Hartford Business Journal

12 Hartford Business Journal • June 4, 2018 • www.HartfordBusiness.com By Matt Pilon mpilon@HartfordBusiness.com C onnecticut's lottery has seen steady growth over the past decade and expects to contribute a record $350 million to the state's coffers at the end of the current fiscal year. Despite its financial success, Con- necticut Lottery Corp. officials are concerned about competitive and generational headwinds that could imperil future revenue growth. As a result, the lottery is making some big asks of state lawmakers. The quasi-public agency has been lobbying for authorization to sell its draw games online and to become a sportsbook — significant new offer- ings that could bring the most drastic change to its product mix since the lottery was birthed in 1971. The lottery is also developing a new player loyalty program and just hired new marketing firms to re-craft its image, particularly to younger adults. "We're the fourth-oldest lottery in the country and we basically still sell the same two products — we sell draw games and instant games," said Chelsea Turner, the lottery's interim president and CEO for the past year, during a recent wide-ranging interview at her Rocky Hill headquarters. "If we're going to continue to maintain or even in- crease our general fund transfers over time, we need to innovate and adapt. "We don't want to be left behind," she added. For the lottery, a win on either front could mean significant revenue growth for an organization that is al- ready ranked No. 5 in per-capita sales among its U.S. peers. Legislative hopes There's no guarantee Con- necticut Lot- tery's legislative wishlist will make it through the General Assembly. Internet lot- tery, or "ilotto," legislation faces retailer opposi- tion and has failed several times in recent years, while a bill authorizing the lottery to offer sportsbetting didn't reach a vote in either chamber during the 2018 leg- islative session. Even if sportsbetting became legal here, the lottery may not end up as its purveyor. There are plenty of potential compli- cations in negotiating with the state's casino-operating tribes, not to mention concerns about the potential social impacts of more gambling options. But Connecticut's efforts to expand gaming have picked up momentum, following the U.S. Supreme Court's recent decision to open up sportsbet- ting to states. Gov. Dannel P. Malloy last month sought input from lawmakers on how he might approach negotiations with the Mohegans and Mashantucket Pe- quots, operators of Mohegan Sun and Foxwoods Resort Casino, which have a claim on expanded commercial gaming in Connecticut through a 1993 compact that requires them to pay the state 25 percent of their slot machine revenues. Lawmakers could meet in special session this year to address internet and brick-and-mortar sportsbetting, as well as ilotto, though House Speaker Joe Aresimowicz recently called online lottery sales "somewhat problematic" and in need of further study. Player engagement Meantime, lottery officials are work- ing on several other projects they hope will help drive revenue growth. One includes a player loyalty club, slated to launch next year through a website and mobile app. The club would allow users to accu- mulate points by scanning their losing tickets and other activities. Points could be used for second-chance draw- ings and other prizes. Though Connecticut's lottery mea- sures its audience through surveys and other methods, a robust online database would provide it with new customer insights it could use to make marketing and business decisions. "We could understand what kind of games they buy together," said Tom Trella, the lottery's director of port- folio strategy and analysis. "We could also survey people about their opin- ions on new game concepts." The lottery may soon select a con- tractor for the project. The system would also sync up with sportsbetting and online lotto offerings. Lottery overseers also recently awarded a three-year, $1 million con- tract to marketing firms Makiaris Me- dia, of Middletown, and Glastonbury's Decker Creative Marketing. The firms are charged with, among other tasks, figuring out ways to bet- ter reach Millennials, a generation that doesn't spend as much on lottery products as its forebears. "We see that not only with the lot- tery but with a lot of our clients," said Makiaris CEO Irene Makiaris. "That's the up-and-coming audience." Eleven marketing firms bid, but the lottery says Makiaris and Decker's joint proposal stuck out. The firms' bid notes that Millennials are increasingly cord cutters who spend the majority of their online time on mobile apps, including spending money on mobile games. The question is: Why aren't they as drawn to the lottery? CT Lottery Sales and Contributions The Connecticut Lottery's annual transfers to the state's General Fund typically amount to 27 percent to 28 percent of its sales. Transfers have exceeded $300 million in each of the past six fiscal years, and this year is expected to reach a record $345 million to $350 million, officials say. 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 Dollars ($000s) Total sales Transfer to General Fund Source: CT Lotto Corp. Reaching New Players Gambling debate has big implications for CT Lotto's future Chelsea Turner, Connecticut Lottery Corp.'s interim leader for the past year, says she wants the agency to ensure it can continue to provide a significant, growing revenue stream to the state's coffers in the years to come. This tongue-in-cheek ad pitch pokes fun at the "dated" depiction of the lottery-winning billionaire. HBJ PHOTO | STEVE LASCHEVER PHOTO | CONTRIBUTED

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