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According to a study conducted by Digital Gaming Group in December 2016, the introduction of online lottery in Michigan has not negatively impacted brick & mortar lottery retailers. In fact, it has proven to be beneficial for these existing retailers.
According to the report,
According to the report, the success story of the Michigan Lottery should be included in the book of every lottery seeking to persuade its stakeholders about the valuable, certain, and complementary aspects of this new sales channel.
The presence of iLottery worldwide has led to the observation of multi-channel growth on a global scale. Additionally, the industry is now acquiring evidence of domestic growth.
As the trends evolve and solidify, iLottery has the potential to become widely recognized as a highly reliable avenue for achieving steady growth in the near future.
No signs of cannibalization after two years
According to the report, the Michigan Lottery introduced its online lottery in the summer of 2014. Despite witnessing a weekly growth in online sales, reaching over $8 million, the traditional lottery retailers in the state continued to achieve new records in terms of sales, profits, and retailer commissions.
In New Jersey, the inclusion of online gambling has proven to be a beneficial addition to Atlantic City casinos, as evidenced by the data reflecting the situation on the ground.
This goes against common intuition, but occurs due to three underlying reasons.
- The internet attracts new players.
- Online offerings have managed to reignite the interest of previously disengaged players in the lottery.
- Online platforms have been shown to boost the spending habits of current players who transition into becoming multi-platform customers.
Keno great example of how markets co-exist
Similar to the casino-online gaming dynamic, there is minimal overlap between the customer base of online lottery and traditional brick-and-mortar players.
The report provides further details about Keno To Go, an example that clearly illustrates this phenomenon. Keno To Go is accessible both online and at physical retail stores.
The majority of growth within the retail keno category was driven by players who purchased Keno “To Go”. They have the convenience of watching their drawings online after buying in-store, and can easily play a Keno game with better prize returns and faster gameplay. This product remains unaffected by the launch of online keno.
Even though online platforms offer convenience and higher returns, brick-and-mortar customers remained unconvinced to transition their play to the digital realm.
The report provides detailed information:
The player channel preference observed in relation to iLottery in Michigan aligns with the findings from focus group research conducted before its launch. In those interviews, numerous retail players expressed their disapproval of online registration, reluctance to share banking information, lack of trust in the fairness of iLottery games, and a preference for the interactive experience (such as scratching) offered by retail games rather than their digital counterparts.
Furthermore, it should be emphasized that when there is overlap, the average expenditure tends to rise.
According to the DGG report’s findings,
One can argue that iLottery has a positive impact on player engagement and leads to increased sales across multiple channels. Initiatives like the Online Game Card, which can be bought in physical stores and used online, effectively connect these two channels, benefiting both retailers with increased traffic and commissions.
Lobby groups raising invalid concerns
The lobby groups’ concerns are contradicted by the data, particularly in states like Massachusetts where there is increasing support for the legalization of online lottery.
However, brick & mortar retailers might be inadvertently harming their business rather than safeguarding it by opposing online lottery.
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