Paul's Blog September 10, 2018

Paul's Blog --  How can Lottery fight back against its political adversaries?

--  NIKE's controversial decision to choose Colin Kaepernick as ambassador for its iconic “Just do it” branding campaign  

The response of the Remote Gaming Association (RGA) to Slovakia’s new draft legislation provides a good case-study for the challenge that Government-Lotteries face.  Under pressure from the EU Commission to “liberalize” or open up gambling markets to multiple operators and free-market competition, European governments are trying to evolve their regulatory structures while preserving stability in the market-place, protect the consumer from illegality, minimize problem gambling, and maximize benefit to the state and good causes.  Slovakia’s draft legislation preserves monopoly status for lottery and opens up other gaming categories to multiple operators who must apply for license to operate.  The RGA political strategy is to always complain about something, always attack the government for not completely de-regulating the market-place.  Whatever a government does to liberalize, it is never enough for the RGA.  In this case, the RGA is complaining about the license fees being too high and that the issuance of sports-betting licenses is being delayed for a year.  The relentless pounding of RGA public relations campaigns and lobbyists at both the EU and the national levels of government is very destructive to Government-Lotteries.  The problem is that Lottery is constrained from lobbying for itself and waging aggressive PR campaigns designed to influence legislation.  This constraint puts Lottery at a severe disadvantage over against commercial operators who are not subject to those constraints.     

This problem is much bigger than the RGA, Slovakia, and license fees.  Government-Lotteries are owned by the state, which is the people, which is you and me.  We need political representation to fight for our interests and defend against the erosion of regulatory integrity.  Witness the impacts of Lottoland to convince governments around the world to allow a business model that is so destructive to Government-Lotteries and would seem to violate brand-marks and intellectual property laws.  Witness the success of Daily Fantasy Sports providers in the U.S. to convince legislators to authorize online sports-betting but prohibit the online sale of lottery products.  Witness the challenges faced by the Lottery in Pennsylvania.  Witness re-selling lottery products online without proper license in jurisdictions all around the world.  Witness the expansion of “Charity Lotteries” which are not operating illegally, but are nonetheless undermining the monopoly model which is fundamental to the success of Government-Lotteries.  Lottery needs a political voice.

 I’ll need to choose my words carefully when talking about the NIKE decision to put Colin Kaepernick front-and-center of its iconic “Just do it” branding campaign.   I would suspect that I was not alone in thinking this was a rather shocking move strictly from a business strategy and brand-building POV.  Who would think it is sound business strategy to choose as your brand ambassador a person who alienates a large portion of the mass-market of consumers, a large portion of your customers?  Many years ago, Apple Computer created some startling campaigns that challenged conventional thinking.  But they didn’t fly in the face of strongly-held personal convictions like Colin Kaepernick does.  Can you think of anything quite like this, demanding that your customer think less about the attributes of your product (in Nike’s case, shoes and athletic wear) and instead decide whether “you’re with us or against us” on a hotly debated political issue?   I am not a marketing person, but it seems to me to reflect quite the quantum shift in how one thinks about the market-place, how one thinks about the most effective ways to connect with your target audience, how one even defines “audience” and re-defines the very purpose of brand-messaging and market segmentation.  How it's not enough to "stand for something".  How "Authenticity" demands that we put our names down for something more than what everyone agrees on like integrity, and serving the customer, and producing great player experiences, and responsible gaming; something that may not "cost us everything" but does require courage because it won't align with everyone else opinions.

Preliminary post-script:  Nike sales over the 3-day period following the launch of the Kaepernick campaign were 31% higher than the same period last year.   That’s quite interesting but far from conclusive evidence as to the efficacy of this unorthodox strategy which will bear watching in the months to come.  

BTW, to wade into the politics a little:  I don't think that the decisions made by Kaepernick and NIKE took "courage" or in fact "cost them everything".   More like a convenient pivot away from a football career that was in decline before anyone had ever "taken a knee", and a high-risk/high-return bet to revitalize "Just do it" as the authentic soul-defining brand meme that it was in years past.  Regardless of all that, it will be fascinating to see the outcome of NIKE's unorthodox strategy which I do think qualifies as an innovative "out-of-the-box" and gutsy move.