50 PUBLIC GAMING INTERNATIONAL • JANUARY/FEBRUARY 2024 Every year, there are two important events held in London during the first week of February. ICE Totally Gaming (held at the Excell Center) hosts more trade-show booths than any gaming show in the world. The far more important event for the lottery sector, though, is the joint EL/WLA Marketing seminar. This winter gathering is where lottery CEO’s, marketing directors, and many other stakeholders convene with their technology partners for presentations, panel discussions, and side-bar meetings where important issues are discussed. The juxtaposition of these events raises the question du jour: Is there still a relevant distinction between lottery operators and lottery suppliers? In years past, there was a “summa divisio” between governments, state owned operator, beneficiaries, and suppliers. Everyone stayed in their lane. Governments, not commercial firms, operated lotteries. Lottery operators did not engage in other commercial activities and technology vendors did not operate lotteries. For better or worse, capitalism is fundamentally a change agent, driving all economic units to innovate to reduce costs, increase revenues, and add value for their stakeholders. Historically, this dynamic has produced progress and macro-economic success. In the short-term, the benefits of disruption are distributed unevenly as companies adjust strategies and tactics, and governments adjust regulatory policies to address emerging issues. The games-of-chance industry in general, and the lottery sector in particular, has seen substantial disruption over the last fifteen years. The market-place and competitive landscape bear little resemblance to what prevailed at the turn of the millennium. So it should not surprise us that business models and strategies have changed. This applies to lotteries and their associations as well. For instance, consider the vision of the new EL strategy and how it embraces these changes: United in diversity, EL will be recognized as an association of responsible and successful members making the most positive social impact. Built around 3 value pillars - Forward thinking , Sustainability and Integrity - the EL Strategy outlines a clear ambition for the association to be known as a proactive expert, assertive, and ambitious organization that fosters innovation, creativity and development, and collaborates with a diverse set of stakeholders to anticipate trends, share visions, and discover new ways to serve society. Veikkaus CEO, Olli Sarekoski, confronted with a new government approach to partially liberalize the Finnish market, did not wait to initiate a vast transformation program. “We are gearing up for changes. The evolution in the gaming industry and internationalization are pivotal to Veikkaus’ growth strategy. We envision a future where Veikkaus stands as Finland’s premier gambling company and a significant entity in the international arena.” Veikkaus ambitions go well beyond the classic operational approach. With Fennica Gaming, Veikkaus brings its creativity and skills to the global lottery community. The French FDJ Group and Allwyn are two other strong and independent Europeanbased organizations which are adopting a strong financial and corporate governance structure. Their leadership has also led them on a fundamental transformation. Both have expanded their activities to bring innovation and sustainability for governments and beneficiaries in multiple jurisdictions around the world. On the other side of the business, commercial operators and technology companies have for years been actively participating in RFPs and/or ITA for facility management contracts, government licenses or concessions. The distinction between technology suppliers and operators is gradually disappearing and thus requires a new model of partnership based upon mutual trust and fairness. A benefit of this blurring of lines is that lotteries are becoming more businessoriented. For instance, the content of RFP’s has changed from a cost-based approach towards a dynamic and innovative vision that places more attention on value and outcomes. More consideration is being given to a broader set of objectives like developing local markets, transferring knowledge to help other local businesses succeed, engaging local participation in operations, and finding new ways to be of service to society (examples are Morocco and South Africa). At the same time, governmental and regulatory stakeholders are looking more carefully at how they might support innovation and modernization that addresses market changes, protects the lottery monopoly, and grows the business in a sustainable socially The Transformation of the Lottery Sector By Philippe Vlaemminck – Managing partner Vlaemminck.law Continued on page 42
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