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// PUBLIC GAMING INTERNATIONAL // September/October 2016
But for instance, at PGRI’s last conference
in NYC, you articulated a compelling ar-
gument for state lotteries to work together
to overcome obstacles to the implementa-
tion of forward-looking IT like Application
Programming Interface.
C. Hedinger:
I am averse to risk but that
doesn’t mean I am averse to progress. There
is a risk posed by failing to act to modern-
ize our business practices. A prudent assess-
ment of costs and benefits often leads to the
conclusion that it is indeed much riskier to
stick with obsolete practices than it is to in-
vest in change and innovation. I believe that
is the case when it comes to creating the IT
infrastructure that enables us to communi-
cate seamlessly between ourselves and with
our retail channel partners.
Your assessment of the advisability of any
investment, including innovation where the
outcomes are uncertain, is calculated by a
relatively straightforward assessment of fi-
nancial costs and benefits. But how do we
do that when there is no way to ascertain the
costs and benefits?
C. Hedinger:
The accounting profes-
sion certainly tries to integrate all the facts,
including those which may not have a con-
crete financial metric to attach to it. We
just try to mitigate the influence of fear of
loss and hope of gain that are not based
in fact. Accountants are among the most
trusted advisors to businesses because we
really do wrestle with all the pressures
posed by a challenging business environ-
ment. We respect the fact that the future
is uncertain, and that inputs to help us
discern the correct actions are not always
quantifiable. We still insist on the impor-
tance of cost-benefit ratios and the need to
assign values to factors that are not wholly
quantifiable. In the end, you have to rely
on your experience, judgment, and the
facts you have to make a decision
U.S. lotteries are served by three organiza-
tions, NASPL, MUSL, and Mega Millions.
There is an effort to explore the potential to
re-structure the organizations to improve pro-
ductivity, efficiencies, and outcomes. Do you
have an opinion on whether or how the struc-
ture should be changed?
C. Hedinger:
I am not sure that the
structure is either broken or needs chang-
ing. NASPL serves the function of a trade
association, being a clearinghouse for in-
formation, publishing a trade magazine,
and coordinating educational seminars
and trade shows. I do not think a trade
association should dilute its focus by per-
forming tasks that a commercial enterprise
is better equipped to perform. Likewise,
MUSL and Mega Millions develop and
manage games and they should stick with
their core competencies. I’m sure there is
always room for improvement, but I’m
not sure that the basic structure needs to
be changed. I’m not even sure what we
think we would accomplish by changing
the basic structure. I’m eager to see what
recommendations we receive regarding the
structure of our organizations.
The New Jersey Lottery contracted with
Northstar New Jersey almost three years ago.
What are some of the outcomes of this change?
C. Hedinger:
I am extremely proud
of having been part of the implementa-
tion of this unique public-private partner-
ship. The implementation has gone very
smoothly. The purpose of the contract was
to bring in the human, technological, and
economic resources of a world-class com-
mercial partner. And that is exactly what
we have done. The NJ Lottery has retained
total authority and control over every as-
pect of the operation, only now it is with
the benefit of a partnership that augments
our operation in ways that we could never
have otherwise done.
State lotteries all operate with budgets
that are not well synchronized with the
business model. Budgets are not based on
optimizing ROI of expenditures and the
potential of a market-driven business.
We now have a partner who is capable of
applying that kind of analyses to invest-
ing in the business. They can invest in
growth opportunities. They can reassess
the ROI and increase or decrease invest-
ment as needed. They have more flexibil-
ity to make changes as needed, to invest
in new technology, new merchandising
and retailer support programs, to test
new games or promotions, to increase
the sales force and implement sales force
automation tools, to make personnel
changes, to enter into third-party rela-
tionships and other initiatives that prom-
ise to improve performance and results.
Northstar has the flexibility and the re-
sources to maximize the potential of the
business. And we retain control to ensure
that everything is performed to the high-
est standards in every respect.
Now, together we can build three to
five year business plans and know that
the resources will be allocated to support
those plans. The outcome is year-over-year
growth. Most importantly, the entire en-
terprise is being positioned for long-term
sustainable growth. We exceeded $3 billion
I am averse to risk but that doesn’t mean I am
averse to progress. There is a risk posed
by failing to act to modernize our business
practices. A prudent assessment of costs and
benefits often leads to the conclusion that it is
indeed much riskier to stick with obsolete
practices than it is to invest in change and
innovation. I believe that is the case when it
comes to creating the IT infrastructure that
enables us to communicate seamlessly between
ourselves and with our retail channel partners.