Is it a problem that our customer, and the media, keeps raising
the bar, waiting for a higher jackpot level to cause them to jump
into the game?
Carole Hedinger:
Some of us are old enough to remember the
old days when we started to talk about jackpot fatigue and the
jackpots were in the $20 to $30 million range. We began to worry
about it even more when jackpots rose to the unheard of level of
$40 to $50 million. In spite of concerns and dire predictions that
this could not possibly continue, we kept selling tickets, jackpots
kept rising, and we sold even more tickets. The model has been
sustainable for decades now in spite of our concerns. So I suspect
we will be talking about this same issue at PGRI conferences for
many years to come.
Seriously, though, we do seem to be headed for a billion-dollar
jackpot, and we should think carefully about the implications of that.
Do we want a billion-dollar jackpot? And when the frenzy of media
and consumer excitement has subsided, will we be saddled with a
consumer expectation that eventually becomes undeliverable?
Charlie McIntyre:
I’m wondering how the billboard folks will
adjust. Most billboards are set up for only three digits before the
word “Million.” Remember the Y2K Problem—Maybe we should
prepare for an over-the-top marketing event to take full advantage
of the frenzy and havoc that will be caused by the billion-dollar
jackpot? Or maybe a teaser to create a Y2K speculation about how
the world will change when we hit that billion-dollar threshold?
Back to reality, the size of jackpot necessary to attract media
attention and consumer excitement is increasing at a rate that is
difficult to keep up with. That is a problem. But, as Carole pointed
out, it has always been a concern.
Gary Grief:
In spite of our concerns, sales of the jackpot games
continue to increase. And put into historical perspective as Carole
just did, I think we can be confident that they will continue to
grow. But I also think that a billion dollars is a watershed moment
for our jackpot levels. How will we fare if the consumer perception
of big jackpot recalibrates to a billion dollars? And where do we
go from there, to $1.1 billion, then $1.5 billion? It wasn’t too long
ago that the media would give us a big boost once the jackpot hit
$100 million. Now we have $200 million jackpots come and go
with little media coverage. I hope we think very carefully about
how we manage our jackpot levels up to that $1 billion. There are
some discussions taking place in the MUSL group regarding pos-
sible jackpot management techniques. I have never been a fan of
jackpot capping. But I think the billion dollar mark might be dif-
ferent for us, and we need to be concerned and explore new ways
to generate more consumer excitement for jackpot levels that are
below the half-billion mark.
R. Hargrove:
How do you all feel about capping jackpots? I
remember some thirteen years ago when you were at the New York
Lottery, Connie. And the “Big Game” was recruiting New York to
join it in what became Mega Millions. There was some discussion
then about capping jackpots. But New York Lottery basically said
that the reason they want to join is for the big jackpots. What do
you think, Connie, about capping jackpots now?
Connie Laverty O’Connor:
The power of jackpots to drive
retail traffic and ticket sales is incredible. We have plenty of
evidence in recent years, from cross-sell to $2 Powerball, that
actions to drive jackpots produce higher sales. Even now, we can
see that bump when sales go over $100 million. That is obvi-
ously a good thing. But as an industry, we need to think about
how we can extract maximum value from the power of rising
jackpots to drive sales. Or, from a sustainability point of view,
we may need to take measures to ensure that the power of rising
jackpots to drive sales does not diminish over time. For instance,
we can also see that recent changes to Mega Millions precipi-
tated a sales increase of 90%, but Powerball fell by 16.4% be-
fore we went into this last roll up. So I believe that jackpots
are fantastic to drive incremental play but that we have to be
very proactive as an industry to embrace the notion of jackpot
management at a certain level. At some point in the future, it
may take the form of reducing the roll-up over $600 million, or
maybe it’s re-apportioning the prize pool to fund some kind of
overlay promotional games or exciting bonus plays. Maybe the
re-apportioned prize monies could fund special games to cele-
brate certain holidays. Maybe we could use it to fund new game-
plays that could further differentiate Mega Millions, Powerball,
and the new National Premium Game.
R. Hargrove:
Thank you for bringing up the National Premium
Game, Connie. We have held extensive meetings this week, worked
through most of the issues, and I am pleased to tell you that the
National Premium Game is going to launch on October 19. I be-
lieve the majority of U.S. lotteries will participate. And I believe
everybody on this panel is probably going to participate in the
October launch. The game is going to be different from Mega Mil-
lions and Powerball, offering many different levels of million-dol-
lar winners, probably the most million-dollar winners ever seen in
a single night. Instead of one single $100+ winner, the National
Premium Game is structured to produce lots of million-dollar win-
ners with every draw. Is that a way to combat jackpot fatigue?
Stephen Martino:
I love the national premium game. I love the
idea of it and that the idea has come to fruition. I do think it will
complement the two other big jackpot games, hopefully providing
an alternative play-style and appealing to a buyer motivation that
is not consumed by mega-jackpots.
In Maryland, our way to hedge against jackpot fatigue is to diver-
sify our game portfolio so that we are not so dependent on the big
jackpot games. Maryland jackpot games generate around13% of our
overall sales. We make sure we build the playership of games like
keno and instant tickets. Like everyone, we benefit when the jack-
pots go higher and higher. But we can’t control that or predict that.
One of the reasons why I like the National Premium Game so much
is that it’s different - creating those frequent million-dollar winners.
One of the things we continue to struggle with is getting new
people in Maryland to play the lottery. We’re stuck at about 48-
50% participation in any given survey. And 2/3 of our players are
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