Paul's Wall August 20

Paul's Wall  August 20

More U.S. states are taking concrete steps to outsource larger and larger portions of their lottery operations.  As we read these articles and these issues become a part of the public dialogue, an important distinction should guide us.  Outsourcing of particular business functions is not "privatization".  The difference is material for two reasons.  First, the concept of "outsourcing" more accurately describes the process.  The state retains ownership of the asset, i.e. the lottery, and continues to guide long-range strategy and exercise oversight over issues relating to responsible gaming, advertising, and other matters of operation.  Downsizing the body-count of state employees in the lottery management team is not "privatization".  It does not resemble a sale of the asset so much as simply a decision to enlist the talent, R & D, investment funds, and more resources from the commercial community.  Second, while the precise interpretation of U.S. federal laws prohibiting anyone or anything other than the state to operate a lottery is not exactly clear, it is widely understood to mean that states must retain ownership of the lottery and some measure of oversight.  For those reasons, I would submit that the words we use to describe the process are quite pertinent, and that the operative concept should be "outsourcing" and not "privatization".

Zynga (operators of Farmville, Zynga-poker, and other popular on-line social games) is upping the ante on their mission to turn their social-gaming empire into a real money-gaming empire with an increase in lobbying firepower in Washington D.C.  The pressure on Zynga to push hard for the right to enter the money-gaming market is especially acute because their franchise of social games has started to contract.  It is expected that the first break will come in jurisdictions outside of the U.S., and they are in fact working to make that happen ASAP.  Executive Mark Pincus told analysts the firm expects to "launch our first real-money gaming products in international markets in the first half of 2013." Of course, he needs to do something fast, because Zynga's market cap has dropped 70% from its IPO valuation which was just a year ago.

There is an interesting article titled "Why you keep playing the lottery".  In summarizing some of the conclusions of a study conducted by Behavioral Decision Making, author George Loewenstein theorized that "lottery serves a psychological function for people - Our pleasure of living is not only based on our current situation, but what could be, what we can imagine our situation could become."  That's just one of many insights.  Nice to see an intelligent analysis of lottery in the general media.

And the article titled "Crowdsourcing expertise" takes the hypothesis of a book written a couple years ago, "The Wisdom of Crowds", an interesting step forward.  The counter-intuitive notion is that large groups of people with markedly lower levels of expertise can render judgment that is more accurate and holds more predictive value than a small coterie of elite experts.   This article today talks about how the "crowd" can also be the better source for identifying the relevant questions to begin with, that framing of the issues is the most decisive part of the process of scientific inquiry, and that leaving that part of the scientific method to the experts "can become a bottleneck to new insights".  We've been witness to the transformation of the world by the democratization of political authority.  Now it seems that the steamroller of democratization is taking over every nook and cranny of life, even the ability to pose the right questions!

Georgia Lottery CEO Margaret DeFrancisco is retiring and will be very sorely missed in our industry.   Her pedal-to-the-metal leadership style has been the source of significant innovation and progress at the Georgia Lottery and also for the U.S. multi-jurisdictional games.  Margaret has always challenged us to recognize the need for change and to take dramatic action if that's what is called for (and it is what is called for!).  Let's keep that spirited approach alive as this industry quickly moves into the most exciting period of change it has ever seen.

The World Lottery Summit (WLS 2012) is coming up September 9 to 12 in Montreal. This bi-annual conference and trade show is hosted this year by both the National Association of State and Provincial Lotteries (NASPL) and the World Lotteries Association (WLA) and is by far our industry's biggest and most important event.  Great speakers, provocative panel discussions, parallel educational tracks, the biggest and best industry trade show ever, all combine to make WLS 2012 a must-attend event.  Please join us there for "a world of opportunities à la Montréal"! Visit http://www.world-lotteries.org/wls2012/ for more info about the World Lottery Summit.

Thank you all for your support.  I welcome your feedback, comments, or criticisms.  Please feel free to e-mail me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Mark your Calendars (Oct. 22-25) for PGRI Lottery Expo 2012 in Miami (see conference website www.PublicGaming.org).  Visit www.PublicGaming.org for more info about Lottery Expo and on .