An Interview with Atul Bali

Atul Bali leads GTECH’s New Media & Sports Betting division as its President.  This new division is focused on a large portfolio of interactive games such as online (i.e. internet)  poker, casino, bingo, and skill games as well as lottery (internet /mobile draw and instant) games and both retail and internet sports betting.  With the proliferation of the Internet and Mobile channels for distribution, there are many different ways  the entire player experience will change, not simply content and distribution. Gaming operators need to adapt to provide a secure and entertaining player journey.

Paul Jason, Public Gaming Magazine:  You’re sort of in that flash-point where traditional games are being adapted to new media, new distribution, and an explosion in creative game development.  Where’s all this going to lead and how can lottery organizations position themselves to succeed in this brave new world?

Atul Bali:  Simply put, I think almost every lottery is focused on balancing three fundamental objectives.  First, they are trying to raise as much revenue as possible for good causes.  Second, they need to protect their image as a public institution and reputation for integrity.  Even privately held operators need to be sensitive to their role as a public institution and protect the positive image and brand that is the lifeblood of any lottery or gaming organization.  And thirdly, they have an obligation to protect the players and ensure they are engaging players in a responsible manner.  So our mission as a supplier is to help the lotteries accomplish those objectives and support their leaders with broad solutions that balance each of these appropriately.

Those three over-arching objectives can be therefore broken down into guiding our offering.  For instance, for raising revenue lotteries need new content and broader distribution. The internet allows a much broader opportunity for lotteries to provide socially interactive games such as Bingo, Poker or other card games. These tend to appeal to a demographic that may not play lottery today and spends much longer interacting with the lottery. Secondly a critical component to a positive image is to be progressive and innovative.  Creating exciting new games that appeal to the public (for example the video gaming generation), providing the players with a variety of games to choose from and channels to buy on … being perceived as a leader and innovator in product development is important to the brand and image of any organization, especially lottery organizations.  I say ‘especially’ because many lotteries are under -utilizing their brand image and opportunity to appeal to a much wider demographic than they do today.  The concept of image works in two ways.  There’s the image the operator projects to the player.  Then there is the players’ self image.  The goal would be to project an image that is in sync’ with the players’ self-image.  Lotteries have the inside track on integrity and honesty and user-friendliness as an integral part of their image.  A reputation built over decades of irreproachable trust is by far the most valuable component to any brand.  Lotteries generally have a significant advantage over their competition.  But in this day and age, it’s not enough.  You’ve simply got to provide the customer with entertainment that appeal not just to themselves as an individual, but for them as part of a community or social network.  For this the operator has got to project an image that is in alignment with the players’ self-image.  The good news is that the daunting task of creating a reputation for integrity and quality service is something that takes years of creativity, huge sums of money and the highest standards of service. The good news is that the lotteries already have that.  Thirdly, lotteries must provide this entertainment service in a socially responsible way. Like all organizations, lotteries need to really understand the customer that they are trying to reach. The internet provides them with a unique opportunity to appeal to them on their individual terms and in ways that allows them much greater long term access to their player base.  Even if your mission is to market ‘draw and scratch’ games only, you still want to understand your players and how best to provide them access to the lottery for buying product or simply getting more information. At GTECH we are investing a great deal in this important differentiation. This is not simply about technology but also about understanding trends and analyzing the underlying information about individuals.  

Public Gaming:  The modern consumer really expects to have multiple options to choose from.

A. BALI:  Exactly.  In the developed world, most consumers have a variety of  options, both for product and how to learn about and/or buy it.  This is no different for lottery and gaming operators. The player today is demanding choice - A wider variety of more entertaining game content and a wider variety of promotional and distribution channels to gain access to these games and also to fellow players.  It is this that the operator needs to cater to, in order to appeal to a broader player base and support the player through a uniquely developed experience (by the operator).

The thing is, governments everywhere are sitting on the most valuable asset that exists in our industry.  That is the relationship they have with millions of customers who know the lotteries, trust them and have traditionally enjoyed playing their games.  These customers are consuming a wide variety of goods and services that they would much rather buy from their trusted source, their own government sponsored lottery.  The operator should nurture that special relationship it has with its customer.  They need to build on it or they will lose it.  

Public Gaming:  Can lotteries do more to leverage the reputation for integrity that they enjoy with the public?

A. BALI:  To answer your question, in some cases this is a missed opportunity for lottery organizations to differentiate themselves from the competition.  Lotteries are already required by government and regulators to comply with the highest standards of responsible gaming and social responsibility.  They’ve been held to this higher standard since inception, and so are likely to have a head start over their competition.  Lotteries have been scrupulous at performing well in this respect and at projecting an image of social responsibility and genuine concern for the interests of the player.  Governments everywhere, and regulators and the general public, are giving more attention to the importance of protecting the player.  This presents an incredible opportunity for operators who can demonstrate superiority in this space.  The European Commission, for instance, recognizes protecting the player as being the primary justification for preserving the lotteries’ monopoly control of certain types of gaming in some jurisdictions.  So, responsible gaming and protecting the player will be an increasingly important part of the governments’ agenda and therefore an equally important part of the gaming operators’ agenda.

The third principle is raising as much revenue for good causes that benefit the public instead of enriching private interests.  That’s what government sponsored gaming and lotteries are all about and will always be a cornerstone of their mission and purpose.  That is something they should be proud of and make sure that the public and public policy makers are well aware of.

 Public Gaming:  You referred to the operators building and nurturing relationships with their customer, the player.  That’s a big part of every business’s playbook, isn’t it?

A. BALI:  Absolutely.  Building relationships with their players should be a top priority.  We need simply look at the social networking phenomenon taking place on the internet now. Whether it’s Facebook, Bebo, or YouTube, the internet is changing the way we socially interact with our peers. Loyalty programs on the other hand are not a new concept. The airlines started these over 20 years ago, followed by credit card companies and then supermarkets in the 90s. Today Casino groups, Betting Operators, Media brands, Video Game publishers and now several lotteries are signing up millions of players and members, building vast databases that will be the driver of loyalty and of course revenue.  Some of these databases are now in the tens or hundreds of millions, not hundreds of thousands but tens growing to hundreds of millions of consumers that are entering into a far more dynamic and mutually supportive and productive type of relationship with providers of goods and services. The companies that are taking the initiative to engage their customers in this kind of ongoing interactive relationship are obviously going to have a huge advantage over the ones who aren’t.  And that is probably even more true in the gaming industry than most others.  The reason for that is simple.  The need for interaction between operator and player is compelling from a responsible gaming as well as from a customer loyalty and retention point of view.  The profit potential in the gaming business is at least as great as any others and so the need from a competitive point of view to take the steps necessary to engage your customer in a dynamic and interactive relationship is compelling.

Public Gaming:  So how do they do that exactly?

A. BALI:  It’s about distribution and content.  Take your lotto and scratch games and make them available in the places that your customer buys things.  If they’re not going into the convenience stores as much but they are buying things on the internet and playing games on their mobile, the lotteries need to convince their legislators to permit them to make the product available where the customer can buy it.  That is just the first step. From there an operator needs to build a player database by using a whole variety of marketing methods on the internet. This could be by using affiliates and/or partnering with those that already have a large database of potential lottery players (for example their own retail chains). In addition, lotteries can leverage their huge retail distribution, brand and marketing efforts to get people to register directly to buy their products over the internet or through their mobile phones. This is a complex multi-faceted area which is a combination of technology and e-commerce. That’s been a key area of focus at the New Media & Sports Betting Division of GTECH, helping the operator through every aspect of its business of attracting, retaining, entertaining and long term relationships with its players, including collecting payments and paying prizes and connecting with key distribution partners and where to advertise including SEO (search engine optimization) or how to cross promote with truly viral games or messaging.

Public Gaming:  Could you describe more specifically what the player is looking for?

A.BALI: There are a wide variety of players and an equally wide variety of interactive experiences that they are looking for.  But, the players are looking for an experience that includes interaction with their peers and with entertainment products and brands that speaks to them and their social group.  So you are profiling the players and identifying the dynamics that will engage their interest. Managing the player experience, from the moment she enters the lottery website through each inflexion where her interest is engaged or disengaged.  You build your audience by focusing on the player journey, the evolution of their experience on your sites, through your product and over time.  You know, the internet is no longer just a place where people go to read news, email, gather information, shop or even to play a lotto game.  Web 2.0 means there is a whole new genre of recreation being built to support individual expression, wants and needs.  The lotteries need to look at making some wholesale changes to the way they think of their customer and player at an individual level.  Lottery has been a fundamentally a high volume transaction focused business.  It really needs to transform into a broader entertainment experience.  The technology and know-how is fast emerging to move into a new age of one-to-one marketing, developing uniquely personal relationships with your customers, targeting products and promotions and responsible gaming initiatives and perhaps even non-gaming products to meet the unique needs of a customer;  building an even greater social networking experience into the whole player journey. A significant area of building loyalty for your site is driven through the player interface, the wallet, chat functions as well as the quality of games. Internet operators look at two key drivers for their games: 1) The Cost of Player Acquisition (or CPA).   2) the Life Time Value (or LTV) of those players on their site. It is (2) minus (1) that drives the basic contribution of a player. These interactive functions are intended to extend the LTV of a player and therefore increase a player’s contribution.

As some say, Gaming may in fact be seen as “Social networking with Profit”- Lotteries can perhaps provide the powerful message that they can provide Social Networking for generating Profit for Good Causes. 

Public Gaming:  What other kinds of things are you working on?

A. BALI:  Developing and managing a full e-commerce environment where people can come together and play is really what’s going to build the image of a lottery and be the platform that will drive their success in the future, and so that’s what we’ve been working on doing.  GTECH is investing heavily, building domain expertise and a depth of technological capabilities and expertise, developing and acquiring IP.  We respect the fact that change is not easy and are sensitive to the obstacles that lotteries often confront when attempting to adopt new technologies and new ways of doing things.  So, change will definitely happen, but it will happen on the lotteries’ terms, not ours.  Our mission at GTECH is to make sure that we are there to provide all the tools and support as needed.  We are big believers in greater adoption and do feel that the industry is in a period of significant transformation.  This will be a process rich with opportunity for the lotteries but there will also be formidable challenges.  GTECH has been focused on doing everything we can to be the best partner to the lottery organizations in this transition process.  

Going forward, the lotteries will need to manage a far broader portfolio of games and a far more varied playing experience that will include social networking and other forms of recreational activities that aren’t necessarily a part of the lottery business today.  It is these new initiatives that will reduce CPA, increase LTV, increase the number of visits players make to drive revenues, drive customer loyalty, and do all this while we build more sophisticated tools to promote and manage responsible gaming.  GTECH has the tools and the capability that enables the operator to successfully transition to this exciting generation of gaming.  It really is an exciting future rich with potential, but it is also important to be equipped with the right tools and strategies to compete in this new broader gaming environment. 

What we’re trying to do in our business is building a broad portfolio of game types, building technologies and products that will integrate with the ever changing array of distribution channels and game concepts.  For example, we have recently started offering a range of skill games, taken from well known games for fun, played by millions of people on the internet such as the Yeti Sports games.

Our offering allows operators to provide these games to their players in both a tournament or head to head one on one format. So a player can log on and place a wager or tournament fee and win a prize if they win. These games for fun are a huge tool for attracting and retaining very large volumes of players. We are currently conducting some research to determine how many players are playing certain games (by themselves or in a P2P format) at different times of the week. We have all seen the “World of Warcraft” phenomenon with an estimated 1.5 million average concurrent players. These games are known as MMORPG or Massive Multi-player On-line Role Play Games. Our emphasis is on much simpler community style fun games. Currently our back office platform is currently configured to allow 250,000 concurrent players, it is our aim that by 2011 this will be engineered to accept 20 million playing, for instance, a Pool game, or other viral games like Yeti Sports. It is this softer form of gaming, we hope, that will help lotteries make the transition from Draw and Instants games to much more interactive games, such as Bingo, Poker or Blackjack in tournament or cash game form.

PAUL JASON:  People in the lottery business often describe the competitive environment as one in which they are competing for the “entertainment dollar”.  While that is true, I would propose that we should now acknowledge that lotteries are also competing for the “gambling” dollar.  Gambling and slot machines have now become widespread and commonplace and readily accessible to almost everyone everywhere; and so no longer have the taint of controversy that it may have had in the past.  I would propose that it should now be permissible for us to talk openly about the fact that we are in the gaming business and that means we are competing with all forms of gaming, including casino type gaming. And that we should be noticing the actions of operators like Harrah’s and others, who are amassing a database of players that will be the object of intense marketing of all varieties of games, not just casino games.  Shouldn’t we anticipate that the lottery player will be marketed to way more aggressively than ever in the coming years by operators of all kinds of gaming options and venues?

A. BALI:  The lottery player base today is not different from any other consumer profile in one important sense.  Consumers are all being bombarded with a mind-boggling variety of choices and options.  Land based and Internet Casinos and other gaming operators will definitely be increasing their efforts to gather data on lottery players and leverage that data to enhance their marketing efforts.  And it’s important to recognize that there is a great deal of overlap between people who play lottery and people who play some other form of gaming.  I believe it was found that in the U.K. Prevalence Survey 2007 that 79% of the people who regularly played on-line Poker, Bingo or Casino also played the National Lottery and 78% of those that placed a bet on-line with a bookmaker also regularly played the lottery.  We predict that our industry will evolve like all others … that with much greater online distribution more products and options will result in further fragmentation of the market.  The consumer will be more inclined to try different products.  That means there will be more opportunity for the gaming operator to attract the consumer with a compelling new product but also more competition to retain the loyalty of their current players.  This overlap will only be increasing, and that will be true eventually for the U.S. market as well. 

Lottery operators have a huge number of players who spend relatively small amounts of money.  Look at what the businesses with a similar relationship with large customer bases are doing.  Software companies, phone and utility companies, newspapers, T.V. broadcasters, credit card companies, are all building powerful databases that they will use to consolidate and reinforce their bond to their customer.  But they’ll be looking for all kinds of ways to monetize that data, including the marketing of other products and services.  The good news for lotteries is that they have the most extensive customer base that exists in our industry, the challenge now will be to build that one to one relationship that only New Media allows them to do. 

The concept of investing heavily in building your customer database has been around for at least 25 years, when airlines developed their frequent flyer and loyalty programs.  Customer Relationship Management (CRM) is rapidly becoming one of the most important competitive differentiators, and lottery operators need to ramp up in this area.  The level of sophistication and precision is evolving quickly and you really can not afford to fall behind in building your CRM programs.  We’re not talking about general classifications about millenials or 25 to 35 year-old college educated women, etc.  We’re talking about a level of sophistication and precision that enables you to target the exact needs of your customer, knowing precisely what she will respond most positively to, and how, where, and when to reach out to her.  Technology is creating the potential for CRM tools to transform your relationship with your player.  But, potential is just that until you make the commitment and investment necessary to implement these kinds of tools.  It will pay off, and the ones that hesitate too long will be at a disadvantage against those who are ramping up now.

Public Gaming:  What is GTECH’s role in the business of capturing and analyzing player information?

A. BALI:  Let’s be clear on an important point and that is that we all need to be very sensitive to many issues that relate to data-mining, usage and ownership.  First of all, we don’t necessarily own a lot of the data that we might have access to and we need to respect rights of ownership.  Second, we need to respect rights of privacy on the part of the players.  The analytics we use to develop deep insight into the trends that will drive the industry do not compromise anyone.   For instance, we can look at the behavior of a set of problem gamblers and identify commonalities and be better able to isolate those things that really make the most difference in encouraging responsible play.  So that sort of analysis helps the player, the operators and the industry, but doesn’t infringe upon anyone’s privacy or proprietary customer data.  The data is typically owned by the customer, the lotteries.  So we coordinate with the customer to ensure that the CRM tools we implement, the analytics we apply, stay consistent with their objectives and with the laws of each country pertaining to the use of customer information.  That leaves a lot of room to build a Best Practices methodology based on an incredible resource of customer data.

Public Gaming:  So CRM can be used not just to figure out more effective ways to promote the products.  It can also be the basis of an effective Responsible Gaming program.

A. BALI:  Absolutely.  Already, comprehensive Responsible Gaming programs are becoming the norm.  An enlightened approach to Corporate Social Responsibility and Responsible Gaming are expected from everyone.  From a public policy point of view, the operators who excel at CSR and RG will be looked upon favorably by legislators and those who are deciding who should operate the games.  The associations like World Lottery Association (WLA) and the regional bodies have created blueprints and accreditation programs to help the lotteries measure their performance.  CRM helps the operator to understand and communicate with the player so, yes, an effective CRM plan would be integral to support Responsible Gaming objectives.