LOTTERY ANALYSIS. Research: 1 P a g e

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1 Research: LOTTERY ANALYSIS The lottery has become a large part of English culture since its launch in 1994, and a part of our history for far longer than that. But who, exactly, takes part? We've combed the internet for the facts and figures behind those weekly lottery draws to find out. Lotteries are operated at the state level in the U.S.; 44 states and 3 territories operate state lotteries, and nearly all of them are members of consortiums that operate regional games, and the two nearnational games Mega Millions and Powerball. The game's attractions to low-income and working-class bettors were the ability to bet small amounts of money, and that bookies could extend credit to the bettors. Also, policy winners could avoid paying income tax. Different policy banks would offer different rates, though a payoff of 600 to 1 was typical. Since the odds of winning were 1000:1, the expected profit for racketeers was enormous. The first modern government-run US lottery made the chances of winning a lottery jackpot to vary widely depending on the lottery design, and are determined by several factors, including the count of possible numbers, the count of winning numbers drawn, whether or not order is significant, and whether drawn numbers are returned for the possibility of further drawing. Unlike other games, state lottery in the US have faced lot of problems in the past and even present, the major of which lies in the fact that state lotteries are losing a lot of money to other states. This problem has been ailing many state lotteries for years. The issue of keeping residents playing in their home states is one that no lottery to date has quite figured out when all of the residents leave the states to capitalize on the opportunity to win and win big with lottery games such as the mega millions. Leaving states with a staggering budget which might have been solved if such problems were addressed properly. Sometimes, the only thing longer than your odds of winning the lottery is the lineup to buy tickets. Just how many people are playing? And with a big win so unlikely, what keeps them in the game? Whether you re in the gaming industry itself, or simply trying to harness contesting and Gamification as marketing tools, understanding the dynamics of today s booming lottery phenomenon provides key insights on how to engage your audience and keep state citizens to patronizing state lotteries rather than traveling out. 1 P a g e

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3 Research I conducted, got a fresh perspective on lottery players through a recent Vision Critical study involving 958 adult lottery players in the Unite "With regard to lottery play for respondents of various racial/ethnic groups, non-hispanic whites and Native Americans had the highest proportion of gambling on the lottery (51% for each group); however, with regard to mean levels of gambling on the lottery, blacks, and Native Americans had the highest averages (20.6 and 25 days, respectively)." Those in the lowest fifth in terms of socioeconomic status (SES) had the highest rate of lottery gambling (61%) and the highest mean level of days gambled in the past year (26.1 days). Moreover, there were very few observed differences in lottery gambling for those in the three upper SES groups 42 43% gambled on the lottery and the three upper groups averaged about 10 days of gambling on the lottery in the past year. The tendency to play the lottery in a given year increases for people in their twenties and thirties the proportion hovers around 70% in those age groups. It dips slightly to about two-thirds for people in their forties, fifties, and sixties; and then declines to 45% for people 70 and older. 3 P a g e

4 Men play more frequently than women do 18.7 days over the past year for men, versus 11.3 for females. Americans spent $70 billion on lottery games in That's more than $300 per adult in the 43 states where lotteries are legal. In fact, Americans spent more on lottery tickets that year than they did on sporting events, movie tickets, books, video games, and recorded music. Of course, some people consider the lottery a form of leisure and budget for it accordingly. But for lower-income households, those tickets often constitute a major financial strain. According to a Duke University study, the poorest third of households buy half of all lottery tickets sold, and a big part of it has to do with advertising. Those who are paid to promote lottery sales are good at marketing the almost-impossible dream of buying a one-way ticket out of poverty. As a result, folks who can least afford those tickets typically end up spending the most. But even if you're in a decent spot financially, buying lottery tickets isn't exactly a good use of your money given the extremely low chance of success. The odds of winning the Powerball jackpot on a single ticket, for example, are one in 292 million -- hardly an inspiring number. Even if your goal is to snag a smaller prize, you're more likely than not to come out a loser. According to Bloomberg research, the average lottery player in America loses roughly $0.40 for every $1 in tickets purchased. Talk about a bad return on investment. As the results show, I found that almost 51% of Americans actively play the lottery. In the past years, most state lottery games have lost a lot of money as home-based move out of state to other places to engage in what they see as a greater payout, but yet in real sense slimmer chances of winning. Below is data for some plays: 4 P a g e

5 Game Participation Frequency Of purchase per week Frequency of purchase per month Average number of play per week Average number of play per month Average spent per play Mega million 61.1% 30.5% 20.2% Dollar Powerball 60.3% 25.3% 15.9% Dollar Texas Lottery scratch Texas triple chance 15.2% 13.1% 8.8% Dollar 11.7% 10.1% 5.3% Dollar Lotto Texas 3.2% 6.8% 3.5% Dollar Below I listed both lottery players needs and how these needs can be met, which when implemented appropriately will eventually make indigenous players play within the state and would not have to go losing out money to other states. Firstly; Money isn t everything. Marketers often emphasize cash prizes when promoting lottery games, but our research indicates that this isn't always the best approach. As it turns out, enjoyment is a huge factor for consumers. Overall, 40% of consumers enjoy playing lottery games that are for fun instead of cash-based. The importance of enjoyment is especially true for younger lottery players: 62 percent of 18 to 24-yearolds we talked to enjoy playing non-cash lottery games. While Mega Millions and the Powerball will likely remain very popular in the US, the non-cash play is an emerging trend that organizations need to also keep an eye on. When you re running a contest or lottery, don t just emphasize cash: intrinsic things like fun and excitement are also important to this group of consumers. Consumers still prefer to purchase lottery games in person. Although many companies now allow consumers to buy lottery games online, our research suggests that perhaps they don't mind the long line-ups to buy their tickets. 78 percent of the lottery players we talked to said they would rather purchase in-store than buying tickets online. Online play isn t quite trusted yet, and this contributes to why only 22 percent of lottery players would purchase online. 23 percent of the consumers we surveyed think that lottery odds are different online 5 P a g e

6 and in-store, indicating the need to educate consumers about the mechanics of playing lottery online. Many consumer experiences are already moving online though, so organizations trying to reach lottery players still need to keep an eye out for this trend. In fact, because of its relatively low adoption, online play is probably the next big opportunity for lottery games. If organizations can figure out how to make online play more appealing, they ll have an opportunity to expand their market and attract more customers. To get people to play lottery games online or enter online contests, organizations need to learn about consumer attitudes about online gaming and get to the bottom of why they are hesitant to adopt it. Men are more likely to play lottery online. In general, men are more likely to play the lottery (55 percent VS 42 percent of women), but I also found that men are more receptive to lottery online gaming. 18 percent of the lottery players I surveyed indicated that they are likely to purchase lottery tickets online, whereas only 12 percent of women are likely to do so. The higher percentage of men playing lottery games online provides a couple of opportunities for brands. First, attracting men to online lottery games is the low-hanging fruit for organizations in the short term. Secondly, organizations have an opportunity to do a better job of making online lottery games more attractive to women. Examine the demographics of your contest participants, and think about whether emphasizing online tactics makes more sense if your target audience includes a significant number of women. Not everyone expects to win. Research shows that only 75% of players believe that they will eventually win the lottery. That s a great majority but it also means that one in four people play without the expectation of winning. To win the last Powerball, the winner had to beat odds of about 175 million-to-one, so perhaps our finding isn t too surprising. But what this finding reiterates is the need to communicate more than just about cash prizes to lottery players. Many consumers are realistic about their chances and may have other motivations for playing. 6 P a g e

7 When crafting communications to players or contest participants, consider that winning the lottery is not necessarily their only motivation. Speak to the other aspects of the lottery game that might attract them to play. The bottom line for organizations trying to use contests and gamification is that this market is dynamic and it continues to change. It is important to engage players regularly to get a clearer picture of who is using your product and why. Ongoing player engagement offers many benefits, including the following: Keep up with player and trends by learning what drives satisfaction of games as well as what consumers are looking for next Develop and test new products and concepts by understanding what draws consumers interest Optimize marketing and communications investments to match consumer tastes and motivation. 7 P a g e