Paul’s Wall February 28         

I don’t know what the answer to this problem is, but the stakeholders of lotteries need to find some way to defend their interests.  My first thought is to point out that it’s not about lotteries per se.  It’s about the Good Causes and public service supported by funding generated by lotteries.  Other interest groups (like Indian gaming, offshore I-gaming operators, anti-gambling groups, etc.) have well-funded lobbying and marketing communications agendas.  Who is defending the interests of Good Causes?  Lotteries are more focused on channeling financial benefits back to the service of society than any of these groups.  And yet a few self-serving politicians use lotteries to burnish their image as fearless protectors of the public.  And for reasons I cannot fathom, the general media turns off its brain when reporting, so it’s these few self-righteous grandstanders who get all the press.

The thing that inspired this little rant is the bizarrely lopsided coverage of the performance of the Georgia Lottery.  The stories repeat how the funding received by Georgia’s Good Cause (the HOPE Scholarship fund) would have been higher if the prize payout percentage had not increased.  The logic being that a decrease in prize payout means more money left over for Good Causes and so ergo the simple and obvious solution is to decrease prize payout.  They repeat this mantra without regard for the possibility that a decrease in value to the consumer might negatively impact top-line sales. 

The reports refer to another state that returns a higher percentage of revenues to its Good Cause and rhetorically asks why Georgia can’t do the same thing.  The irony is that the other state used as an example of superior performance actually experienced a decline in both top-line sales and net funds delivered to its Good Cause! 

Conversely, the Georgia Lottery has produced an increase in funds to the HOPE Scholarship every single year for the past 12 years. Even when last year’s sales were flat (and whose weren’t), operational excellence and superior execution produced an increase in funding to the HOPE Scholarship.  The fact that a very small number of politicians will do anything to get headlines with self-righteous grand-standing is not shocking.  What I don’t understand is how or why reporters let them get away with it and even jump on the bandwagon to deliberately mislead their own readers.  ‘Nuf said.  Actually, not quite.

Lotteries are not invited by their legislators to form political action committees to defend their interests.  But something does need to be done to defend the interests of the Good Causes that are supported by lotteries.  Lotteries are the only operators in the gaming industry whose sole purpose is to serve the general public.  Somehow, this message needs to be communicated to the shapers of public policy and the general public.  Because it’s not about lotteries; it’s about protecting the uniquely public service mission that lotteries represent.  The expansion of electronic games and the imminent regulation of I-gaming will change the entire landscape of the gaming industry.  There will be winners and losers in the public policy battle that is taking place right now.  We need to act now to protect the interests of Good Causes. 

‘Engagement’.  New or not so new buzzword has interesting implications for gaming.  Gaming has the unique ability to engage attention and interest.  It’s long been a source of entertainment for that reason.  It has also been used as a tool to teach skills and make learning more enjoyable.  Then game theory began to be studied as it applies to strategic planning.  The next frontier may be:  “Total Engagement: Using games and virtual worlds to change the way people work and businesses compete.”

(authored by Byron Reeves and J. Leighton Read).  Their thesis is that games will be integrated into the workforce and everyday life.  The reason that the nature of work itself will be changed into a game is that engagement is the key to productivity - the theory being that work is boring and doesn’t ‘engage’; games are fun and stimulating and do engage. 

So the path towards optimal performance is to turn work into a game; or at least integrate game elements into everyday work.  Not exactly a revelatory concept.  This notion has been used for years to motivate sales teams and others to improve results.  Their point, though, is that society has evolved such that workers are less willing to be bored for any reason (including the need to bring home a paycheck); and that they are less able to adapt to boring work because of the incredible entertainment value that has been a part of their entire lives and which they now take for granted.   Combine that with the fact that our understanding of how to use games to influence states of mind and behavior has increased; and the tools and technology available to accomplish those ends have improved so dramatically. What you get is an imperative to figure out how to leverage games to engage the attention and focus of workers.  “For anyone convinced that engagement is a key ingredient of the future of work, games are the definitive model.”  I am thinking that this poses both an opportunity and a threat.  Obviously, games are our business so we should be good at creating the kind of gaming experience that will engage the consumer.  On the other hand, what will it mean to our business if everything everywhere turns into a gaming experience?  Meeting the increased expectations of the proverbial ‘millennial’ may be even more challenging than we’d imagined.      

The interesting thing about the “Virginia Outlaws ‘Illegal’ Internet Gambling” is it brings to light quite a little conundrum.  What exactly constitutes ‘illegal’ gaming? And I am not referring to the straightforward question of who has regulatory authority, states or Federal gov’t.  I’m referring to the distinction between games that involve wagering and games that supposedly don’t.  “I never underestimate the ingenuity of people who are trying to skirt the law” states one Virginia legislator.  I agree with that, but unfortunately the problem defies easy answers.  The laws are not clear, partly because the very nature of gaming is so rich with different possibilities that it can never be fully defined.  Games can include a combination of skill and chance.  Social games include the award of virtual currency.  The Swedish court, for instance, is now attempting to define whether poker is a game of chance or skill, with important implications for how it is regulated and taxed.  Obviously the conclusion will be that it’s both.  Then what?   

See you at SMART-Tech NYC!  

"Not for the Faint of Heart" Panel

(L-R) Paolo Personeni, President, GTECH G2, John Pittman, Vice President of Marketing, Intralot, Byron Peterson, Director of Sales (US), Pollard Banknote Limited, Richard Weil, Managing Director of Sciplay, Scientific Games, Tom Shaheen, Vice President of Business Development, LINQ3 - CLICK HERE TO WATCH (after you click scroll down the page to watch the video)

Speaker order: John Pittman, Rick Weil, Tom Shaheen, Paolo Personeni, Byron Peterson, Rick Weil

This video presentation is brought to you by Public Gaming Research Institute and was recorded live at the LOTTERY EXPO 2010 in Las Vegas, November 2010