“state lotteries are at an inflection point, and while the choices are not easy, the results from...
TRANSCRIPT
“State lotteries are at an inflection point, and while the choices are not easy, the results from moving toward best practices and embracing change would be well worth the investment.”
From 2009 Frost & Sullivan report
ELP Group ProjectNancy Williams, David Kan, Ron Jackson, and Sandy BeCoats
“If it doesn’t make money, it doesn’t make cents.”
Outline
• Team Assignment• Our Strategy• Financials
Team Assignment
• What are the biggest issues facing the Tennessee Education Lottery (TEL)?
• Looking at the corporation’s business what does management need to accomplish over the next five years?
• How can the corporation increase sales and raise more dollars for the programs it funds?
Issues Facing the TEL
• Increase proceeds to fund scholarships• Improving the quality of TEL retailer
base• Minimize disparity between instant and
online sales
Business Plan
• A multi-faceted plan for the next five years
• Expansion of sales channels• Taking advantage of emerging
technologies
Strategy
Presentation:• Ticket Checker via Smartphone App• 2-D Barcodes on Instant Tickets• New Business Model for Big-Box Locations
Manned Kiosks Self-Service Lottery Kiosks Vouchers
• Predictive Ordering System
There’s an APP for that!
• Several smartphone APPs already scan barcodes
• Players can scan tickets to determine winners, which reduces retailer fraud
• Communicate through a web service to lottery host system to validate tickets
• Reduce cost of purchasing ticket checker terminals
“Big-Box” Barriers To Entry
• Not enough resources to manage inventory
• Better tracking of inventory
• ROI does not justify labor costs
“Big-Box” Concept
• Manned In-Store Kiosks
• Self-Service Lottery Kiosks (Unmanned)
• New Corporate LSR position
• Vouchers to redeem winnings
Manned Kiosk
• Pre-determined store locations
• Staffed by entry-level lottery associates
• Evening and weekend coverage
Successful Business Models
Self-Service Kiosk
• Combines successful business models
• Offers online sales, instant sales, validations, and ticket checking
• Serviced by Corporate LSR
• Redemption of cash vouchers at any cash register
2-D Barcodes
Vouchers
Manned Kiosks
Gross Sales $5,500,000
Free Tickets ($600,000)
Net Sales $4,900,000
Less:
Gross Prize Expense $3,223,000
Vendor Fees $116,000
Staff/Other Expenses $228,000
Lease Commission $55,000
Estimated Return to Education: $1,279,000
Return %: 26%
Self-Service Kiosk
Gross Sales $4,500,000
Free Tickets ($500,000)
Net Sales $4,000,000
Less:
Gross Prize Expense $2,637,000
Vendor Fees $94,000
LSR/Other Expenses $90,000
Lease Commission $90,000
Estimated Return to Education: $1,089,000
Return %: 27%
Predictive Ordering System
• Web-based system used in conjunction with Tel-Sell ordering application
• Analyzes instant game variables and low-tier validations to calculate the optimal combination and quantities
• Identifies the right products, the right place, the right time, and the right amount
Predictive Ordering System
Benefits:• Provides accurate forecasting to increase
sales• Recommends chain/corporate specific
product mixes• Considers marketing campaigns• Assists with retailer training to promote
online games
Predictive Ordering System
Benefits cont’d:• Reduces returns• Reduces out-of-stock conditions• Recommends sound replenishment
estimates• Provides retailer specific plan-o-grams
Projected FY Instant Sales(using Predictive Ordering System)
% Increase
Projected Net Sales
Projected Net Gain
Projected Return to Education
Low Range (3% increase) $520 M $15 M $4 M
High Range (5% increase) $530 M $25 M $7 M
Conclusion
• Ticket Checker via Smartphone App• 2-D Barcodes on Instant Tickets• New Business Model for Big-Box Locations
Manned KiosksSelf-Service Lottery KiosksVouchers
• Predictive Ordering System
• Projected Net Return to Education of $5 to 8 MILLION annually
Q & A
If it doesn’t make money, it doesn’t make cents.