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Tuesday, November 12, 2013

Lessons To Be Learned From The Illinois Online Lottery Project

At the EiG conference in Barcelona this year I had the pleasure of sitting in on a presentation describing the history and approach Illinois took  launching an interactive online version of their state lottery. It was an education on the success, misconceptions, mistakes made, and  reactions of a traditional land based gambling operation going interactive/online with their business.

The importance of this presentation went far beyond a focus on the Illinois lottery organization’s challenges and education in launching and operating an online gambling operation. Many land based US casino operators are now seriously contemplating launching online gambling or social gambling operations in the US.    Some have already indirectly launched social gambling properties through acquisitions of existing online gaming properties.  The Illinois interactive experience should be studied by all of them if the land based operators actually want to launch and run successful online gambling operations of their own.

Will Internet Gambling Negatively Land Based Gambling? - Probably the most controversially debated subject in the board rooms and management meetings of land based gambling operators is the threat posed to their land based revenues and customers by online gambling operations.  The general consensus has been that if you encourage people to play online they will not go to the casino or buy lottery tickets at the local casino or grocery store.

The Illinois lottery experiment proved that this fear was entirely unfounded. In fact,  the launch and operation of the Illinois lottery proved that there was very little overlap of online and offline players. The online players were actually new customers for the lottery. In many cases they had never played the lottery or bought a ticket at a land based location.

Creation Of The Web Site - The first attempt in creating and launching the Illinois state lottery web site was deemed a failure by the management team. The usage was low, it was hard to understand and the communication on the site was poor. The primary reason for this is that the web site was created to mimic a land based operation model and to attract a typical “land based customer”.  Neither if these approaches worked because the online customer is different from the offline customer and the process of marketing, selling and engaging online lottery players is completely different then attracting terrestrial  players.

Marketing Online For Online Consumers - The initial marketing effort by the Illinois online lottery version did not work very well. The Illinois lottery primarily used its traditional in-house marketing organization to create and execute the campaign. The result was underwhelming causing the marketing program to reconsider their land based marketing approach for online players.

 Relaunch of a Successful Online Lottery Business - In all due respect to the management of the Illinois lottery they learned from their early experience launching an online business  and were  adamant that online was an absolutely necessary channel for them.  Eessentially, they took the iteration approach practiced by most online businesses. The rule is simple; do not expect to come out of the gate with a winner, iterate, change, test and relaunch. This is in contrast to land based operations that require a large capital expenditure commitment and relatively long time frames to construct, move or change physical assets. Online lets you fail, fail often and quickly giving an organization valuable information about what works and what does not.

The Illinois lottery regrouped, discussed what worked and did not work in the first round, hired experts form outside the organization in web site designed and online marketing and gave it a go again. This second attempted proved to be very successful with a dramatic increase in visitors, online sales of lottery tickets and no downside to their land based operations.

In Conclusion  - There are several good lessons to be learned from the Illinois lottery online project.

1.) Interactive businesses do not negatively impact land based operations.

2.) Interactive business attract a new and different audience compared to land based operations.

3.) Marketing to online consumers is different from marketing to land based consumers.

4.) Building, launching and operating an online business requires a completely different kind of expertise and skill sets relative to land based gambling businesses.

5.) Failure is OK and perhaps necessary as long as you iterative to a positive outcome.

  Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes  about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.

Lessons To Be Learned From The Illinois Online Lottery Project

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