Cold Cash – Not Hot Ringtones – Will Attract More Lottery Ticket Sales

The April 1st Wall Street Journal reported on a business deal to link the lottery and music industries. Because it was April Fools’ Day, I almost thought the whole idea to be a big joke.

“In an unusual deal that links two ailing industries, EMI Group Ltd. will provide music and memorabilia for new instant-win games designed by Pollard Banknote Ltd., which runs lotteries in 45 states and territories around the world,” Ethan Smith wrote.

“Pollard, of Winnipeg, Canada, is creating a line of music-themed, scratch-off lottery games that it is currently marketing to state lotteries,” the Journal reported. “In the new games, sattamatka players can win either cash or prizes such as album downloads and ring tones.”

That’s right: it is no joke.

With 26 years of working in the lottery industry, I believe I am qualified to state in no uncertain terms that lotteries partnering with the music giant, EMI Group Ltd., to provide prizes of music and memorabilia for a new instant-win scratch-off ticket game is one of the worst ideas yet.

“The idea is to lure younger players to a pastime that traditionally has appealed to people who are around retirement age,” the Journal reported. Doug Pollard, vice president of lottery management services at Pollard went on to tell the newspaper, the demographic “is getting older every year. That’s been one of the big challenges.”

First, let me just say that it is irresponsible and reprehensible for state lottery officials to entice young people to gamble. I also know through interviews and research that people buy lottery tickets to win money not prizes — especially not music, most of which can be downloaded free on the Internet.

Pollard told the newspaper that “after growing consistently by around 8 percent annually, lottery-ticket sales fell sharply in many states during the second half of 2008.”

When lottery ticket sales decline, lottery officials try desperate means to reverse the decline — usually by changing the number field and increasing the odds against winning. They may also alter the division of the prize pool so that the greatest percentage of money in the prize pool goes toward paying the first prize jackpot, leaving very little money for the other prize categories. Both moves are bad.

Lottery players do not like to have the number field of the game they play changed or tampered with. Germany has had the same successful 6/49 game going for more than five decades — since 1955. Lottery officials generally have an incorrect opinion of their ticket buyers, thinking that they all want to chase huge jackpots. For that reason, the prize pool is divided in such a way that every game is a jackpot-driven game.

Now that every lottery state has either Powerball or Mega Millions with huge jackpots, the other lotto games the state offers should have the greatest percentage of the pay-outs go toward the lower tier prizes, not the jackpot.

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