The Lottery Corporation (TLC) published their full year results this morning in which they reported that for the full year, 40.9% of lottery revenue came from online, for which they note: Nearly half of the growth in digital share came from digital sales on which commissions are retained.
On the $200M Powerball jackpot, they note on page 16: Turnover of $320m; equivalent of 1 in 2 Australian adults purchased an entry; digital sales 47%.
On page 16 of their deck they note: Elevated personalised marketing through digital channels.
Digital features in their plans:
At least one analyst has noted today that in the second half of the financial year, digital sales hit 42% of revenue.
What all of this means for lottery retailers is: focus on attracting shoppers to your business for products beyond lotteries while serving lottery customers the best you can.
Lottery shoppers are migrating to digital purchase. I think in-store purchase will decline except for big jackpots. Act now to make your business attractive for non lottery purchases so that the migration does not negatively impact the value you derive from your business today and when you choose to exit. Lobby to limit capital investment in representing TLC in your business and push to open the currently quarantined TLC required space so you can pitch other products, like some of your competitors are allowed today.
Also, if I had lotteries in my businesses, I would be actively pitching syndicates through TheLott app to capture business outside of my shop. What TLC has enabled here in the last year in this space is terrific for retailers I think.
Click here to access all the ASX announcements from TLC.
Now, if you are still with me and reading this, thank you by the way, here is what TLC should do to better connect with and support the retailers who do currently account for the majority of their business:
- Open the TLC dedicated space and allow retailers to reasonably place other products to maximise the lottery shopper visit.
- Work with retailers on seasonal collab opportunities.
- Make it easier for people using the TLC website or app to find nearby retailers.
- Pull back on some breach criteria as the stress caused for local small business retailers does hot match some infringements.
I don’t think any of these moves would harm or damage business prospects for TLC. In fact, I suspect they would improve thanks to retailer happiness.
On the issue of suppliers to retailers also selling direct to consumers, this is a road suppliers need to navigate thoughtfully and with respect to the retailers they supply. TLC makes it clear in the presentation that selling direct is more profitable for them. As a public company, driving shareholder value is their top obligation. However, lumbering retailers with obligations that hold back the retailers is, in my opinion, unfair, socially irresponsible. TLC needs to address this.
This is the most important point you make: TLC makes it clear in the presentation that selling direct is more profitable for them. As a public company, driving shareholder value is their top obligation. However, lumbering retailers with obligations that hold back the retailers is, in my opinion, unfair, socially irresponsible.
The growth of digital lotteries sales is clearly gaining speed. I worry about the lack of investment in the technology of the existing franchise network. Recycling outdated computer hardware well beyond its useful life certainly assists in converting in store customers particularly in times of breakdowns during big draws.. Compensation for any down period is never forthcoming. The Lott seem to take their gaming responsibilities very carefully. I wonder when they will take their franchisor legal obligations as seriously.
Steve, in the FY2023/24 results docs I read they have investment planned for retail tech. Page 24: Deploy new retail terminals across our Lotteries and Keno networks to improve our CX.
I think they need to look at what they impose on some retailers while allowing other retailers greater flexibility. You (retailers) need more flexibility to assist with business sustainability.
I agree with your suggestions Mark. If only the lott would too. They are a selfish business. I need them but they hurt me.
I think it’s ridiculous that The Lott requires newsagents to spend a bunch of money on what is effectively marketing for The Lott when many other businesses (even small businesses such as independent petrol stations) don’t have to do that.