By Paul Jason

One basic trade-off seems to be between the pressure to maximize short-term profits and the need to position our organizations for the future.  In a recent roundtable discussion with a U.S. lottery director, the C.O.O., and others, one person observed that Internet gaming initiatives haven’t really contributed to the bottom line yet.  The C.O.O. responded with a quote from a hapless prognosticator of the late seventies who stated “I can’t understand why anyone would want to clutter up their workspace with a desktop computer”.  Limited resources, tough calls to make … Invest in those things that will help you make your next quarter numbers, or invest in the initiatives that won’t begin to pay off for another 18 months or even longer? 

It was not long ago that there seemed to be an almost unlimited demand for gambling services.  No matter how rapid the expansion of casinos and other gaming services, demand continued to exceed supply, ensuring success to any well-executed growth strategy.  Sort of an “If you build it, they will come” world.  The past year has been a huge eye-opener on many fronts.  Earlier in the year, there were indications that some markets may actually be reaching supply/demand equilibrium, causing a pull-back on capital investment.  And now we are confronting a challenging economic environment, extremely stingy capital markets, increased competition making it hard to hit the top line, and customers expecting bigger prize payouts making it hard to hit the bottom line.  And in the face of all that, governments and other stakeholders expect lotteries to increase their contributions to education and other Good Causes … Yikes! 

The financially and strategically conservative approach may buy time, but will ultimately leave the operator in a weakened position.  “Sticking with what works”, trying to wring more mileage out of promotional and operational strategies that have served well in the past but you know need updating or even complete overhaul, may seem to be the best way to maximize profits in the short-term.  But we know that leaves us vulnerable to our competitors who are working hard to change and reshape the gaming environment.  We need to be the ones who set the new standards, who take action to innovate and move decisively in new directions and proactively change the rules of the game.  It does appear that the competitive landscape of the future favors the market leader.  As the overwhelmingly dominant market leaders today, lottery operators do hold the inside track. But we need to invest in a future that is responsive to the game styles and preferences of a younger generation, that integrates new channels of distribution, and leverages new phenomena like “social networking” that are likely to change the migratory habits of our customers.  

Again, I’m just running some ideas up the flagpole - I welcome feedback (especially disagreement and criticism!) from you on these or any topics. 

Thank you all for your support.   I welcome your feedback, comments, or criticisms.  Please feel free to e-mail me at pjason@publicgaming.com.