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Lottery's Marketing Methodology Will Likely Change

23 February 2000

Last Friday, the Michigan Senate Fiscal Agency released figures stating that lottery revenues have decreased so far this year by seven percent. For the current fiscal year, lottery sales have totaled over $540 million. Thus, it appears that the opening of Detroit's casinos has had a significant impact on the State lottery in the short term.

A logical step when faced with increased competition is to try new things, launch a new advertising campaign, and do whatever it takes to promote your product. However, when it comes to gambling activity in Michigan, there is likely to be new sensitivity on the part of public officials, and new pressures put on to temper any campaigns using public funds to promote any form of gambling activity.

Since 1972, Michigan has operated one of the most successful lotteries in the country. Through creative design of new games and marketing techniques, the Bureau of State Lottery has accomplished amazing results. Starting in 1987, the lottery broke the $1 billion mark in annual sales, and has generated over $1 billion a year every year since 1987. Significantly, even given the opening of 17 tribal casinos in this State, the lottery was able to have record-setting years in 1997 ($1.6 billion) and in 1998 ($1.64 billion).

With the opening of the Detroit casinos, the Bureau of State Lottery is likely to face a huge new obstacle that it may not have foreseen - and I am not talking about increased competition. The Detroit casinos have brought with them increased media attention on issues such as compulsive gambling and related mental health issues. Numerous politicians and public officials have been all too willing to criticize any type of promotional activity even by privately run casinos. Given these statements, the Bureau of State Lottery will probably face new pressures to curtail or curb creative advertising.

In 1995, after a Blue Ribbon Commission appointed by Governor Engler recommended casinos for the City of Detroit, Governor Engler stated his opposition making clear his feelings that the expansion of gambling activity was not part of his agenda. I still vividly recall leaving the Governor's press conference and getting in the car to hear radio advertisement assuring that I too could become a millionaire if I played the lottery. It is hard to imagine this kind of advertising continuing in an administration that repeatedly seems inclined to focus on the "evils of gambling."

Over the years, the lottery has consistently implemented innovative changes. The Michigan lottery was one of the first lotteries to develop a weekly-televised game show. Additionally, the Bureau has always been on the cutting edge in introducing new products that appeal to a wide range of age groups. The lottery has been very successful in marketing itself as fun and entertaining, while, at the same time, making meaningful contributions to the State's School Aid Fund.

Just a few short years ago, in 1997, International Gaming and Wagering Business Magazine named Michigan the nation's top performing lottery. The magazine commended the Bureau's creative marketing and its ability to reach the delicate balance between the often-opposing forces of effectiveness and efficiency. With shifting attitudes, the Bureau probably won't have such a free creative hand going forward. The good news is, however, that the government revenue lost through a decline in the lottery will be more than offset by the new revenue from the Detroit casinos. Unlike the lottery, casinos are not a form of convenience store gambling. Going to a casino is usually a planned night out that occurs infrequently for most people. The lottery, in contrast, provides the daily opportunity to gamble in the convenience of one's own neighborhood. This form of gaming was heavily critised by the National Impact Study Commission's Final Report, which was delivered to the President and Congress in June of 1999. The Commission's findings will likely affect the Bureau's ability to continue to aggressively market its product.

David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com
David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com