As US Lotteries Change, Australian Tattersalls Group Stands as an Example
AUSTIN, Texas, Feb. 14, 2014 – For over 130 years, Tattersall’s – now Tatts Group Limited – has run games of chance for Australians. That legacy dwarfs the 60-odd years that legal lotteries have operated in the United States; Tatts’ history could hold many lessons for the U.S. lottery industry as internet gaming proliferates and private operators express interest in state lotteries.
Tatts Group’s Chief Operating Officer of Lotteries, Bill Thorburn, told LotteryHUB that “There’s a long, long history of lotteries in Australia, and I think a well-established community view that lotteries in Australia are an acceptable low-risk form of entertainment.”
Particularly as some U.S. States weigh the option of selling government-run lotteries to private operators, Tatts Group’s success returning revenues to governments as a private operator can provide a ‘down-the-road’ type of context for opponents and supporters of privatization alike.
The history of Tattersall’s is by now a piece of Australia’s cultural heritage. Even the company’s name speaks to that fact; from the Tattersall’s Hotel in Sydney, George Adams ran his first ever public “sweeps”, issuing tickets with prizes based on the results of the 1881 Sydney Cup horse race.
Tatts Group owns, or has operating rights over lotteries in Tasmania, Victoria, New South Wales, Queensland, the Australian Capital Territory, South Australia and Northern Territory. Just one of the nation’s major lotteries, Lotterywest in Western Australia, lies outside of the Tatts umbrella, remaining under government ownership and operation.
Tatts Lotteries, as the lotteries operating division is known, is undoubtedly the nation’s largest operator. That designation was earned over the past six years or so, a period of rapid growth set off by the company’s 2007 acquisition of Golden Casket, the Queensland state lottery.
Since that deal, in which Tatts Group acquired a 65-year operating license from the Queensland government for AUS $530 million, Thorburn says that “governments [are] recognizing, perhaps, that their best role in relation to lotteries is to regulate, set the social policy agenda and collect tax, rather than being directly involved in the operation of the lottery.”
After Queensland, Tatts took control of the nation’s largest lottery in New South Wales in 2010, and in 2012 was awarded a ’40 year Master Agency arrangement’ to operate the lottery in South Australia on behalf of the State Lottery Commission. “We’ve found that handing over the operation of the lottery to an independent, non-government based entity has worked well here in Australia,” Thorburn said. Tatts success is due in part to “careful transition processes and a focus on ensuring [that] the interests of key stakeholders are recognized and met.”
“The Australian lotteries have always worked together on revenue, so national ‘Bloc’ pooling systems have been a part of the Australian lottery system for years”. Generating higher, pooled prizes has allowed Australian lotteries to build a portfolio of attractive games with strong per capita sales and a sustainable growth profile. However, “what wasn’t being captured was the operational efficiency that could be gained by combining operations and adopting private sector practices.”
Many opponents to the process of combining operations or adopting private sector practices – privatization to the American ear – argue that a private lottery operator, concerned with profits, could hurt communities. Thorburn, while discussing some of Tatts’ marketing and advertising strategy, suggested the opposite, noting the combined Tatts Lotteries business returned almost AUS $1.3 billion to state and federal governments in the prior financial year.
One of the key differences between Australian lottery operations and U.S lotteries has been the long established player registration systems for both retail and internet purchasing. Registration provides prize security and other membership benefits for players, as well as a highly-developed and direct channel by which the Lottery can communicate with and engage their players. “It’s all about getting the right message to the right player, at the right time,” he said.
This is particularly true on the internet, where Tatts has been selling tickets for its draw games for more than a decade.
Tatts’ lottery players have the ability to register for online play through ‘sophisticated’ age and location identification systems, or join the player’s club in-store. Once registered, players can choose the marketing messages they do or don’t want to receive and registration also provides them with ‘auto-play and prize security’ benefits as well as entry into targeted promotions and loyalty rewards.
Thorburn said that Tatts’ internet sales account for about 10 percent of their total revenues and growing. Federal regulation prohibits Tatts from selling ‘highly interactive’ instant style games online, he said, but regardless, the majority of players still buy their tickets at brick-and-mortar retailers – good news for U.S. retailers feeling threatened by internet sales.
Though capturing new demographics is always a goal, Thorburn said the internet system is also about convenience and offering players a true multi-channel experience. As identified in the 2013-14 Winter Edition of the World Lottery Association Magazine, “leveraging [player] data [has allowed Tatts] to provide better services, better products, more relevant offers and more personalized marketing.”
As U.S. State lotteries debate the merits of ‘selling out’ to private operators; of establishing systems for internet sales and, in some places, whether a lottery should exist at all, an important consideration must always be the revenue lotteries generate for good causes.
“Lotteries worldwide have a special place in the gaming industry”, Thorburn said. “Lotteries have a great heritage of community support; they have been associated with funding good causes for years …. and I’m sure there’s a bright path for the industry to maintain that close community connection under a variety of operating models.”
Chief Operating Officer – Tatts Lotteries – Bill Thorburn
Bill Thorburn is one of the lottery industry’s most experienced lottery executives. He joined Golden Casket Lottery Corporation 18 years ago as the Chief Executive Officer and has since integrated the rest of the Group’s Lottery operations into the Tatts Lotteries Operating Unit. Bill is now responsible for leading Australia’s largest lottery operation with sales of more than A$4 billion across seven jurisdictions.
Bill is in the unique position internationally as one of a handful of lottery industry leaders who have managed the operations of a government owned lottery and then successfully transitioned that lottery across to a private operator model. He has led a number of lottery integrations including the transition of Golden Casket, NSW Lotteries and more recently SA Lotteries.
Prior to joining the lotteries business, Bill gained wide experience in the Australian gaming and wagering industry at Queensland TAB, now known as TattsBet and also part of Tatts Group.
In 2010 Bill was inducted into the Lottery Industry Hall of Fame