A hundred days since taking over the operation of the National Lottery on July 5, Johann Schembri, founder and CEO of IZI Group plc provides insights into the operation of National Lottery and the opportunities that lie ahead.
What can you tell us about the first 100 days at the helm of the National Lottery operation?
This year has been a watershed for National Lottery plc. The preparation for the takeover of the national lottery, in what is considered as one of the fastest technology and operational turnarounds for any national lottery operation in the world, has been very intense due to the short window we had to implement the full system.
Nevertheless, we had a meticulous plan charting the path from award to launch with very little margin for error. The proof of our preparation was the achievement of our first milestone when we successfully migrated the National Lottery operation on July 5 without a single day of down-time or delay. I am extremely proud of my team: despite the complexities of the transition, we managed to handle a very smooth process thanks to our dedicated employees and the cooperation we found from our agents.
Throughout these 100 days, we have worked towards attaining admission as a regular member to the European State Lotteries and Toto Association (EL). We are pleased that our efforts have been recognised by EL as attested by the fact that the executive committee of EL approved our application to become a full member in record time.
We are following a well-crafted plan to ensure that we re-engineer and deliver to the market the best lottery experience possible. Albeit in our early days, we are extremely encouraged by the market feedback in general, but the journey is a very long one and we have still a long way to go to fulfil our aspirations and the overall performance of the business.
At its launch, National Lottery plc promised to introduce several changes to the lottery market. Can you describe some of these changes and how these changes have been perceived by the local market?
At the core was our vision to bring the national lottery closer to the public, through a product offering that is more compelling and delivered under a brand that is truly local.
Our promise was built over months of prior market research, in which we engaged with people from all walks of life to understand better what kind of national lottery they wanted. In many instances, the changes were quite notable, and our challenge was not only to implement the changes over a short time but more so to communicate the benefits of these changes.
Case in point, in the game of lotto, undoubtedly the most popular National Lottery game with nearly a 100-year tradition, we introduced for the very first time a Tuesday draw, and we eliminated all the capping on winnings that the previous operator had maintained since 2004. These changes, alongside a new brand image for the game and a more efficient fulfilment process in the shops, have been very well received by the market as we continue to experience unprecedented growth in this game.
We also made subtle changes to the Super5 game itself while we introduced another two add-on games to the Super5 game draw. These include the Super5 Plus game, providing a second-chance draw to all players, as well as Super5-4-3-2-1 which essentially allows customers to play a fixed-odds lotto game on the Super5 draw. Once again, both products are also showing encouraging results even though they are completely new to the market.
What have been the most concrete benefits for consumers over the first 100 days of operation?
Players typically aspire, or better still, dream of a big win that could change their lives and that of their families or friends. Our goal since the very start was to transform this aspiration to reality for as many players as possible.
While entrenching stronger responsible gaming provisions, we have made important changes to the prize structures of most of the games and this has translated into
bigger wins for players, without the previous unfair capping practice.
We are glad to have distributed approximately €13 million in prizes over these 100 days, a national record, including two jackpot wins in the Super5 game, a winner in the fixed Lotto Quaterno jackpot of €500,000, as well as multiple winners in the top-tier prizes of all the other product categories.
What about new games?
Introducing new games to a market with an already very rich selection of games is not an easy task and needs to be managed well. However, we did introduce a brand-new game and will be reintroducing other games later in 2023. The introduction of Pick3, a digit game that is drawn twice daily, is gaining popularity because of its simple play format.
Customers can pick three numbers from 0 to 9 with the intent to match their numbers with those drawn. Picking the right three-digit combination in exact order earns 600 x the stake, providing very generous returns to players. We are confident that as the market becomes more accustomed to this product, it will become very popular indeed.
We have also created a new brand name for the traditional Keno product, but essentially retaining the game experience in its past format. As was expected, FASTKENO is proving to be a very popular product in the market.
What are we to expect in terms of product development going forward?
When we took over the national lottery operation, we found out that the scratch card category was grossly underserved. Malta as a market ranked last in terms of sales of scratch cards per capita in all of Europe and our goal was to grow the market to European benchmarks.
The market for scratch cards is quite complex and requires a sustained investment both in product and distribution to reach the intended targets. In view of the importance of the scratch card market within the operation of the National Lottery, we took a conscious decision to plan the launch of this service for Q1 2023.
Moreover, in the next 18 to 24 months, we expect to introduce another two products that according to our market research will prove to be very popular. These include a multi-jurisdiction lottery, as well as the reintroduction of the traditionally popular Tiritombola.
What do you consider to be the three most challenging factors that you would like to overcome soon to continue attaining market growth?
The size and complexity of the operation, while providing our group with unprecedented growth opportunities, also presents itself with several exciting challenges, some intrinsic to the operation itself and others that are inherent to the external environment.
Firstly, the lottery operation like any other mass market operation, requires an efficient and strong distribution network to provide unencumbered access to the products of the National Lottery. When taking over the national lottery operation, we found a mix of very efficient and entrepreneurial agents to others that operated at sub-optimal levels of efficiency.
Our foremost challenge now is to improve markedly our distribution efficiency levels through a mix of improved processes and the acquisition of well-located retail stores. Moreover, we are working very hard to make all lottery products available online. This project is earmarked for Q2 2023, when players will be able to play the games of the National Lottery online via ‘lottery.mt’.
Another challenge we continue to face is related to the illegal distribution of lottery products, especially fixed-odds products such as lotto. Millions of euros are played each year on illegal lotto to the detriment of the local coffers and our community. We will continue to work closely with the authorities to eradicate these illegal practices and ensure that the state receives its dues on any local lottery games.
The third challenge we are facing is that of bringing change to what essentially is a traditional market. Our communication efforts are addressed to create awareness and interest in the games of the National Lottery. We are in this for the long haul and are confident that the market will react positively to the changes we are proposing, as these are all focused on improving the customer experience and bringing to the fore a diverse product portfolio.