On the ball: The digital lottery rise

Next year will mark 25 years since the National Lottery first launched in the UK and seven jackpot winners each scooped £800,000 in the inaugural draw watched by a TV audience of 22 million. Hosted by Noel Edmonds, the Camelot-run game ushered in a new era of gambling, much to the chagrin of bookmakers, and Saturday night draws in BBC1’s prime time slots became compulsory viewing as lottery fever gripped the nation in 1994.

While clutching their paper tickets, armchair viewers even religiously listened to the ambiguous predictions regarding future winners trotted out by ‘fortune teller’ Mystic Meg hunched over a crystal ball.

Despite the National Lottery’s appeal waning somewhat among the public since those heady days, it’s currently the world’s sixth-largest lottery, racking up sales of around £7bn a year and awarding £30 million each week to good causes.

It’s also an extremely well-known brand and National-Lottery.co.uk is one the most-visited ecommerce sites in the UK. Today, around three-quarters of all tickets are sold in corner shops, supermarkets and filling stations up and down the country. The remaining share comes from digital channels, which are experiencing healthy growth.

As part of a wide-ranging strategic review announced last year, triggered by the fact total sales slumped almost 9% to just under £7.6bn for the 12 months to 31 March 2017, one of the four key pillars aimed to ensure Camelot offered an upgraded digital capability (the other three involved improving the range of games, an enhanced retail offering and reinvigorating the National Lottery brand).

It’s the upgrade to the front- and back-end of the digital off erring that partly explains why revenues in National Lottery’s digital channels for H1 of its financial year grew to a record £831.4m – an increase of £77.4m.

To put it into context, digital sales were £713.8m in H1 2015/16. That’s a 16% increase. Moreover, mobile sales grew by £99.8m to hit an all-time high of £431.6m for H1 of its fi scal year – a 72% leap over H1 2015/16 when handheld devices racked up a shade over £250m in sales. Indeed, mobile represents the lion’s share of the growth witnessed on the digital side of the business. “Mobile is hugely important because you have to reflect people’s shopping habits,” says Camelot’s senior manager for digital strategy and planning, Chris Hodge.

“While digital sales have been on a pretty steady increase over the past five to 10 years, mobile sales have really exploded over the past five years or so – and much of that is down to the major new online and mobile platform that we launched back in September 2014.”

He adds: “It was really the new platform that transformed the way players interact with National Lottery games across all devices – especially on mobiles where, for the very first time, it enabled players to play Instant Win Games – and we’ve continued to build on that.”

Ticket to ride

The National Lottery’s digital division boasts 10.5 million registered players – more than any lottery operator in Europe. Mobile, which accounts for 50% of all digital sales, benefited from the roll-out of a full version of the lottery’s Android app late last year (Android-powered smartphones occupy around a 40% share of the UK market).

“[This] instantly made our games available to play for millions more smartphone smartphone users,” Hodge remarks. Smaller developments, such as TouchID for iOS users, have helped with retention. Meanwhile, Camelot has introduced an improved game range and mix, including giving the Instant Win Games (IWGs) product a makeover and rolling out more games to keep things fresh and players interested.

On the occasions where there are rollover draws, the IWGs attract a notable uplift in play, creating ideal cross-selling opportunities for Camelot. As mentioned earlier, three-quarters of sales are physical purchases. Yet many of these retail players choose to check the results and whether they have won a prize by going online or by fi ring up the app.

So the integration of a QR scanning function within the app – bridging the gap between retail and online to create a better omni-channel experience – has proved particularly popular with players. Being able to scan their pink tickets, much like high street bookmaker companion apps allow punters to scan betting slips spat out by in-shop SSBTs, was a feature lottery players had been calling for.

“It was primarily aimed at our existing retail player base to make it easier for them to check their tickets – particularly people who buy multiple-line tickets for multiple weeks,” says Hodge. “Because it was a case of meeting a demand, we knew it would be popular, but it’s been far more popular than we ever could have anticipated. So, it’s really about looking for similar opportunities like that – initiatives that both bridge the gap and give players something that will be genuinely useful to them.”

Naturally, though, Camelot’s back-end systems have to cope with huge spikes in traffic as the cut-off points for ticket sales approach, particularly on Friday (EuroMillions) and Saturday (Lotto) nights. On the big draws, such as when EuroMillions jackpots breach the £100m mark, hundreds of tickets are sold per second online and through the 45,000 retail terminals.

“On digital, we do encourage people to get their tickets early, and we also stagger marketing emails and app push notifications, but we do sometimes see delays caused by the huge volume of traffic in the lead-up to the 7.30pm cut-off when the jackpot is really huge,” Hodge says. “All we can do is continue to ensure our systems are as robust and secure as possible.”

Often, it’s direct communications from the National Lottery that drives that traffi c back to the site or app, Hodge explains. “If someone gets an email from us saying they’ve won a prize on Wednesday’s Lotto draw, they’ll need to log in to their account to see how much they’ve won – for security reasons, we never tell people how much they’ve won in the email itself – and then they might withdraw some of their winnings, but keep a bit in there to buy a ticket for Friday’s EuroMillions draw or to have a go at an Instant Win Game that has caught their eye.”

For many years, the National Lottery was the one and only lottery for UK players. Now, though, it is facing mounting competition from online-only bet-on lottery operators like Lottoland. These so-called synthetic lotteries are going after online players, particularly those who rarely set foot in a corner shop to purchase a ticket, although they can’t take bets on National Lottery games or EuroMillions from UK consumers.

Instead, they lay bets on overseas lotteries. While National Lottery players like the fact a portion of their stakes go to good causes, some have had their heads turned by bet-on-lottery brands. Then there is the competition from what Camelot CEO Nigel Railton has described as “industrial-scale society lotteries that operate on a national basis”.

These include the Health Lottery and the People’s Postcode Lottery among others. The problem for Camelot is that by law the National Lottery has a strictly limited marketing budget. “These companies come nowhere even close to approaching our revenue, but they are regularly outspending us on advertising and marketing,” Hodge says.

“This causes our ‘share of voice’ to decline, but it also means that we have to pay more online to maintain our search terms. To help combat this [competition], we’re continually looking to improve our experience.”

It’s also about freshening things up where the games are concerned. Subject to approval from the Gambling Commission, Camelot plans to launch a brand-new annuity game in Spring 2019 with a top prize of thousands of pounds every month for 25 years (exact prizes and the cost to play have yet to be decided). “They appeal to people who dream of lifelong financial security, rather than just big, one-off jackpots,” Hodge states.

“So, this is all about offering something for everyone, no matter how they choose to play – whether on a laptop, on their mobile or in a shop – with prices, chances to win and prizes to suit different tastes.” Yet there’s no escaping the fact the National Lottery has endured a few tough years of late – some of Camelot’s own making.

For a start, doubling the cost of a Lotto ticket from £1 to £2 in 2013 and increasing the number of balls from 49 to 59 two years later drew criticism. Then, in August this year, Camelot was fined £1.15m for a number of failings, including a glitch with the mobile app that showed winning results as non-winners. This followed a £3m fine linked to a fraudulent pay-out.

And there was also a DDoS attack last year that paralysed the website and app for 90 minutes ahead of a Saturday night draw. Camelot’s licence to run the National Lottery is due to expire in 2023 and there are sure to be plenty of parties interested in taking over this prized and established asset.

So Camelot knows it needs to keep iterating the retail and online channels – especially the latter – to try to grow the products and also fend off competition from bet-on lotteries, online sports betting, bingo and casino. The myriad of online gambling options available within arm’s reach these days is a far cry from that pre-egaming era of 1994.

Live Lotto draws were axed from BBC1 in 2017 and switched to iPlayer – a reflection of changing times and dwindling interest in watching the actual draws – although ITV poached the show from the Beeb earlier this year. And while Hodge says there is no distinguishable difference between online and retail customers in terms of demographics, there’s no getting away from the fact that staying relevant with the public going forward will rely on appealing to younger, mobile-focused players.

So whether its new omni-channel features or overhauling the desktop and mobile products, digital is sure to remain a top priority for Camelot. “Although our continued digital success is great news and something we’re very proud of, not least of all because of the huge amount of money it raises for good causes, it’s not surprising considering it’s been one of our key focus areas and something we’ve been working really hard on,” Hodge concludes.

More importantly, continuing the “impressive” and “astonishing” mobile growth on the back of the strategic review could be key to the National Lottery rekindling some of the lottery fever that swept the UK a quarter of a century ago.