While cash prizes rule the lottery industry, experiential prizes are often an intriguing alternative.
By Patricia McQueen February 16, 2024 NASPL Insights Online
It’s human nature – confined as never before due to the pandemic, people have been spreading their wings far and wide ever since. Record numbers of travelers are still hitting the highways and airports, eager to visit new places and experience new wonders. In the meantime, lotteries are feeling the pressure as the big jackpots don’t attract player interest as easily as they used to. As a result, lotteries continue looking for new ways to build excitement for the games and their prizes, and experiences represent one path forward.
“Experiential prizes have been offered throughout the Pennsylvania Lottery’s history,” says Kara Sparks, the Lottery’s Director of Products. “Their popularity rises and falls with cultural trends and the economy. I’m happy to say that interest in fun and unique experiences is on the rise, especially after the pandemic.”
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Many lotteries would agree. “Today’s young adult consumers are less motivated by expensive ‘things’ and more motivated by desirable experiences,” adds Quinn Dossett, the Louisiana Lottery’s Vice President of Marketing. “They’ve grown up with social media and enjoy the power of social currency. They want more than to be entertained; they want to BE part of the entertainment and they value the exclusivity of the experience. Lottery marketing efforts should aim to make players the center of the activity and provide the ability to share experiences in real time rather than simply participating as a bystander.”
To learn more, we asked lotteries about experiential prizes, and received more than 30 responses to our survey. Most of the respondents offer these types of prizes to some degree. After all, experiential prizes can grab the attention of a wider audience, perhaps bringing in new players. For a chance to win an exclusive opportunity with a popular musician, for example, or meet star players in major league sports teams, fans might try their luck at lottery play for the first time.
These prizes can also attract media attention, providing media outlets with good local stories at a time when giant jackpot prizes don’t have the same power as they used to. Some lotteries even noted an added benefit – experiential prize winners may be more likely to share their lottery win than if they had won a large cash prize.
Only a handful of the responding lotteries indicated that they don’t usually offer experiential prizes. In some cases, the reason is simply a resource challenge – staff are too busy with other projects to even consider something out of the norm. In others, the local market simply responds better to cash prizes and experiences fall flat. Or there may be concerns about players needing to cover taxes on the prize value (some lotteries cover any taxes due), or possible complications if an experiential prize winner owes child support in states where lottery payouts take a back seat.
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Of the American lotteries offering experiential prizes, most use complete experience packages provided by vendor partners. The prizes and promotions might be offered in only one jurisdiction, or they might be linked to multiple lotteries across the country. The most recent example of the latter was Living Lucky with Luke Combs, a second-chance promotion which culminated in early February with a prize package that included a private concert experience in Nashville. Provided by Atlas Experiences, 19 lotteries participated in the promotion, with 167 individual prize winners among them. “It’s always exciting to witness the innovative strides our vendor partners in the industry are taking with experiential games, reshaping how we engage and interact with our players,” says Cindy Polzin, Director of the Wisconsin Lottery and current president of the North American Association of State and Provincial Lotteries.
Although many lotteries have had great success offering experiences, they also know that cash is and always will be the preferred lottery prize. That’s an important reason why many lotteries combine an experiential prize with plenty of spending money. The Florida Lottery, for example, is one of many respondents that have been successful with adding cash to experiential prize packages – it incentivizes players to participate and even provides publicity opportunities for the Lottery. Similarly, the Georgia Lottery notes that experiential prizes seem to be more appealing if they include participation in an event or show with an opportunity to win cash (such as Wheel of Fortune and The Price is Right).
What about seemingly the best of both worlds – an experiential prize with a cash option in case the winner doesn’t want the experience? That’s not very common among lotteries, partly because some of the blockbuster experiences cannot be otherwise purchased at any price; how would they be valued? More importantly, for those lotteries that have offered a cash option for a trip or other experiential prize, in the end most winners have taken the greenbacks. So what’s the point in offering that option? There generally isn’t one, and the majority of responding lotteries don’t offer cash options.
They generally have the sentiment expressed by the North Carolina Education Lottery, which doesn’t offer cash options for experiential prizes. “One of the reasons that we offer experiential prizes is for that once-in-a-lifetime opportunity for our players,” says Randy Spielman, Deputy Executive Director of Product Development and Digital Gaming. “We believe this helps reinforce how much fun it is to play the Lottery.”
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In contrast, the Pennsylvania Lottery is among the few that tries to choose prizes and promotions that facilitate a cash option. They also pay estimated taxes on the experiential prizes. “The Lottery’s intent is to award the full value of the prize and cover all costs to prevent the player from having to diminish the value of the prize,” explains Sparks. Yet they know that in the end, not everyone ends up choosing the experiential prize. “While there are some winners who take the cash option, that doesn’t discount the appeal of a dream experience and its power to attract, entertain and delight players.”
If a lottery doesn’t offer a cash option, it may allow an experiential prize to be transferred to another person of the winner’s choosing. There may be other exceptions that prevent a winner from forfeiting an experiential prize, but they aren’t common. In rare instances, for example, the New Jersey Lottery has provided the value of the prize in scratch-off tickets; most recently for a Meat Up field promotion last summer conducted in partnership with the food truck vendor Johnny Pork Roll for The Jersey Debate instant game. One winner was unable to use the prize due to specific circumstances, so scratch-off tickets were provided instead.
The Missouri Lottery, which has a long history of offering experiential prizes with its second-chance promotions, handles the situation differently. When entering a promotion, players simply choose whether they want the indicated cash or trip prizes, so they are entering only for the version of the prize they want.
A Range of Experiences
Of course, “experiential” can mean many things. The British Columbia Lottery Corp., for example, generally considers any second-chance promotion as experiential in nature. That’s because by design, these promotions require players to engage with a lottery to participate, and that provides an experience beyond simply scratching a ticket or matching lotto numbers. While that’s true enough, a typical experiential prize includes more, much more.
“Our North Carolina players have jumped for joy after winning a million dollars on national television, played for big prizes on The Price is Right games in Las Vegas, and strapped in for a wild ride in the pace car at a NASCAR race,” says Spielman. “These are moments some players would only be able to experience through the lottery.”
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Add in an almost endless variety of participatory prizes available through sports sponsorships and trips to destinations far and near (there's increasing interest in local travel prizes), and there’s something for everyone.
A new experiential bar is set with the Texas Lottery’s “edge of space” prize with Space Perspective. Certainly, this available prize has already garnered considerable media attention, unlike most other experiential prizes. “We are always looking for unique and extraordinary prizes, and based on the recent surge of private companies offering space travel options, we thought it would be a great opportunity to offer an incredibly unique experience like space travel to our players,” explains Lottery Operations Director Robert Tirloni. To make it happen, Texas Lottery officials challenged industry vendors to come up with a second-chance promotion that featured a trip to space. Alchemy3 was able to partner with Space Perspective to bring this idea to reality for Texas Lottery players via Pollard Banknote.
Time will tell where the industry goes from here, but as you will see in our accompanying roundup, experiential prizes can provide memories of a lifetime that winners never dreamed possible, and therefore are often valuable marketing tools for lotteries.
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