The host of the 2024 NASPL Annual Conference, the Missouri Lottery has excelled in a number of areas, including responsible gambling and promotional efforts.
By Patricia McQueen
Published September 11, 2024
It’s called the “Show Me” state, and although there are various tales of the phrase’s origins, it is now used to indicate the resolute, steadfast and discerning character of Missourians. The Missouri Lottery, however, is known for showing a few things to other lotteries for a number of years now. Its track record with promotions and experiential prizes is second to none, for example. It also provides an excellent example of progressive thinking in the area of responsible gambling, and is a prominent member of the Missouri Alliance to Curb Problem Gambling. And from a media and public information perspective, there’s a 104-page fact book that contains all the history and information you’d ever want to know about the Missouri Lottery and then some!
There have certainly been challenges over the years, such as a recent 97.5% slashing of the Lottery’s advertising budget, but current Executive Director Lester Elder has succeeded in restoring some of those funds to faithfully continue the organization’s stated mission: To help fund educational opportunities for Missouri students, support Missouri businesses, and entertain millions. “Helping public education is a good cause you can get behind, because we all have kids or family members that have kids, and it’s our future,” he says.
The dollars raised have been impressive. From inception on January 20, 1986, through June 30, 2024, the Missouri Lottery has sent more than $8.2 billion to Missouri and to public education in the state. For the first few years, proceeds went to the state’s General Fund. In August 1992, voters passed Amendment 11, earmarking Lottery proceeds to solely benefit public education. The Missouri Legislature annually determines what education programs will receive those proceeds; beneficiaries include the Foundation Program, Transportation Costs, Virtual Schools, Special Education Excess Costs, and operating costs at colleges and universities. In all, Lottery proceeds represent about 4% of the total funding for education in the state, and about 10% of what the state provides to colleges and universities.
It has all been accomplished with an eye on responsibility. Missouri was one of the first American lotteries to achieve Level 4 certification in the World Lottery Association’s Responsible Gaming Framework, and is currently one of just nine American lotteries with that designation. It was also one of the first lotteries to receive certification in the NASPL/NCPG Responsible Gambling Verification Program.
And then there are the millionaires! The Missouri Lottery has produced 708 millionaires from inception through the end of August; the largest prize ever awarded was a $293.7 million Powerball jackpot on November 28, 2012. “When I took the job, I never would have realized that so many people have won million-dollar prizes,” marvels Elder. “It’s interesting to know that we create a lot of millionaires in this industry!”
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Advertising Challenges
One of the first things Elder did upon taking the helm in November 2022 was address the Lottery’s advertising budget – or lack thereof. As recently as FY19, that budget was as high as $16 million annually, which was still only about 1.1% of sales, a relative pittance for any organization competing for consumer spending dollars but at least in line with many lotteries across the country.
Beginning in FY20, the Missouri Lottery’s advertising budget was decimated by the legislature, down to only $400,000 in FY22 and FY23. That put advertising at just 0.02% of sales, hardly a level that would help the Lottery compete in a very crowded market with 13 casinos across the state plus additional casinos, and sports betting, just across state lines in the St. Louis and Kansas City metro areas.
“One of my first challenges was to meet with all the state representatives on the Budget Committee and all the senators on the Appropriations Committee and try to find out what concerns they had with us using advertisement money and what concerns they had with lottery, and to try and rebuild that relationship,” says Elder.
How did he do that? It was basically boots on the ground, as he met with some 60 legislative members across the state. It was trying to dispel some of the typical myths about lotteries, everything from lottery being a “poor-man’s tax,” to “nobody ever wins” to “the money doesn’t really go to education.” All untrue sentiments, of course.
Elder didn’t go in trying to change the mind of anyone who disagrees with gambling in general. Rather, he wanted to remind them that in 1984, Missouri voters overwhelmingly approved a constitutional amendment that removed a previous prohibition on lotteries. Therefore it is important to manage the Missouri Lottery with integrity, in a responsible way, while meeting the wants and needs of consumers throughout the state.
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In typical “show me” fashion, he presented legislators with a variety of statistics that explain what lotteries are really about. That the average Missouri player is in the 30-to-45 age range, are at least high school graduates with some higher education, and are gainfully employed. Importantly, that only 11% of calls to the state’s problem gambling hotline are lottery related; the rest reference casinos, sports betting or unregulated gaming. All that was easy to show. The bigger challenge was all about timing. Given that he was making the case after pandemic shutdowns had given a big boost to lotteries everywhere, it was difficult to explain why sales had stayed strong even with the advertising budget slashed.
Yet in developing an open dialogue and creating trust with the legislature, Elder made it happen. The goal was an $8 million advertising budget that first legislative session of his tenure, and the Lottery ended up with $5.4 million in FY24. “That was a big step. We’re trying to utilize that money to help reverse our downward trend of Scratcher sales. Without advertising, those games were starting to decline.” Since they make up some 68% of the Lottery’s sales, that has a big overall impact. Advertising is also critical for attracting the more casual players, especially those who are interested in playing the big games only when jackpots are high.
The additional funding got put to use immediately, especially for the all-important holiday season last year and for a spring campaign this year. Even a percentage point increase in sales translates to a lot of dollars, given the dominance of instant games across the Lottery’s entire portfolio.
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Of course, the budget is still very limited compared to past years, so some older commercials were brought back and modernized to save money. And while traditional media is carefully utilized, there’s a whole world of options using streaming services, digital channels and even social media. “That’s pretty inexpensive advertising, and we’re constantly looking at new ways to get the message out there and trying to get people engaged.”
Importantly, Elder didn’t rush right back the legislature to ask for more, but is still keeping the lines of communication open and meeting with legislators in productive one-on-one conversations. “It’s important to not only meet them when you’re asking for something, but to also meet them when you’re not asking for anything, exploring any concerns or issues they might have on an ongoing basis.”
That’s especially true given the frequent changeover in elected officials. “There are always new people to talk to, so I plan on meeting with them every session. And it’s okay to disagree on things, as long as the dialogues continue. They respond well to that.”
Current games:
Instant tickets: Approximately 45 new games launched annually; $1, $2, $3, $5, $10, $20, $30 and $50.
Pull-tabs: Available only at veterans and fraternal clubs; $1, $2, and $3.
Terminal games: Lotto, Show Me Cash, Pick 3, Pick 4, Cash Pop, Powerball, Mega Millions, Cash4Life, Club Keno
Vital statistics:
Number of employees: 153.5
Number of licensed retailers: 4,756
Self-service equipment: 1,669 units
Responsible Gambling
The partial restoration of the advertising budget not only helps the Missouri Lottery reach consumers about products and promotions, it also provides an additional responsible gambling appropriation that allows the Lottery to offer more marketing support for the 1-888-BETSOFF problem gambling help line. That help line, and the website www.888betsoff.org, are part of the Lottery’s contributions to the Missouri Alliance to Curb Problem Gambling. The Alliance is a partnership between the Lottery and several other organizations: Missouri Department of Mental Health’s Division of Behavioral Health, Missouri Gaming Association, Missouri Gaming Commission, and Port Authority of Kansas City. The purpose is to educate Missourians on the potential characteristics and dangers of problem and compulsive gambling, to refer compulsive gamblers and their family and friends to free treatment through a toll-free help line, to prevent underage play, and to promote responsible gaming.
The Missouri Lottery plays a key role in the Alliance, building awareness of problem gambling and promoting the availability of free treatment options. In addition to hosting the website and the help line marketing support, the Lottery created an award-winning youth addiction prevention program (“Beat Addiction: Choose the Right Path”); provides problem gambling public service announcements for radio and television; has permanent outdoor billboards for the 1-888-BETSOFF help line and publicizes the number in numerous other ways; emphasizes the “Play Responsibly” and “Players must be 18 or older” messages wherever appropriate; creates posters, brochures and videos for the Alliance; and provides gambling awareness articles for retail and player publications.
In addition, the Lottery plays a valuable role in the planning and coordination of the annual Midwest Conference on Problem Gambling and Substance Abuse, and works with Alliance members to field requests to exhibit and present at conferences and workshops for educators, judicial personnel, prosecuting attorneys, university/college representatives, counselors, social workers, older adults and the general public to raise awareness of problem gambling issues and the free help available to problem gamblers and their families.
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Product Developments
As with most lotteries across the country, FY21 was a record-setting year for Missouri, with sales exceeding $1.8 billion. Since then, sales have held fairly steady, surpassing $1.7 billion each of the last three years. While every lottery continuously evaluates its product lines, instant games are a particular focus in Missouri. After all, they account for nearly 70% of sales.
The lottery industry – and the players – have embraced $50 instant games, and Missouri joined the mix with its first $50 game in January 2022. While that price point has done well and generates strong top-line sales, the profits don’t rise as rapidly because of higher payouts. They do have a place, however, as the $5 million top prize is very appealing.
It’s critical to balance the entire portfolio. “We still see the value of having a $1 game, because a lot of people want to try a game without spending a lot of money, even $5,” notes Elder. He pointed to constant analysis of the data, both from the Lottery’s own team and from its vendor partners. “We’re always looking at price points and seeing where we are going to get the best bang for the buck. We want to bring in new games and new players, but we don’t want to discourage players who don’t want to play the higher priced tickets.”
Missouri is offering a lot of fun instant games these days. In FY24, for example, there was Frogger. “It was our best-selling ticket in the last two years. It just went crazy; people loved it and everyone had a fun time with the marketing. It had such a unique way to play. It was a really good, strong game and I’d love to have another one or two like that.”
There should be more to come. The $5 Pink Panther Diamond Tripler debuted at the Missouri State Fair in August; it scored really well among the Lottery’s loyalty club members. And in November a Yellowstone ticket will be out to coincide with the last season of the popular television series.
The Missouri Lottery also supports fraternal and veterans organizations with its pull-tab lineup. Sold through vending machines that feature animated game displays as they dispense printed tickets, pull-tabs generated almost $138.1 million in sales in FY24. There are currently 433 pull-tab dispensers operating across 112 locations.
On the draw side, the Lottery’s newest game is Cash Pop, which launched in May 2022. Drawn five times daily, the game brought in almost $13 million in sales in FY24, about $2.5 million more than the multi-state Cash4Life. “These games are good in our portfolio, but are not really a strong push for us.”
Powerball and Pick 3 are the Lottery’s dominant draw games; which one sells more in a given year depends on Powerball jackpot runs. Mega Millions and Pick 4 are next, with Mega Millions’ relative position also dependent on jackpot performance. Club Keno, Show Me Cash and Lotto round out the draw game portfolio. Missouri also offers the add-on option EZ Match, available on Show Me Cash, Lotto, Pick 3, Pick 4 and Cash4Life.
Elder is encouraged by the work the various multi-state game groups are doing to invigorate their products, through game changes and unique branding partnerships. Earlier in his career, he worked for the Missouri Highway Patrol, and served five years as director of the organization’s gaming enforcement division. He saw first-hand how a thriving bingo industry sagged after casinos came in. “Bingo stayed the same, and people got bored with it. They wanted something different. You have to keep looking forward and looking at new ways to bring people in and keep them entertained.”
That’s the impetus behind the Multi-State Lottery Association’s work with the Powerball brand and potential new games, the planned changes to Mega Millions, and the collaboration being discussed by the Cash4Life and Lucky for Life game groups. “We’re open to look at any games that are proven to do well, games that can bring in new players, or games that we think might fit our demographics and our players,” says Elder. “We’re open to moving forward.”
He’s not necessarily sure what will happen in Missouri with a jackpot game that goes to $5, but he compares it to what has happened in the casino industry. Years ago it was easy to find $3 and $5 blackjack tables; now it’s hard to find anything less than $15 tables. It’s the state of consumer purchases these days, and after all, $50 instant games are selling extremely well across the country.
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Loyalty and Promotions
While Powerball and Mega Millions depend on giant jackpots, what constitutes a “big enough” jackpot is a moving target. For members of its My Lottery Players Club, Missouri has an ongoing promotion at the bottom end of the scale. For seven days after a Powerball or Mega Millions jackpot is hit, the “Jackpot Reset” promotion is triggered. A “buy three, get one free” offer gives players a free additional ticket when they purchase three plays of either Powerball or Mega Millions on a single ticket.
That’s only the tip of the iceberg when it comes to Missouri Lottery promotions. “We try to do a lot of retail promotions and incentives,” notes Elder. “Our sales and marketing teams work together and we’re constantly looking at ways to bring in new players and ways to excite the existing players, and a loyalty program is a great way to do that.”
Promotions with experiential prizes resonate particularly well with Missouri players. This summer, it was the “Choose Your Dream Adventure” promotion. For each $10 worth of eligible scratch or draw game tickets, My Lottery members could choose to enter the Dream Vacation drawings (three drawings, each awarding one personally-curated dream of a lifetime, valued up to $40,000, taxes paid) or the Dream Green drawings (a total of 30 winners over three drawings, each receiving $1,000, taxes paid). There were additional weekly drawings for $300 cash prizes, for a total of 700 winners. Retailers even won prizes, based on sales performance during the promotion.
There were more than 84 million entries throughout the three-month promotion period, and it was almost a tossup as to which prize players favored when they entered their eligible tickets. Over 49% of entries went into drawings for the Dream Vacation drawings, with the remainder choosing the $1,000 cash drawings. With no ability to choose a cash option for the vacation, Missourians clearly love experiences!
A new loyalty program is part of a much broader gaming system RFP that is currently out in the market, but data provided for the 13 months ending May 31, 2024, show that the monthly average of unique active My Lottery users was 87,195, for a weekly average of 21,799 unique active users. Both Scratchers and draw game tickets can be entered; a total of 51,816,325 tickets were entered, with a total value of $369,939,325. As of the end of May, there were 530,814 total registered My Lottery users.
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Looking Forward
The Missouri Lottery’s current systems contract expires in 2025, and the future will depend to some degree on the capabilities of a new gaming system and the related goodies that will come with a new contract. Suffice it to say that “modernization” is a key goal going forward. “We’re always looking at new technology and new ways of making our business better, trying to increase sales, and keeping with the times,” explains Elder. “There’s a lot of interesting technology out there, along with a variety of games that we don’t have here, like Fast Play.”
While new tools will be forthcoming, Missouri has already done well with self-service vending machines and is currently piloting digital menu boards. Vending units with display screens help attract players; among the locations with the units are Walmart, QuikTrip, and a variety of high-volume locations that simply don’t have counter space to accommodate traditional ticket displays. The latter locations are also good targets for the placement of digital menu boards. Both of these products help the Lottery stay relevant with a good in-store presence.
Beyond technology, loyalty and marketing will become increasingly important as consumer expectations about businesses change. “We’re currently looking at a new marketing strategy for this current fiscal year, and trying to craft different messaging to increase engagement. You have to keep moving forward and keep trying to think outside the box.”
Missouri won’t be able to offer every new product or technology that comes along, but overall Elder thinks the lottery industry in general is very progressive. Importantly, lotteries are willing to share. “That’s a great thing about this industry. Everybody likes to help each other.”
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