Winning Big in Oregon

Celebrating 40 years in April, the Oregon Lottery has been generating revenues for all Oregonians, and current strategic efforts intend to keep it that way.

By Patricia McQueen

Published March 18, 2025

For 40 years, the Oregon Lottery has done good things for the people and state of Oregon. It’s even built into the tagline: “Together, we do good things.” Since its inception in April 1985, the Lottery has raised more than $16 billion for its beneficiaries. Currently, more than half of proceeds (53%) help support public schools, 25.5% supports job creation, 15% helps fund Oregon’s state parks and natural habitats, 4% supports Outdoor School, 1.5% goes to services for veterans, and 1% goes to problem gambling support.

The lion’s share of that revenue comes from video lottery terminals, which have headlined the Lottery’s product portfolio since their debut in March 1992. It was a time when the state desperately needed new revenue sources to keep some programs going; as just one example, state parks were in serious jeopardy of closing. “Video lottery is really what has helped sustain many of those beneficiary organizations,” explains Director Mike Wells, who has been at the helm since late 2022 (first as Interim Director after about three years as Assistant Director of Security; he was formally appointed as Director by Governor Tina Kotek in August 2023.) “Many of our beneficiaries would be struggling without lottery proceeds.”

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He observes that Oregon maintains a robust gaming market, encompassing the state Lottery, nine tribal casinos and numerous unregulated online gaming providers. Currently, these entities appear to be competing for the same customer base, creating a cannibalization effect within the industry. In response, the Lottery’s team is working to gain a clearer understanding of the competitive landscape.

Consumer behavior indicates that players will always seek the best value or specific gaming experiences. As an example, if the perceived tax burden on Lottery-operated sports betting is too high, players may turn to alternative options. Similarly, if the game selection offered by VLTs does not appeal to them, they may seek online providers that better align with their preferences. “It’s very difficult to study, obviously, but there’s no doubt in our mind that we are losing consumers to all of the other offerings that are out there.”

Wells and others question whether other gaming providers are even allowed to operate in the market, diverting revenue from tribal entities, the state Lottery, and its beneficiaries. “It’s just never been addressed before,” he states, emphasizing the lack of a centralized regulatory body overseeing gambling in the state. Instead, policy direction is determined by the Governor’s office.

That policy direction drives the choices made at the Lottery, and a relatively new senior management team is currently studying the way forward, particularly as it relates to profitability. More on that later.

Key Accomplishments

Given the product’s role in providing revenue for key state programs and services, it’s no surprise that Wells considers VLTs to be the Lottery’s number one accomplishment over its entire 40 years. Yet that doesn’t mean they aren’t still learning about VLTs and the public’s relationship with the games.

Oregon was the third U.S. lottery to introduce VLTs, after South Dakota in 1989 and West Virginia’s initial test that began in 1990. As of early March, there were 10,559 VLTs across 2,033 Oregon video lottery retailers. VLT retailers must be restaurants, bars and taverns with liquor licenses, and there’s a limit of six terminals per location.

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That total is down quite a bit from the peak count of 12,482 in 2010. Over their first two decades, VLT revenues topped out at $895.1 million in FY2008. After a two-year decline due to the impacts of the great recession and a smoking ban in bars and taverns, revenues started growing again.

The climb was abruptly interrupted in 2020 by COVID-19, as all bars and taverns were closed for a period of time. An interesting and important lesson was learned as the industry recovered. Previously, it was assumed that VLT revenues would grow through the addition of new locations. Yet with a base of only about 10,800 machines over the past few years, revenues have grown considerably – from $966.5 million in FY19 to almost $1.2 billion in FY24.

“It was really a light-bulb moment for us to reevaluate the entire video lottery ecosystem,” explains Wells. Was there really a need for more VLT retailers and machine numbers, or was there a sweet spot for revenue optimization? “We have spent the past few years evaluating and changing the way we manage the product, finding that adding more retailers doesn’t necessarily produce more revenue. Now, we are being more strategic in the locations of our VLT retailers as we look for more successful business environments.”

By closely examining the revenues produced by VLTs at each location, and relocating those from poor-performing locations, not only are revenues improving, but the Lottery is reducing its overhead costs as well. After all, the Oregon Lottery’s own staff operates and maintains the entire system. “We continue to see revenue stability to slight growth as the VLT footprint has shrunk; all while lowering our overhead at the same time,” says Wells.

Almost three decades after VLTs changed the Oregon gaming landscape, sports betting followed suit in 2019. The Oregon Lottery actually was an early pioneer in sports betting, starting long before PASPA was repealed in 2018. The football-based Sports Action was launched at retail in 1989, and lasted until early 2007 when state policy directives changed and the product, then known as Scoreboard, was discontinued.

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Fast forward to October 2019, when Oregon launched its new era of sports betting, the fourth lottery to do so in the wake of the PASPA repeal. This time, it was entirely through an online/mobile platform, while the tribal casinos (who are entitled to offer any form of gambling also offered by the Lottery) can offer sports betting only within the confines of their casinos. That area is off limits to the Lottery’s platform, so its online network is geofenced. This structure was designed to allow the Lottery to compete with the tribal casinos in a way that met the state’s goals of balancing new forms of gambling. The Lottery can attract players all over Oregon as long as they are outside of tribally recognized land, while the casinos offer popular collegiate games which the Lottery has chosen not to include in its platform.

The Lottery initially launched sports betting with partner SBTech; in early 2022, that company was bought by DraftKings, which replaced Oregon’s sports betting platform with its own. It’s a revenue sharing agreement, whereby the Oregon Lottery receives 51% of net gaming revenue from sports betting while DraftKings receives 49%. In FY24, that net gaming revenue was $75.l million, after deduction for discounts.

Sports betting is still a growing industry, and the data indicates that there is a steady increase in both new registered users and active players, always one of the Lottery’s key goals.

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Traditional Products

While video lottery towers above everything the Oregon Lottery does, its portfolio of more traditional lottery games is also a bit different from many other American lotteries. That’s partly due to state policy guidelines against an expansion of gaming. In fact, the Lottery’s first new draw game in 14 years, Cash Pop, was launched in January only after the long-running Lucky Lines was retired to make room.

“Cash Pop is completely different than our other games,” says Tina Erickson, Manager of the Lottery Products Portfolio. That difference, and its novelty, has it outpacing Lucky Lines by a large margin after just two months. Evidence from other jurisdictions that indicates it’s especially popular with younger adults is another attractive aspect of the game.

Oregon chose to launch Cash Pop with hourly drawings from 7am to 10pm daily, at the $1, $2, $5 and $10 price points. That draw schedule is unique to Oregon among Cash Pop states, and one reason for that was to limit potential cannibalization of four-minute Keno. Another was the constant attention to responsible gambling, and the desire to have a game that offers more frequency than typical draw games, but not the frequency of Keno. Finally, hourly drawings give Oregon flexibility to make adjustments over time, as warranted. Erickson expects to do a web survey this fall to get feedback from players.

Staples of the draw portfolio are Powerball and Mega Millions, and Oregon’s own lotto game Megabucks. The latter, which made its debut a few months after the Lottery itself launched, is a $1 6-of-48 game drawn three days per week. There’s also Pick 4, the current iteration of a daily numbers game, which began in 2000 and currently has four drawings per day.

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Keno generates the most sales among draw games, with almost $107 million in FY24. The game launched in 1991, and offers an 8-spot rolling jackpot, providing a sales boost as the jackpot gets high.

Oregon is the only American lottery that offers its own “for life” game instead of one of the two multi-state games of that category. Win for Life launched in 2001; with three drawings per week, it offers a top prize of $1,000 per week for life.

Finally, there’s a very popular raffle each spring, with 250,000 tickets and a $1 million top prize.

Oregon is also different from many of its American peers in the percentage of sales generated from instant games – about 35% of traditional game sales in FY24, a far cry from the U.S. average of about 62%. Price points range from $1 to $30; the Lottery’s first $30 game, Merry and Bright, was introduced this past holiday season.

“Scratch-its really tend to be the ‘face’ of the Lottery,” notes Erickson; they are what people see in the stores. They are also the product that lotteries have the most control over – in particular, there’s no reliance on jackpots. Importantly, introducing a new instant game takes considerably fewer resources than a new draw game. “Scratch-its are pretty easy because they come and go based on their life cycle.”

Scratch-its with gaming themes are probably the most popular, perhaps given player familiarity with VLTs and the tribal casinos. But right up there are games that have an Oregon theme. Each year in late spring, there’s a game that ties into Oregon’s state parks. “Those do extremely well, and our own digital marketing team designs those tickets,” says Erickson. Crossword is another hugely popular theme in the state, with 13 such games on the market in mid-March, ranging from $1 to $20; bingo isn’t far behind in popularity.

The products team continues to look at industry best practices when considering new games, including those with limited prize tiers. “We try to do a lot of things to boost sales here and there.” One thing not in the current program are licensed games, due to their higher cost. That’s part of the Lottery’s current strategic focus on profitability across the board.

It’s a wide-ranging game portfolio, despite the state’s policy limitations. “We try to have games that are really appealing to a cross-section of our customers, but with the competition of video, it sometimes gets a little hard,” says Erickson. “We have to be realistic with our expectations.”

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Responsible Gambling

With video lottery and sports betting, two non-traditional lottery products, responsible gambling is at the forefront of just about every decision the Lottery makes. “Responsible gambling is very important to us,” emphasizes Wells. The Lottery funds a number of programs, including a hotline and call center, research, and even counseling and treatment programs for the entire state.

With sports betting the only “known play” option offered by the Lottery, there are many RG-related options built into the platform. “We’re really proud of that.”

The Oregon Lottery has a number of employees focused on RG area, led by Senior Manager of Product Marketing Stacy Shaw. They ensure that the Lottery follows all best practices and maintains the highest level of RG certification by NASPL/NCPG and the World Lottery Association. “It’s so ingrained here that it’s strange to think that not everyone does this,” marvels Wells.

Looking Ahead

As part of its current deep dive into all parts of the business, Wells and his team are focusing on how to responsibly create revenue, and a key path forward is studying profitability – it’s not always about marketing.

“Our agency strategy right now is all about getting back to the basics,” says Wells. “What are we doing well and what are we not doing well, and how we can make our current products more profitable. In my opinion, we already have in our portfolio everything that we would need to be highly profitable and create the revenue that the state relies upon.”

He sees opportunities in streamlining processes and focusing on the basics to get the most bang for the buck – mastering the fundamentals with every expenditure under scrutiny for the value it provides. This “Mission Excellence” strategy will drive the Oregon Lottery over the next few years:

Mission excellence enables us to meet state forecast expectations and prepare for the future.
Our business and operating models require a secure, technology-driven organization.
We need to address deferred maintenance costs now and plan for operating cost increases.
Business demand will continue to evolve; our strategy and financial planning approach must follow.

Wells knows that this strategy, led by the profitability goal, is a way forward to get past the current limits on game expansion. “We need to show that we’re making the most we possibly can, and then ask for help to go even further.”

He’s excited about the work being done by both MUSL and Mega Millions and will continue to explore more higher-priced Scratch-its. “We’re a little late to the game in some of these larger denomination tickets, but as other lotteries are finding too, they’re much more profitable.”

As for the Oregon Lottery’s 40 years, the main celebration is the new 40th Anniversary Scratch-it, just the second game introduced to date at the $30 price point. True to its origins, the game visuals honor the legacy of the Lottery’s very first game, Pot of Gold, complete with its classic rainbow and golden treasure. On the reverse is a brief reminder of the good things the Lottery has done for Oregon in 40 years. Offering 25 top prizes of $40,000, and a minimum prize of $40, the game will keep Oregonians celebrating in 2025, while the Lottery team focuses on keeping that pot of gold filled in the long run.

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Reflections From Long-Time Employees

Bobby Bones, Supervisor of Technical Support

Bones started at Oregon Lottery in November 1992, working the warehouse. In two years, he quickly transitioned to technical support, helping with installations and assistance for video lottery terminals (VLTs) at retailers across the state. Fiber optics was used at the time, and advancements in technology are the most striking features of his time at the Lottery.

“Technology has improved so much since back then,” Bones said. “If we were going to change the operating system of the VLT or add a game to a VLT, a technician would need to physically touch every machine being upgraded and do what we called a chip change. It took a few months for one upgrade of an individual VLT using multiple technicians throughout the state.”

Today, about a dozen games are available for players to choose from on individual VLTs, and updates are made with the touch of a button and modern technology. “Now, we can push updates to individual VLT types during a ‘maintenance’ window without disrupting the retailer during their operating hours,” he said. “This is a seamless transaction that the retailer will not notice.”

Tina Erickson, Manager, Lottery Products Portfolio

Hired just a few months after startup, Erickson began her decades of Oregon Lottery work as a word processor. “They didn’t have computers for everyone, so I was one of a group who did all the typing.” She eventually moved to administrative support, and then her talent for drawing was noticed when the Lottery brought marketing and design in-house in the late 1980s. She was part of the design team until 2005, when she moved to the products group, helping to bridge the gap between the Lottery’s field and marketing teams.

She marvels at how technology has advanced. “We started out with only printed instant tickets, and added our first draw game (Megabucks) not long thereafter. Yet one of the biggest changes she has seen is the focus on responsible gambling and how that impacts game design and development. “Every new instant game theme and design, for example, goes through a review process to make sure it’s appropriate. Stacy Shaw and her team look at everything through an RG lens

And even after nearly 40 years at the Lottery, Erickson is happy to “still learn something new every day.”