program plans

You recently received the latest information about how Lottery plans to manage the VLT program as we shift from crisis response to a stable, long-term, and predictable approach.

pandemic losses

The global pandemic led to a nearly $500 million loss of Lottery revenue over the past two years. Supply chain issues, retailer closures and access to capital all contributed to a disruption of our operating model – forcing Lottery to consider short- and long-term mitigation strategies. The most visible action we took was pausing the acceptance of new Video Lottery applications; essentially freezing our portfolio of retail locations and the number of terminals within them.

focusing on key areas

While the pause on new Video Lottery applications allowed Lottery to focus on supporting current retail locations, it’s not a long-term solution. As the largest slice of our revenue pie, Lottery must ensure the sustainability of our Video Lottery games.

Over the coming year, Lottery will focus on these key areas:

• Continue replacing terminals to ensure a good mix of options for players, to enable new play features, and to minimize down time from older models.
• Reopening retailers who self-suspended over the past year (contract abeyance)
• More actively managing the VLTs we have in the field; first by looking at the per-terminal average weekly dollars played minimum of $2,667 set in Provision 3.1(e) in the 2020 Retailer Administrative Rule 177-045-0030(1)(c).
• Developing a dedicated capital fund and replacement cycle for VLTs to add certainty for Lottery, retailers and our suppliers.

So what’s this mean to me?

In the short term, it means the Lottery will continue replacing obsolete terminals across the state, and we may remove one VLT from retailers well below the minimum revenue thresholds (single VLT retailers won’t be impacted). This move, combined with stepped up refurbishment efforts and new VLT purchases should allow us to balance immediate inventory needs, while preparing for the future.
Until we have more information on long-term VLT funding, availability and replacement cycles, the freeze on new location applications and net new terminals at existing locations will remain. Look for quarterly updates on our progress starting in the first quarter of our next fiscal year (July 2022).