The iLottery services are scheduled to be available to players in the fourth quarter of 2014. Increased sales from the iLottery services are projected to increase the Michigan Lottery’s contributions to the state School Aid Fund by about $480 million over the next eight years.
“The Michigan Lottery is continually changing and evolving to meet the demands of its players and stay competitive in the entertainment marketplace. In today’s society, more and more consumers want to do business online and that includes Lottery players. Adding iLottery services as an option for players keeps the Michigan Lottery offerings up to date and supports its efforts to increase its revenues and provide additional funding to the state’s schools,” said Tom Weber, the Lottery’s chief deputy commissioner.
In the 2012 fiscal year, the Michigan Lottery contributed a record $778.4 million to the state School Aid Fund.
Since it began in 1972, the Lottery has provided more than $17 billion to support the state’s public schools. More than 97 cents of every dollar spent on Lottery games is returned to the state as contributions to the School Aid Fund, prizes to players, and commissions to the retailers.
The Lottery expects that offering its existing games through digital channels will result in incremental sales growth. That anticipated growth is projected to increase the Lottery’s contributions to the state School Aid Fund by nearly $120 million over the next four years and another $360 million over the four years after that.
Those projections are based upon the performance of iLottery services in other states and countries, including the United Kingdom where iLottery services have been offered to players for a decade. Australia, Italy, Norway, Belgium, and Mexico are among the other countries offering digital services to lottery players. A number of Canadian provinces also offer iLottery options to players.
In the United States, Illinois and Georgia offer iLottery services. Nevada and Delaware offer online gaming via casinos and New Jersey is implementing those services. Many other states, including Virginia, Minnesota and New York, now offer subscription ticket purchases over the Internet.
The iLottery services offered by the Michigan Lottery will include a number of responsible gaming safeguards, primarily:
- Players will have to verify their age and identity
- Their play must take place within the state
- They will have a single account (“virtual wallet”) for their play
- The Lottery will set daily spending limits for all iLottery services
- Players may set lower spending limits for themselves
- Players also may choose to exclude themselves completely from iLottery services
The Lottery will have strong mechanisms in place to maintain the security of players’ financial information and to protect their privacy.
The selection announced today caps a request for proposal process that began in January and attracted submittals from five companies. An internal committee evaluated the proposals and determined that the proposal from Pollard Banknote and NeoGames would offer the most flexibility and value for players and the Lottery. After reviewing the committee’s work, Lottery executives agreed with the recommendation. Information about that decision was posted on the Michigan Lottery’s news website, www.milotteryconnect.com.
The other companies that submitted proposals were notified today of the Michigan Lottery’s decision. There is a five-day period for them to challenge that decision.
If the decision is challenged, the Lottery will analyze the points raised and determine if it should revise or reaffirm its decision.
Once the decision is determined to be final, the Lottery will begin contract negotiations. The proposed contract developed through those negotiations then will be submitted to the State Administrative Board for review and approval.
The contract is expected to have a value of about $23.2 million for the first four years. That estimate is based on Pollard Banknote and NeoGames receiving 19.6 percent of the gross profits for the iLottery games and projected sales through the digital channels.
In its proposal, Pollard Banknote committed to opening a customer call center in Michigan to serve players using iLottery services. Pollard Banknote already employs more than 200 people in the state of Michigan. The company has a state-of-the-art lottery ticket printing facility in Ypsilanti and provides ticket printing and other services to the Michigan Lottery.
Pollard Banknote Limited is one of the world’s leading full-service lottery vendors and is a major supplier to North America’s charitable gaming industry. The company manufactures instant lottery tickets and provides related programming, design, and marketing support. Established in 1907, Pollard Banknote currently serves more than 50 lotteries worldwide, including some of the largest and most respected lotteries in the United States, Canada, Europe, Asia, and Central and South America. For more information: www.pollardbanknote.com.
NeoGames is a leading software and service provider that pioneered the global internet scratch cards and instant win market, offering the most extensive portfolio of interactive instant win games. Since launching in 2005, NeoGames’ has delivered the most comprehensive soft gaming solutions which include the largest success-proven games portfolio combined with a robust backend platform and operational services. For more information: www.neogames.com.