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Plinko paying off for operators and OLG

 

WinnerIn just six weeks, Ontario c-store operators have help drive $29,643,900 in Plinko sales due, in part, to a commission-based incentive from OLG.
OLG announced in December that retailers in Ontario would earn 30% sales commission for every pack of $5 Plinko tickets activated from January 4 to March 31, 2021. This is an increase of 22% over the regular commission of 8%.
The move was designed to thank and support c-store operators, while also driving customer awareness and sales growth of this new lottery game, which launched January 1, 2021. As part of the Plinko promotion, retailers earn $105 per pack activated vs $28 based on regular commission of 8%: The promotion is slated to last three months.
“This is the most successful launch the OLG has ever seen,” says Dave Bryan, president of the Ontario Convenience Stores Association, which last fall petitioned the provincial government to recognize and reward the key role that c-store operators play in driving revenue for the Ontario Lottery and Gaming Corporation by increasing lottery commissions across the board by 2%.
While this hasn’t happened yet, the Plinko incentive is a good first step.
Bryans points out this is the first time the OLG has moved off of commission standards and it’s paying off for everyone involved, with motivated operators earning $8.9 million in commissions so far, compared to the $2.4 million they would have earned at the usual rates. “It shows that promotion, plus incentive, plus the support of small business gets record sales and helps small business.”

READ: OLG shares best practices for lottery sales during the pandemic

Despite COVID-19, lottery continues to be a significant traffic generator for c-stores. So far this year, convenience stores account for 84.6% of the total lottery business in the province – 44 weeks into the OLG’s fiscal year, that amounts to $224 million in commissions YTD, compared to $191 million this time last year.
“Lottery brings in the traffic, which drives sales of chips and pop and everything else,” says Bryans, who encourages operators to “continue to push these new products as leverage for future discussions with OLG.”
As the cost of doing business for c-stores continues to increase—not to mention the added financial and related challenges brought on by the pandemic—the OCSA argues that this is an ideal opportunity for the province to support the channel and small business owners.
  • C-stores account for 76% of Ontario lottery sales for OLG.
  • During the pandemic, this increased to almost 85%.
  • C-stores facilitate $2.4 billion in lottery sales every year for the province.
  • C-stores earn 5% on standard electronic tickets and 8% on scratch tickets.
  • The margins are slim, but the value for c-stores is in generating foot traffic.
  • As more customers pay with credit cards, c-stores are being hit with transaction fees of 2 to 2.5% on lottery purchases, further reducing margins.
  • Lottery commissions haven’t increased in more than 30 years.
  • OCSA is suggesting a 2% increase in commissions.
  • An additional 2% at point of sale for lottery equals about $5,000 per store.
  • This would inject an estimated $30 million into the convenience channel.

 


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Priming the purchase is key to boosting lottery sales

Screen Shot 2020-03-09 at 1.14.42 PMLottery and convenience go hand-in-hand. For its most recent fiscal year (which isn’t over yet) the Ontario Lottery and Gaming Corporation reports that C&G delivered more than $2.846 billion in lottery sales, earning retailers more than $207 million in commissions.

“We are the single largest traffic driver into the convenience channel (in terms of transactions),” Larry Colatosti, executive director retail sales, OLG, told attendees during a packed lunch-and-learn session—“Driving lottery commissions to your store”—at The Convenience U CARWACS Show in Toronto March 3.

Colatosti outlined the organization’s efforts further boost business at the c-store level. For instance, OLG recently completed a pilot project with 300 new, more efficient terminals. The organization rolled out 800 new machines in February and all 10,000 terminals in Ontario will be replaced by the fall.

“This is one example of how we are committed to retail. Making sure you, we, have the right equipment in place to bring us into the future,” said Colatosti, adding OLG is getting ready to introduce new products designed to generate even more excitement among players and sales for retailers. “We continue to innovate at retail to make sure you can serve your customers, our customers.”

He said there are three important steps operators and their staff can take to boost sales in-store. It comes down to priming the purchase:

  1. Signage: Promote lottery to increase visibility and excitement
  2. Play area: Ensure it is clean, inviting and well stocked
  3. At cash: Ask for the sale, you have to create an interaction (one in two will say yes)

Colatosti, whose first job was at a convenience store, paid homage to the role c-store operators play in supporting OLG : “Thank you for what you do every day to make sure lottery is well represented in our stores.”

Screen Shot 2020-03-09 at 1.14.01 PMDante Anderson, director, brand marketing for OLG, also took to the stage to talk about the OLG’s ongoing rebranding efforts, which aim to build stronger relationships with customers. “The opportunity is for us to reintroduce the OLG brand and create a new brand image that stands for fun, excitement and play.”

Research shows most people think of OLG as a regulator. The plan is to shake off the conservative images and reposition the organization.

“Our goal is to hit reset in terms of what people think of the OLG brand,” said Anderson, adding OLG is going to be about play. “We are making this shift to appeal to a new generation of players.”


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