Kertin Lack joined OLG in fall 2021 (Photo: OLG)
Despite the myriad challenges the convenience channel continues to navigate after two years of pandemic-related lockdowns and business fluctuations, lottery sales are a bright spot, a beacon of hope if you will, buoying in-store traffic and generating welcome commissions for convenience operators through promotions, new sales opportunities and supports. Helping steer the ship is Kerstin Lack, who joined the Ontario Lottery and Gaming Corporation (OLG) as chief lottery and customer officer last fall. She is responsible for driving value and growth in OLG’s Lottery business through the development of new and improved customer experiences and products, engaging underserved segments of the market, effective and efficient supply chain management and customer-centricity. Convenience Store News Canada connected with Lack to find out how the pandemic has shaped OLG’s business, what that means convenience and how OLG is investing in its relationship with convenience retailers.
On how has the pandemic reshaped OLG’s business:
KL: Despite the challenges faced during the global COVID pandemic, OLG continued to drive the performance of its lottery business. Lottery retail sales reached an all-time high of $4.2 billion in the fiscal year that ended in March 2021 (Fiscal 2020-2021). The convenience and gas category helped generate $3.8 billion of OLG’s lottery sales in Fiscal 2020-2021, with 70% of the convenience and gas stores earning 81% of sales. We’re on track for similar results this year. (As of press time, the 2021-2022 results were not yet out).
On how important the convenience and gas channel is to OLG:
KL: OLG recognizes that our approximately 10,000 valued retailer partners across the province, including convenience and gas stores, are critical to lottery sales. Safeguarding the health of our lottery retail network is of utmost importance to OLG. OLG is proud to say that its blended retailer commission rate is the highest in Canada.
KL: Did you know that more than half of the $4.2 billion of lottery retail proceeds in Fiscal 2020-21—$2.4 billion—were returned to Ontarians in prize money? Lottery winners represent a key driver for in-store lottery sales. Each year, retailers process approximately $1.9 billion in lottery prize claims at their stores, collectively paying out between $1.1 billion and $1.4 billion in cash prizes. OLG paid more than $330 million in commissions to our retailers across the province in the last fiscal year: Compare that to the $196 million in commissions paid in Fiscal 2009-10. This represents an increase of 5% compounded annual growth rate (CAGR) to total commissions paid to retailers over the past decade.
On how OLG is further investing in its relationship with convenience retailers:
KL: To help support OLG’s valued retail partners during the pandemic, OLG has run several unique lottery retailer Initiatives that have provided increased commissions on the sale of a variety of lottery products. In a Canadian lottery first, OLG launched the “Support Local” initiative in January 2021 that returned all profits to retailers for three months’ worth of sales on the new Instant Plinko game. Based on the success of the Instant Plinko initiative, other programs quickly followed for such games as, Lightening Lotto and Instant Top Up. The commission increase on these products ranged from 10% to 30%. OLG has other initiatives in the pipeline that we believe will continue to drive higher retail sales and higher retail commissions.
READ: OLG introduces retailer promotion for Instant Crossword and Instant Bingo
In addition, bonus commissions are earned when retailers sell a top prize-winning ticket at their store, in addition to commissions on winning redemptions at the store. Bonus commissions vary from $100 to over $1,500 per top prize-winning ticket.
On the pivot to online gaming and lotto and how this impacts the role the convenience channel plays in the future of OLG:
KL: Ontario provides a range of entertainment options to adult Ontarians including digital online play, offered in a safe and secure environment. Last summer OLG launched Ontario’s only legal digital sportsbook, ProLine+ to allow customers to place single event wagers or in-game bets on sports. [However,] OLG’s retail network remains the traditional place to purchase and redeem lottery products. OLG continues to invest in this important channel. For example, in February, OLG launched new and exciting sports betting products at retail locations across the province under the popular ProLine brand. The new ProLine allows in-store customers to make single event wagers on sports based on dynamic competitive odds, and also have access to new sports, events, and markets to place bets on. The new ProLine also allows retailers to make same day payouts for wins of less than $1000 at the retailer's availability. OLG is offering a complete gaming experience for our customers, whether it be at retail locations or online.
On how c-stores benefit from selling a winning ticket and what operators can do to boost lottery sales:
KL: Retail lottery is obviously a key driver of store traffic and in-store sales of other high-margin items. OLG believes that same-store lottery sales have considerable upside, meaning that retailers can drive commission growth through improved merchandising and leveraging new product launches. For example, we have exciting changes coming to Lotto 6/49, the game Canadians have loved for decades. More details will be shared soon about how Lotto 6/49 will get bigger in September 2022. Also, the new ProLine products are expected to generate more player interaction at retail locations, contributing to increased retailer commissions and economic recovery in Ontario. It’s also important to know that 100% of OLG proceeds are reinvested into provincial priorities to improve the quality of life for all Ontarians. So, when you play any OLG games, you play for Ontario.
On new initiatives to support operators:
KL: OLG continues to find new opportunities to optimize lottery sales and drive traffic to lottery retailers in order to increase their commissions. One such opportunity that retailers are starting to see in their stores is a refresh of two core pieces of OLG’s merchandise—the Lottery Playstand and Instant Ticket Display. The new designs include several operational and aesthetic enhancements that will improve lottery experience for retailers and customers.
Also, to ensure more efficient and effective communications with our approximately 10,000 retailers, we launched the OLG Retailer Hub on OLG.ca. It’s a one-stop shop for retailer communications, training and compliance information. It keeps retailers updated with current promotions, upcoming product launches and also promotes best-in-class retailers that share how they are leveraging lottery to increase their revenue and service their customers.
The Retailer Hub not only provides valuable information and upsell tips but there are also retailer-only contests, such as the current promotion for a chance to win a ProLine prize pack valued at $100.
On why retailers who don’t sell lotto should get into the game:
OLG has been in the lottery business since 1975 and has a proven track record of benefits for our approximately 10,000 lottery retailers across the province:
- Grow your business—the average retailer generates over $9,000 per week in lottery sales.
- Increase traffic and basket size with the #1 selling products at the front of the store.
- In the convenience and gas category, lottery sells five times more than the next highest product category (not including fuel).
- Retailers earn regular and bonus commissions on a high-volume category. Compared to other jurisdictions, OLG’s blended lottery retailer commission rate is the highest in Canada.
- Most importantly, 100% of OLG proceeds are reinvested into provincial priorities to improve the quality of life for all Ontarians.
- When your customers play any OLG games, they play for Ontario.
Originally published in the March/April 2022 issue of Convenience Store News Canada.