In 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.”
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."
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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.