The methods of hypothesis testing I learned as a scientist are applicable to many situations, including testing the effectiveness of advertising. The “null hypothesis” – the assertion that nothing has changed – is central to the method. This has the effect of putting me (the testing expert) in a position that feels adversarial, to those who are trying to show an effect of their work. In NASPL Insights June 2014 I recount how my first encounter with a client exposed both my methods, and their feelings.
Category: The Business of Lottery
lottery as a business operation
What I Like About These Things
For a person who is without illusions about probability, what is there to lie about lottery games? This is a question answered in NASPL Insights April 2014 by my friend M., the gambling economist. I don’t mean an economist of the gambling industry- I mean an economist who likes to gamble.
Seeing Prize Structures
The common feature of both printed and online instant games is the prize structure- the allocation of limited prize funds to prizes of different size and abundance. The prize structure is a purely quantitative feature that determines the wins experienced by players. The prize structure also determines the profitability of the game. Historically, it has received less attention during development of instant games than the play style or “reveal”, or the appearance of the printed ticket. I developed applications to express the winning experience delivered by complex instant game prize structures as graphics that the whole team can learn to interpret, at the speed of conversation.Design discussions now focus on “what is the player’s experience?”, and how to improve that experience. Quantitative changes to the prize structure can be evaluated on the fly, both for their effect on the winning experience and for their effect on profitability. NASPL Insights December 2013
Games for Beginners
My economist friend M., having pointed out that if we want more players in our instant games, we might want to be more generous with prizes (what he calls “pricing for penetration”), followed up with an insight about how quickly we need to prove our generosity. It is pointless, he says, to focus on prizes that are unlikely to be won unless a player is spending big. The challenge is to design games that will keep players engaged who are spending small. I related our conversation in NASPL Insights October 2013.
Can We Stretch Elasticity? The Tradeoffs of Prize Expense, Sales, and Customer Base
My economist friend M. pointed out some time ago that the way lotteries build instant tickets embodies a doctrine about pricing. The doctrine expressed by most lotteries might be called “best deals for our most committed customers”- that is, the players who are willing to spend $20 per ticket get our most generous payouts. This doctrine tends to concentrate the business on a small and very avid player base. Most lotteries claim to want something different- a broad base of players, none of whom plays excessively. A pricing doctrine better suited to producing this result is called “pricing for penetration”. Have you ever heard of this in the lottery context? Neither had I when I published this article in NASPL Insights August 2013
Automating the Lottery Instant Game Supply Chain
In NASPL Insights January 2012, I report on the Business Rule Test (BuRT) project. A six-month project at WA Lottery showed that a fully automated system supported retailers as well or better than the inside sales/telephone sales that was standard at the time of the test. One key to the success of this project was to provide the sales representatives a way to provide information to the system based on their local knowledge. Another key was to harvest higher-level data from the gaming system to understand which games were trending in the marketplace. I posited a set of business rules, implemented them as code on a generic computing platform (VBA/ Excel!), and compared consumption of instant tickets from retailers who participated in the test, to a control group. The test retailers saw a sales increase.
Forecasting Instant Game Sales
In Washington State, the lottery shares its sales forecasts with state economists, who are accustomed to forecasting all sorts of revenue of the basis of economic and population variables. Taking their lead, I found that I could account for a long, quarter-by-quarter history of instant game consumption on the basis of population, cost of living, unemployment, and so on- without taking into account anything that the lottery was doing. With forecasts of these driving variables, it is possible to make quarter-by-quarter forecasts of instant game consumption that are as accurate as other revenue forecasts. I apologize for the tight academic style of this article; I was still transitioning from hard science! NASPL Insights October 2011