This is the first post in a three-part series.
The acronym BYOD stands for “Bring Your Own Device” – a potentially transformative retail sales model that gives retailers lottery-terminal functionality on non-lottery devices such as tablets, third-party point-of-sale (POS) units, and potentially even smart phones, via dedicated lottery software.
For lotteries and their retailer networks, BYOD represents a paradigm shift from the traditional model where a lottery is responsible for providing a set of equipment and ongoing support to its retailer network.
Adopting the BYOD model to enable retailers to sell lottery products on non-lottery devices would offer lotteries three major benefits:
- Reduced capital expenditure on some retailers
- A simplified retailer environment
- A potentially larger and more varied retailer network
Today, most lottery retail networks operate within the classic 20/80 rule, meaning that about 20 percent of the retailers are producing most (approximately 80 percent) of the revenue. Unfortunately, some of the lowest selling retailers aren’t even producing enough revenue to cover their ongoing costs. The 20/80 phenomenon isn’t limited to any one region. It’s true across the world.
As lotteries are looking for ways to expand distribution cost-effectively and engage with more retailers, the BYOD model is appealing. But this kind of functionality must still meet the fundamental requirements of the business. For instance, the transactions must be 100 percent secure, and the system must meet certain agreed-upon levels of performance.
Part of the analysis that IGT and the lottery industry have been doing around BYOD includes questions such as: What constitutes a valid BYOD experience for the consumer, for the retailer, and for the lottery? Does it require the same service-level agreements? How can the model best be introduced?
The evolution towards BYOD has synergies with some of the initiatives that IGT and the lottery industry are pursuing to make lottery products as accessible and competitive as other items that are purchased at retail. Until now, lottery has been unique as a product and an industry. Part of lottery’s uniqueness came from the need to ensure security, and part of it was due to technological limitations. But as technology has advanced across the board, it’s now possible to remove some of the old barriers to access.
In the U.S., the Multi-State Lottery Association (MUSL) governing body recently approved the ability to print a lottery ticket on plain paper, because it’s now possible to include enough security features to authenticate a unique and valid ticket. Retailers will be able to print on existing retail commercial printers, rather than one solely dedicated to lottery. Similarly, BYOD is another step in reducing lottery to its pure essence – in this case, the software that handles the security and the transaction. The synergies among advances like these will continue to offer lotteries and retailers increasing flexibility.
While BYOD for lottery is not yet in widespread practice, the model is more than speculative. It’s already in use in Germany, where there are retailers selling instant tickets using Samsung tablets.
In the next two posts in this series, we will flesh out some of the questions around BYOD in more detail: Why should a lottery consider adopting the BYOD model? And what would it look like in practice?