In 2015, it was either the Year of the Jackpot Drought or the Year of Jackpot Fever, depending on which part of the lottery world is studied. In the United States, it was a lean sales year for U.S. lotteries selling both Powerball and Mega Millions. But in Canada, LottoMax rolled to a C$55 million jackpot plus C$30 MaxMillions in July 2015.
In Europe, the Lotto Gods were kind to EuroJackpot, the new kid on the block. Launched in March 2012, EuroJackpot includes all the German lotto bloc as well as lotteries in Croatia, Czech Republic, Denmark, Estonia, Finland, Hungary, Iceland, Italy, Latvia, Lithuania, Netherlands, Norway, Slovakia, Slovenia Spain and Sweden.
In 2015, EuroJackpot hit the jackpot ceiling of €90 million, an all-time high for the year. A higher jackpot is not possible since the jackpot funds then roll into the lower prize tiers. The record publicity sent sales soaring for this European bloc lotto. “The increase for the German lotto bloc was approximately 27% in EuroJackpot for the whole year 2015 vs. 2014,” reported Dirk von den Driesch, Project Manager CRM and Chair Administrative Unit EuroJackpot at Westdeutsche Lotterie GmbH & Co OHG (WestLotto). He explained that the EuroJackpot is capped at €90 million “due to regulatory requirements primarily in Germany.”
But Lady Luck did not smile on EuroMillions, the oldest European bloc lotto which has successfully operated since February 2004. This bloc includes the three founding members (France’s Française des Jeux, Spain’s SELAE and the U.K. National Lottery) as well as six other European countries—Austria (Austrian Lotteries, Belgium (Loterie Nationale), Ireland (Premier Lotteries), Luxembourg (National Lottery), Portugal (SCML), Switzerland (Loterie Romande and SwissLos).
The top prize in EuroMillions is €190 million (more than twice the top jackpot possible for EuroJackpot). This has occurred two times in the game’s history in 2012 and 2014.
Judging by the game’s past jackpot roll history, it would appear that jackpot fever could strike again in 2016. This would be fortuitous as the EuroMillions’ sales did decline in 2015 vs. 2014 for multiple lottery jurisdictions.
“EuroMillions has been designed as a game with big, rolling jackpots—that’s what creates the huge levels of excitement across the nine countries, which, in turn, drives sales and returns to society,” said Andrew Pilkington, General Secretary, Services aux Loteries en Europe (SLE). “However, it’s fair to say that there has been a natural underlying sales decline across all nine countries over the last couple of years. As well as being typical of mature draw-based games around the world, this decline hasn’t been helped by a lack of high rolling jackpots. In turn, that has led to gradual erosion in the size of the jackpots on offer and the number of participants.”
Over the past five years, EuroMillions’ sales grew 18% to €4.35 billion in calendar 2015 from €3.69 billion in calendar 2010, but this comprises the game sales for only six lottery companies which release their individual lottery product sales (Austria, Belgium, France, Portugal, Spain and Switzerland (Loterie Romande).
“We cannot say that the EuroMillions’ sales are declining if we consider a five-year perspective,” stressed Jean-Luc Moner-Banet, CEO of Loterie Romande in Switzerland. “However, it is undisputable that the sensitivity of the players, in particular the occasional ones, to big jackpots is very important. In 2015 vs. 2014, there have been less attractive jackpots for the players.”
Certainly, the media has fanned the flames of jackpot envy with its nonstop coverage of the runaway Powerball jackpot in the United States that finally reached $1.58 billion (annuity value) after 20 draws on January 13, 2016. From Russia to China and across the continent of Europe, lottery players were regularly reminded of the astronomical sum.
“The news about the gigantic win was widespread also in Europe,” said Antti Vuorikoski, Business Manager, Jackpot Games, Veikkaus Oy.
But European lottery operators stress that jackpot escalation can backfire. “The USD $1.6 billion Powerball jackpot has not had an impact on the global lottery industry, but may have an impact in the U.S. where Powerball is sold,” said SLE’s Pilkington. “The problem with offering a game in which jackpots can keep rolling is that you reset player’s expectations and multimillion dollar jackpots are no longer exciting, so jackpot fatigue sets in. Although win-ability and jackpot size are effective drivers to play and help to increase sales, they both come at a cost to your lottery’s future as the net revenue itself is eroded.”
“The impact of the USD$1.6 billion Powerball jackpot was relatively brief and was mainly transcribed through press articles that mentioned this event,” seconded Moner-Banet.
While the U.S. lottery industry has always led the world in the largest lotto jackpots, thanks to its dual marketing strategy of using annuities as prizes and not capping the size of the jackpot, the rest of the lottery world prefers to control lotto sales trajectory. Many lotteries artificially seed jackpots so they can create lotto jackpot fever tied to holidays such as Christmas. Moreover, the European lottery industry has always insisted on limiting how high lotto jackpots can roll, so both national European bloc lottos have caps on the top prize.
Are European lottery players starved for larger jackpots? Operators say the situation varies depending on the market.
“For now, we don’t see that for EuroJackpot but for Lotto yes,” observed WestLotto’s von den Driesch.
“I do not think that European players are starved for larger jackpots. However, they would appreciate more regularity concerning the EuroMillions jackpots reaching levels of €100 million to €150 million,” acknowledged Moner-Banet.
SLE’s Pilkington stressed that by having a cap in place the excitement around the game is heightened as the jackpot must be won. “The EuroMillions jackpot can rise to €190 million before it is capped. Unlike other large-scale lottery games in which jackpots just keep rolling, the excitement on EuroMillions is further heightened by players knowing the jackpot has to be won at a certain point in time,” he stated.
2015 was a record year for all member lotteries. “Overall EuroJackpot sales increased 34% in 2015 vs. 2014 (from €1.17 billion to €1.57 billion), so the game had really good growth. Most of the countries participating had growth between 20%–50%,” said Vuorikoski.
In Germany, total EuroJackpot sales for the Deutsche Lotto & Toto Bloc increased to €769 million in 2015, up 27% from €604 million in 2014. The increase was largely attributable to the €90 million EuroJackpot. “Mainly yes with direct sales increase in the jackpot phase and the rise of basic sales level afterwards,” said von den Driesch.
Two of the biggest German lotteries, as measured by total sales, reported huge increases.
Staatliche Lotterie Bayern reported a 34.1% increase in EuroJackpot sales to €112.1 million in 2015, up from €83.6 million in 2014.
Similarly, Staatliche Toto-Lotto GmbH Baden-Württemberg saw a 33% increase in EuroJackpot sales to €104 million in 2015, up from €78 million in 2014.
In Norway, EuroJackpot sales increased 53% to 592 million NOK (€64 million) in 2015 compared to 387 million NOK (€41.8 million) in 2014. “Norsk Tipping experienced that the sales were significantly higher in 2015 with the €90 million jackpot,” reported Silje Tysse, Head of Lotteries and Instants, Norsk Tipping.
Even more impressive is the rate of EuroJackpot’s sales sold online. “The digital share for EuroJackpot in Norway was 47.9% (2015)—32% comes from the mobile channel, and 16% from web,” said Tysse.
In Finland, EuroJackpot sales rose 39% to €223 million in 2015, up from €161 million in 2014, for Veikkaus Oy. But the game is still out flanked by the Finnish national lotto. In 2015, Lotto sales totaled €436.7 million, a 1% sales hike. Lotto is the number one ranked traditional game in Finland as measured by gross sales.
There also may have been some sales cannibalization to Viking Lotto, the original Scandinavian bloc lotto launched in 1993. Viking Lotto was the first multi-country regional lotto sold in Europe. Bloc members include Denmark, Estonia, Finland, Latvia, Lithuania, Norway and Sweden. The impact of EuroJackpot’s record-setting jackpot varies by jurisdiction.
For example, Islensk Getspa reported a 5% increase in Viking Lotto sales, which topped 915.9 million IS in 2015. EuroJackpot ranks number three in the lottery’s lotto portfolio in terms of gross sales. They totaled 825 million IS in 2015, up 28% from 646.5 million IS in 2014. Lotto 5/40 is the reigning champion with 1.9 billion IS sales in 2015.
Veikkaus Oy reported an 11% decline in Viking Lotto sales which dropped to €75.5 million in 2015 (compared to €84.7 million in 2014.) SJSC Latvijas Loto reported a 7% decline in VikingLotto to €3.3 million in 2015. UAB OLIFJEJA saw a 1% decline in VikingLotto sales to €10.3 million in 2015 from €10.45 million in 2014. Similarly, in Estonia, Eesti Loto AS reported a 1% decline in Viking Lotto sales to €15.35 million; EuroJackpot sales increased 27% to €14.97 million.
Since EuroJackpot’s €90 million win was an all-time record, the bloc does not know how to predict players’ future behavior. “We have not yet seen how, for example, EuroJackpot sales will perform when we reach a €90 million EuroJackpot level a second time,” said Vuorikoski.
Unlike in the United States, where lottery players can buy either Powerball or Mega Millions within their state borders, European lottery players typically only have access to one of the national bloc games unless they live near a border. (For example, Austrian Lotteries sells the EuroMillions game. An Austrian lottery player could cross the border to play EuroJackpot in the Czech Republic, Germany, Hungary, Italy or Slovak Republic.)
Lottery marketers believe there is very little crossover between EuroMillions and EuroJackpot customers who chase the biggest jackpot.
“There is only one European country that is selling both games and that is Spain. EuroJackpot is still a relatively small game in Spain; EuroMillions as ‘the original’ high jackpot game is far more popular there,” said Vuorikoski.
In 2015, SELAE reported EuroMillions’ sales totaled €1.19 billion in Spain. ONCE reported EuroJackpot’s sales totaled €53.7 million in Spain, according to La Fleur’s 2016 World Lottery Almanac.
The European lottery industry has also protected lotto and by extension the national bloc lotto games, like EuroMillions and EuroJackpot, by designing games with jackpot caps which do not allow gigantic jackpots.
“I indeed think that, by allowing a slow and controlled growth of the jackpots of games such as EuroMillions and EuroJackpot, we preserve—in the long term—our revenues even if, in the short term, we could give in to the temptation of an acceleration of the jackpot amounts. I think that the sustainability of our games implies a progression towards more regular amounts of €200 to €300 million, but do not wish to go beyond,” said Moner-Banet.
As any marketer knows, a product cannot remain static in the marketplace. There are no plans currently to change EuroJackpot as the game just achieved its first all-time jackpot record in 2015. But Moner-Banet did report “a new form of EuroMillions will appear before the end of 2016 which will—we are sure—increase the game’s attractiveness, in particular for the occasional players.”