Whole Lotto Love: Behind the scenes at the Wisconsin Lottery

Stephen Schelb is really into gamesmanship.

“This week, we’ve got Tic Tac Dough, with 1.976 million tickets. We’ll sell out in a couple of weeks,” reports Schelb, instant game research analyst for the Wisconsin Lottery, in a meeting with five colleagues. “We will build to four $1 games. We’ll be launching the $3 Match Two Crossword to replace Double Shot Crossword, which will sell out in the next two weeks. The timing is perfect.”

 “This is a fun job and a fun, entertaining product that gives people a chance to win a little money.” — Chuck Klink, game development supervisor for the Wisconsin Lottery

Schelb and the game development section at the Wisconsin Lottery meet every week to discuss, plan, and design the instant scratch-off games played daily by millions of people across the state.

They’re particularly excited about the launch of a new game, Instant Million, the Wisconsin Lottery’s first $30 scratch game. Its flashy, oversized game card is clearly designed to attract attention, and with good reason: In addition to smaller cash award recipients, Instant Million will result in four instant $1 million winners. (A woman from Ripon and a Milwaukee man have won two thus far. The stores that sold the tickets will each receive $20,000, or 2% of the prize.)

At one end of the room, a large, white board is speckled with voided current and future scratch-off tickets. Games displayed above a green line are close to selling out. Those under the green line will launch soon, and game tickets under a black line are still in the design phase. 

Beth Pahnke, special events and player relations supervisor, shows the group a rudimentary paper design for a $20 ticket she’s working on. She’s also planning for the next $10 game. “We need a game that has a play style down the side so it looks a little different,” she says, holding an example from another state. Everyone agrees that the particular design she holds is too busy. “We’d simplify it,” she assures, “and it wouldn’t be as tall.” She suggests a name: “All Cash?” After some brief discussion, the group unanimously approves.

Winning designs

At any given time, the Wisconsin Lottery can have between 22 and 28 scratch-off games in play at 3,700 retail locations. About 70 different scratch games are launched every year. 

Saverio Maglio, bureau director of product development and marketing, says games being developed now might reach retailers’ shelves six months later. It is common for the group to look at games from other states and tweak them to fit Wisconsin’s standards. Other states do the same, since they’re not in competition with one another.

The magic bullet for the success of any instant game is the winnings. “It comes down to prizes, but the difficult part is that we only have so much prize payout to offer,” Maglio says.

“We’ve got a sense of the prize payout for each price point. If it’s a $3 game, there will be a 63% prize payout, meaning 63% of a game’s retail value will be returned to players in prizes,” he explains. “Of course, some of the balance for us, when talking prize payout on an individual basis, is that the more you pay out, the less profit goes to property tax relief.”

Chuck Klink, the Lottery’s game development supervisor, says game design can vary widely from state to state. “Colorado’s tickets are a little weird,” he admits. “I don’t know if it’s the young skier mentality, but they can be crazy, all over the board and paint-splattered. At least that was several years ago.”

History has proven that busier artwork doesn’t work well in this state, he notes. Wisconsin game tickets are generally cleaner in design, and vary from whimsical to just the basics. Black tickets typically don’t sell well, but every once in a while they gain favor because they’re different. And if you want to attract women, purple or teal-colored game cards work well. “We do a mix,” Klink says, “and we do more cow tickets than other states.” (Now there’s a shock!)

The Wisconsin Lottery celebrated its 25th anniversary in 2013. A ticket from its first $1 game, Match 3, is framed and hanging on the wall of the conference room. Since then, there have been hundreds of games and clever designs. Cash Cow was a favorite in 2013, depicting cows spoofing presidents on fake dollar bills, like Thomas Hefferson, John Quincy Angus, and Teddy Moosevelt. 

(Continued)

 

A typical game can last three or four months before being retired, and those that work well sometimes make a comeback, but new games are always being pumped out. Why? “Because people most often like the new ticket,” Klink says. “That’s our branding. We always have something new and different.” 

Wisconsin’s instant scratch games, whether new or reconstituted from those tried elsewhere, are developed at the Madison office before being sent to any one of three instant game printing companies for final artwork and production. To the best of Klink’s knowledge, the three printers — one in Georgia, another in Florida, and one in Winnipeg, Canada — print all North American, and some European, instant game tickets. 

In a nutshell: The printer prints game tickets based on a prize structure developed by the Wisconsin Lottery. An external audit by a third party of independent CPAs confirms that the game was properly produced, and that it contains the correct number of winning tickets. Those reports are provided to the Lottery as well as to the Legislative Audit Bureau, which checks games and assures that the odds and rules are correct. “Once we receive approval from the audit bureau, we can launch the games,” says Maglio. 

The number of tickets ordered per game typically ranges from about 500,000 to upwards of 2 million tickets. Of the $1, $2, $3, $5, $10, and $20 scratch-off games available, the most popular are the $2 and $5 games. Three-dollar games are typically extended-play games, requiring more time to complete. The most popular game types in Wisconsin are crosswords, which are found in all but the $1 ticket category. 

There have been duds. A Monopoly game performed admirably its first time out, but not so much the second time around, and although the card game euchre is popular in Wisconsin, it did not fare well as a scratch game. “It bombed,” Klink stated plainly. “Retailers weren’t familiar with it, and the spelling of the name probably threw people off.” (Folks were apparently more familiar with the other Uecker, as in Bob.)

Money business

The Wisconsin Lottery handles three primary products: Lotto (Powerball and Mega Millions), which is shared with 43 other states as well as Washington, D.C., and the U.S. Virgin Islands; scratch games; and pull tabs — a much smaller segment of the business. It also manages Super Second Chance drawings, where each week 10 $1,000 winners are drawn from a pool of between 30,000 and 50,000 losing tickets mailed in from players hoping to score big the second time around. 

State statutes require that at least 50% of lottery revenues be paid out in prizes, and the Wisconsin Lottery pays out more than 56%. As of FY 2013, $3.5 billion, or 31%, has been returned to eligible Wisconsin taxpayers in the form of property tax relief.

In the last fiscal year, Powerball and Mega Bucks represented about 24% of all lottery sales, and overall, the last two years have been record-breakers for lottery game sales. In FY 2013, the Wisconsin Lottery recorded sales of just over $566 million, resulting in a net operating income (profit) of $164 million, according to Director Michael Edmonds. Fiscal year 2014 is projected to generate about $543 million. 

Because they are expressly prohibited from partaking in any Wisconsin instant scratch or Lotto game, none of the Wisconsin Lottery’s 87 employees will ever be winners, although they are allowed to play, or “test,” scratch games from other states, and that’s just fine with Klink. “This is a fun job and a fun, entertaining product that gives people a chance to win a little money,” he says. 

“We’re selling the ability to dream.”

Click here to sign up for the free IB ezine — your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.