Tuesday, January 23, 2007

Numbers Game

As somebody pointed out to me about my last post, despite what was in the New York Times article, the State has put out a Request For Qualifications, not an RFP, to gauge interest in selling off the Illinois Lottery.

I stand corrected.

But some of the language in the RFQ is kind of interesting in and of itself. One part promotes the deal by telling potential bidders that they can use market research performed for State to, um, better target customers.
In addition, we anticipate that the concessionaire could further drive sales growth through the application of the Lottery’s recent market segmentation research, in order to reach a better understanding of and increase connectivity with Lottery patrons.
While that sounds like, and is, standard business practice, as I alluded to in the last post, I do not think that heightened efforts to pray on the lower-income population segment that makes up a good chunk of lottery players is going to sit well with a lot of community activists and gaming foes. There are members of the Legislature that would be willing to stand up to this type of targeting by the Lottery. They would have no say in predatory practices by a private vendor.

It also is sounding like a good part of the profitability for bidders will rest by simply having fewer winners.
The concessionaire will also have flexibility in structuring individual game pay-out ratios, limited by a 50% aggregate pay-out ratio floor...Prize payouts (presently amount to) 58.1% of total revenues. (emphasis added)
That amounts to a 14% reduction in pay-outs, far from a negligible number.

Another nugget is that the State is about to get closer to the old-school numbers game business.
The Lottery is about to launch a raffle game with limited tickets and several $1 million winners. It is anticipated that the raffle tickets will sell out in two to three weeks.
That would leave us about two steps away from New York's underground policy rackets. (I know that it's not at all a similar game, but I'm just trying to make a point.) But, that might not be so bad after all:
Over the years, this form of storefront wagering has served as something of a shadow Lotto for thousands of New Yorkers who would rather enjoy better odds than the myriad legitimate games offer - not to mention take their winnings home tax-free.
Now I realize that I may be being unduly harsh on this whole concept, but I don't believe that I am alone in my view on this issue.

Increased targeting of low income players + reduced odds of winning + uncertain long-term benefits to education funding...It just doesn't add up to a good deal for Illinoisans.

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