New Hampshire Lottery Commission
July 17, 2008
NEW HAMPSHIRE LOTTERY® COMMISSION
14 INTEGRA DRIVE, CONCORD, NEW HAMPSHIRE 03301
MINUTES OF COMMISSION MEETING
THURSDAY, JULY 17, 2008 9:30 AM
Richard J. Campbell, Jr., Chairperson
Paul J. Holloway, Commissioner
Arthur P. Klemm, Jr., Commissioner
Rick Wisler, Executive Director
Diane Campbell, Administrative Assistant I
Georges Roy, Administrator III
Robert Preston, Games Manager
Maura McCann, Programs Information Officer
Rose Longo-White, Griffin, York & Krause, Inc.
Patrick Griffin, Griffin, York & Krause, Inc.
Travis York, Griffin, York & Krause, Inc.
Moe Pepin, SGI
Liz Dimmick, SGI
Doug Parker, SGI
Charlie Scannella, MDI
Brady Sadler, Griffin, York & Krause, Inc.
Ed Dupont, The Dupont Group
Tom Rath, Rath Group
Alex Baldwin, Fenway Sports Group
Jenna Clifford, Fenway Sports Group
Judy Rhines, Rath Group
Mark Lev, Rath Group
Commissioner Campbell called the meeting to order at 9:40 a.m.
1. ACCEPTANCE AND SIGNING OF PREVIOUS MINUTES:
Commissioner Klemm made a motion, seconded by Commissioner Holloway, to approve the June, 2008 commission meeting minutes. So voted, unanimous.
2. FENWAY GROUP PRESENTATION:
Tom Rath of Rath Group spoke before the Commission. Mr. Rath stated that the Fenway Sports Group (FSG) is an entertainment, marketing and consulting entity and is part of the larger entity, New England Sports Ventures, two of its properties being Roche Fenway Racing and Boston Red Sox. Mr. Rath stated they are trying to identify potential partners, such as the New Hampshire Lottery. The FSG has a long time relationship with the Massachusetts Lottery. Mr. Rath expressed willingness for the FSG to partner together with the Lottery in an effort to help meet the Lottery’s goals, increase its revenue, provide promotional assistance, consulting, and assistance in the development of new products. Mr. Rath introduced Mark Lev, Alex Baldwin and Jenna Clifford from FSG.
Mark Lev stated that FSG is a sales organization incorporated in 2004. FSG Ventures are properties that FSG actually owns and has an equity interest in, most notably Roche Fenway Racing, the largest motor sports industry worldwide. A product that FSG created is Red Sox destinations, where Red Sox fans are taken on trips to see the team play on the road and to bring Red Sox fans from around the country to Fenway Park. FSG has a sales and marketing division where an organization is charged with generating sponsorship dollars for different properties they represent including, the Red Sox, Roche Fenway Racing, Boston College Athletics, major league baseball and others. The total sponsorship revenue FSG is responsible for generating is approximately $250 million a year. There is also a consulting and events division of FSG which deals with a number of companies to help them leverage sports and entertainment assets to achieve their business interests. A brief discussion was held regarding timelines involved in the development of new lottery tickets.
Mr. Lev stated FSG would like to meet further with Lottery representatives to discuss partnership opportunities that will help the Lottery increase revenues through licensed games, through Replay, and other avenues. Commissioner Klemm suggested that a work session be scheduled after that meeting and before the next Commission meeting to review promotional opportunities with FSG. A presentation will be made at the next Commission meeting.
3. TRI-STATE REPORT:
Director Wisler stated that the last Tri-State Commission meeting was held on Friday, July 11th. The Tri-State Commission voted to allocate $1.4 million of expired, unclaimed prize money to Maine, New Hampshire and Vermont throughout the year for promoting games, holiday promotions and other promotions. New Hampshire will receive approximately $500,000 of the $1.4 million. Director Wisler announced a Tri-State Pick 3/Pick 4 promotion launched on July 13th and will run through July 26th. Players who purchase consecutive day and evening draw tickets or evening and next day draw tickets will be eligible to randomly win an instant $25 cash prize. The new Fast Play game “Fish for Cash” is expected to launch in mid August. Director Wisler presented samples of an upcoming different type of game information literature called “palm card” to be printed from the lottery terminals onto on-line ticket stock. The palm card will relay game/prize structure information in a more cost efficient, timely manner than the traditional point of sale materials. The palm cards will be available when the revised MUSL game launches in January, 2009. Commissioner Klemm encouraged another raffle game to be launched at some future date using the palm cards.
A lengthy discussion was held on the initial June, 2008 date for the Lottery to sign off on the upcoming Tri-State game, “Weekly Grand” and the specifications and delays since then. Director Wisler stated that Scientific Games announced at the last Tri-State Commission meeting that due to the scheduled launch of the revised MUSL game in January, 2009, that the launch of the Weekly Grand may be delayed until May, 2009, or possibly March, 2009. The Tri-State Commission expressed their frustration and disappointment over the delayed launch of the Weekly Grand and how it may have an effect on the launch dates for the new Megabucks and enhanced Pick 3/Pick 4 for and on each state’s revenues. Director Wisler stated that the process involved with the development of the game and delivering the final document for the Lottery’s signature has been far lengthier than expected. Director Wisler stated that the Maine Lottery, Vermont Lottery and New Hampshire Lottery have held discussions on establishing firm dates when Weekly Grand, the new Megabucks and enhanced Pick 3/Pick 4 must be completed by and holding the vendor, Scientific Games accountable for completion by those dates via the contract terms of liquidated damages. Director Wisler stated that the process has gone on far too long and the states need the revenues. Scientific Games provided a detailed list of facts and dates involved in the process of the Weekly Grand launch for Commission review.
Commissioner Campbell recommended the scheduling of a work session to discuss 2009 timelines for the release of Weekly Grand, Megabucks game replacement, and Pick 3/Pick 4 game enhancements in coordination with MUSL game changes.
A discussion was held on the effectiveness of focus group studies. The Replay program has provided the New Hampshire Lottery with valuable information about its player base and survey results through the program are beneficial when developing or changing lottery products.
Maura McCann, Programs Information Officer, reported that new corporate television and radio spots will be aired during the weeks of August 4th and August 11th. Patrick Griffin, or Griffin, York & Krause discussed the potential shortage of television air time for lottery advertising during the political window and resulting increased costs for television spots. Mr. Griffin stated there were six initiatives in FY 09 to increase lottery sales, as part of the marketing and communications plan. The initiatives would include a change from using traditional advertising media i.e. newspaper and television advertisement; change the behavior of consumers during these difficult economic times. Travis York of Griffin, York & Krause discussed a promotion called the Year of the Instant Ticket will hopefully generate additional interest from players and create an emotional connection with players. Categories for instant tickets such as holiday, or sports may be used when creating and displaying new games. Also licensed properties, such as the prior Three Stooges ticket, may be used in the development of instant tickets in an effort to help drive sales. The Replay program will be used to help promote new tickets and incentivize players.
Advertising preparation is underway for the launch of the revised MUSL game and Weekly Grand ticket. Pat Griffin requested the Commission allow use of the Replay program to test actual player response relative to the launch of the two games. The Commission agreed this was a good idea.
Mr. York stated another initiative, the New Hampshire Lottery Replay Get More Promotion, will offer Replay members bonus time promotions. These promotions will be for a limited time and will award additional Replay points to players who play specific games. The most recent Replay survey results indicated that the lottery can affect some purchase behavior.
Mr. York expected this would hopefully take place in the fall with intentions of driving additional sales. Commissioner Klemm suggested retailer involvement with the bonus time promotion. Mr. Griffin stated a Replay enhancement is being looked into that will allow retailers to sign onto a retailer section in the website and provide lottery related feedback to the Lottery.
Mr. York stated a subscription campaign will run to promote subscriptions. The Replay survey indicated 77% of respondents did not have subscriptions and of those, 65% were unaware that double points were offered in advance through Replay to subscribers.
The ad agency updated the Commission on Replay marketing partners and prize enhancement offered through the site.
5. OTHER BUSINESS:
Commissioner Campbell presented the Certificate of Achievement for Excellence for Financial Reporting for the Lottery’s Comprehensive Annual Financial Report for fiscal year ending 2007. Commissioner Campbell commended Georges Roy and the Lottery’s financial department for their good work done.
Georges Roy, Administrator, stated the state system will be doing their fiscal year end closing on June 25th and a draft will be presented to the Commission in early August. The May Tri-State Report was distributed to the Commission. Mr. Roy stated $76.5 million was the projected net revenue. The auditors, KPMG, will begin the fiscal audit of the Lottery on August 25th.
Director Wisler stated research of other state lotteries has been conducted in an effort to improve the efficiency of the system when an instant game is closed. In past practice when the last top prize is claimed in a game, the game was closed and the lottery sales reps would collect all full and partial books of the closed game from the retailers and return them to the lottery. Director Wisler suggested to not allow retailer activations of full instant ticket books after a game is announced closed to help reduce the inventory of closed game tickets in the sales pipeline and to improve operations efficiency. The instant tickets would still continue to be stored securely until picked up by the lottery sales reps. The lottery will send a terminal message to all retailers notifying them when a game is closed and software will be programmed to not allow further activations of full books that are in an “inactive” status in retailer inventories. The changed process would only affect the status of each retailer’s inventory of full books from a closed instant game. Commissioner Holloway made a motion, seconded by Commissioner Klemm, to approve the deactivation of full books. So voted, unanimous. Director Wisler stated the change will be implemented upon written notification to the retailers.
Commissioner Campbell made a motion, seconded by Commissioner Klemm, to adjourn the commission meeting at 12:00 p.m. So voted, unanimous.
Richard J. Campbell, Jr., Chairperson
Paul J. Holloway, Commissioner
Arthur P. Klemm, Jr., Commissioner