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Lotteries - US - December 2011

Sales at many state lotteries declined in 2008 and 2009, as consumers around the nation reduced discretionary spending in order to mitigate the impact of the recession. However, at a national level, sales increased significantly in 2010 and 2011 despite the fact the economy remained weak during this period. One key to this success has been that many lotteries have launched innovative marketing and product development. There is clearly potential for growth in most states, yet it is also evident that some will need to implement changes in order to maximize revenue. To provide information and insight that can be used to help drive growth, this report addresses the following questions:

  • How have state lottery sales fluctuated in recent years and which games have made the greatest contribution to growth?
  • What types of product and marketing innovations appear to be driving growth?
  • How are the most successful states marketing their lotteries?
  • Which consumer segments tend to spend the most on various lottery products?
  • What are some of the key consumer attitudes in relation to lotteries and how can states leverage these to drive growth?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Market data
            • Consumer survey data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • Slow growth during 2010-16
                        • Powerball and Mega Millions rainmakers
                          • Inexpensive instant games and big jackpot games most popular
                            • Economics, distribution, innovation drive sales
                              • Online distribution to drive future growth
                                • Online marketing increasingly sophisticated
                                  • Casinos: Competitors and partners
                                    • Millennials enjoy new games and tie-ins
                                      • Majority of online adults current players
                                        • Men, 25-34s, high earners spend more
                                          • Blacks most likely to spend $30+ per month
                                            • Messaging to focus on community benefits and winners
                                            • Insights and Opportunities

                                              • Instant Ticket Vending Machines
                                                • Online communities
                                                • Inspire Insights

                                                    • Trend: FSTR & HYPR
                                                      • Trend: Carnivore, Herbivore… Locavore
                                                      • Market Size and Forecast

                                                        • Key points
                                                          • Sales up in 2010-11 as nation moves past the worst of the downturn
                                                            • Lottery revenues and forecast
                                                              • Figure 1: U.S. state-run lottery revenues, at current prices, 2006-16
                                                              • Figure 2: U.S. state-run lottery revenues, at inflation-adjusted prices, 2006-16
                                                            • Fan chart forecast
                                                                • Figure 3: Fan chart forecast U.S. state-run lottery revenues, 2006-16
                                                            • Market Drivers

                                                              • Key points
                                                                • Necessity is the mother of inventive gaming, distribution, and marketing
                                                                  • Recession discourages spending
                                                                    • Figure 4: Median household income in inflation-adjusted dollars, 2000-10
                                                                  • Improving employment, confidence could drive sales
                                                                    • Figure 5: Incidence of playing state lottery by employment, August-September 2011
                                                                    • Figure 6: University of Michigan Consumer Sentiment Index, select months, March 2007-November 2011
                                                                  • Minority populations growing rapidly
                                                                    • Figure 7: Population, by race and Hispanic origin, 20011-16
                                                                • Competitive Context

                                                                  • Key point
                                                                    • Local casinos, competitive or complementary?
                                                                      • Casino visitors more likely to play the lottery and play more often
                                                                        • Figure 8: Lottery ticket purchasing, by incidence of visiting a casino in past 12 months, April 2010-June 2011
                                                                        • Figure 9: Type of lottery tickets purchased, by incidence of visiting a casino in past 12 months, April 2010-June 2011
                                                                        • Figure 10: Frequency of lottery ticket purchase, by incidence of visiting a casino in past 12 months, April 2010-June 2011
                                                                      • Partnering with casinos
                                                                      • Market Segmentation

                                                                        • Key points
                                                                          • Mega Millions and Powerball drive growth in down economy
                                                                            • Figure 11: U.S. state lottery sales, by game type, 2008-10
                                                                        • Innovations and Innovators

                                                                          • Online gaming
                                                                            • Online marketing
                                                                              • Apps
                                                                                • Sports and entertainment tie-ins
                                                                                  • Sports team tie-ins
                                                                                    • Green Lantern tie-in game
                                                                                      • Wheel of Fortune games
                                                                                        • Iowa Lottery Broadway tie-in
                                                                                          • Games to engage minority groups
                                                                                            • El Grande
                                                                                              • Asian-themed games
                                                                                                • Fortune cookies
                                                                                                  • Going local: Kansas 150 game uses local art for instant game
                                                                                                    • Lucky Dog gets consumers involved in development
                                                                                                    • Marketing Strategies

                                                                                                      • Overview
                                                                                                        • California Lottery
                                                                                                          • Television advertising
                                                                                                            • Figure 12: California Lottery television ad, 2011
                                                                                                          • Website
                                                                                                            • Facebook
                                                                                                              • Twitter
                                                                                                                • YouTube
                                                                                                                  • New York Lottery
                                                                                                                    • Television advertising
                                                                                                                      • Figure 13: New York Lottery television ad, 2011
                                                                                                                    • Website
                                                                                                                        • Figure 14: New York lottery smartphone app, December 2011
                                                                                                                      • Twitter
                                                                                                                        • Facebook
                                                                                                                          • Georgia Lottery
                                                                                                                            • Television advertising
                                                                                                                              • Figure 15: Georgia Lottery television ad, 2011
                                                                                                                            • Website
                                                                                                                              • Facebook
                                                                                                                                • Twitter
                                                                                                                                  • YouTube
                                                                                                                                    • Massachusetts Lottery
                                                                                                                                      • Television advertising
                                                                                                                                        • Figure 16: Massachusetts Lottery television ad, 2011
                                                                                                                                      • Website
                                                                                                                                        • Facebook
                                                                                                                                          • Twitter
                                                                                                                                            • YouTube
                                                                                                                                            • Participation, Ticket Purchase, and Games Played

                                                                                                                                              • Key points
                                                                                                                                                • Introduction
                                                                                                                                                  • Lottery participation
                                                                                                                                                    • Men more likely to play
                                                                                                                                                      • Figure 17: Lottery play ever and in last month, by gender, August-September 2011
                                                                                                                                                    • 25-64s most likely to play
                                                                                                                                                      • Figure 18: Lottery play ever and in last month, by age, August-September 2011
                                                                                                                                                    • Lowest- and highest-income brackets least likely to play
                                                                                                                                                      • Figure 19: Lottery play ever and in last month, by household income, August-September 2011
                                                                                                                                                    • Ticket purchasing
                                                                                                                                                      • Figure 20: Purchase of lottery tickets in past 12 months, by gender, April 2010-June 2011
                                                                                                                                                      • Figure 21: Frequency of lottery ticket purchase, by gender, April 2010-June 2011
                                                                                                                                                    • 18-24s least likely to purchase tickets
                                                                                                                                                      • Figure 22: Purchase of lottery tickets in past 12 months, by age, April 2010-June 2011
                                                                                                                                                    • Instant games more popular with young adults
                                                                                                                                                      • Figure 23: Type of lottery tickets purchased in past 12 months, by age, April 2010-June 2011
                                                                                                                                                    • Older players buy tickets more frequently
                                                                                                                                                      • Figure 24: Frequency of lottery ticket purchase, by age, April 2010-June 2011
                                                                                                                                                    • Low-income earners least likely to buy tickets
                                                                                                                                                      • Figure 25: Purchase of lottery tickets in past 12 months, by household income, April 2010-June 2011
                                                                                                                                                    • Weekly drawings more popular among those earning $50K+
                                                                                                                                                      • Figure 26: Type of lottery tickets purchased in past 12 months, by household income, April 2010-June 2011
                                                                                                                                                    • Affluent play less frequently
                                                                                                                                                      • Figure 27: Frequency of lottery ticket purchase, by household income, April 2010-June 2011
                                                                                                                                                    • Games played
                                                                                                                                                      • Instant tickets most popular
                                                                                                                                                        • Figure 28: Games played in past month, by gender, August-September 2011
                                                                                                                                                      • 25-34s versed in gaming spectrum
                                                                                                                                                        • Figure 29: Games played in past month, by age, August-September 2011
                                                                                                                                                      • Highest-income groups play fewer games
                                                                                                                                                        • Figure 30: Games played in past month, by household income, August-September 2011
                                                                                                                                                    • Average Spend on Lottery Games in Past Month

                                                                                                                                                      • Key points
                                                                                                                                                        • Men spend more
                                                                                                                                                          • Figure 31: Mean spend on lottery in past month among lottery players, by gender, August-September 2011
                                                                                                                                                        • 25-34s a high-value segment
                                                                                                                                                          • Figure 32: Mean spend on lottery in past month among lottery players, by age, August-September 2011
                                                                                                                                                        • Those from $150K+ households spend most
                                                                                                                                                          • Figure 33: Mean spend on lottery in past month among lottery players, by household income, August-September 2011
                                                                                                                                                        • Players from Northeast spend most
                                                                                                                                                          • Figure 34: Mean spend on lottery in past month among lottery players, by region, August-September 2011
                                                                                                                                                        • Urbanites spend more
                                                                                                                                                          • Figure 35: Mean spend on lottery in past month among lottery players, by urban area, August-September 2011
                                                                                                                                                      • Attitudes: Payouts, Benefits, and New Games

                                                                                                                                                        • Key points
                                                                                                                                                          • Many enjoy playing lottery even when they don’t win
                                                                                                                                                            • Figure 36: Attitudes to payouts, benefits, and games, by gender, August-September 2011
                                                                                                                                                          • Younger players more interested in new and themed games
                                                                                                                                                            • Figure 37: Attitudes to payouts, benefits, and games, by age, August-September 2011
                                                                                                                                                          • $150K+ players most likely to only play when payout is large
                                                                                                                                                            • Figure 38: Attitudes to payouts, benefits, and games, by household income, August-September 2011
                                                                                                                                                        • Custom Consumer: High Spenders

                                                                                                                                                          • Black men a high-value segment
                                                                                                                                                              • Figure 39: Indexed profile of lottery spend groups, by gender, household income, and race/Hispanic origin, August-September 2011
                                                                                                                                                            • New games, social playing, optimism, community benefits drive usage
                                                                                                                                                                • Figure 40: Attitudes to payouts, benefits, and games, by participation in past month, August-September 2011
                                                                                                                                                              • Key attitudinal drivers explain differences in spending
                                                                                                                                                                • Figure 41: Attitudes to payouts, benefits, and games, by high, medium, and low spend groups, August-September 2011
                                                                                                                                                              • Social players and those who recognize benefits to states spend more
                                                                                                                                                                  • Figure 42: Mean spend on lottery in past month among lottery players, by attitudes to lotteries part 1, August-September 2011
                                                                                                                                                                • Those who play for fun spend more
                                                                                                                                                                  • Figure 43: Mean spend on lottery in past month among lottery players, by attitudes to lotteries part 2, August-September 2011
                                                                                                                                                                • Those who want to play online or via mobile are heavy spenders
                                                                                                                                                                  • Figure 44: Mean spend on lottery in past month among lottery players, by interest in playing online or via phone, August-September 2011
                                                                                                                                                              • Impact of Race and Hispanic Origin

                                                                                                                                                                • Key points
                                                                                                                                                                  • Blacks more likely to buy tickets
                                                                                                                                                                    • Figure 45: Purchase of lottery tickets in past 12 months, by race and Hispanic origin, April 2010-June 2011
                                                                                                                                                                  • Blacks and Hispanics purchase more frequently
                                                                                                                                                                    • Figure 46: Frequency of lottery ticket purchase, by race and Hispanic origin, April 2010-June 2011
                                                                                                                                                                  • Black players spend most
                                                                                                                                                                    • Figure 47: Mean spend on lottery in past month among lottery players, by race/Hispanic origin, August-September 2011
                                                                                                                                                                  • Blacks most likely to report liking to try new games
                                                                                                                                                                    • Figure 48: Attitudes to benefits beyond winning, by race/Hispanic origin, August-September 2011
                                                                                                                                                                • Appendix: Additional Consumer Tables

                                                                                                                                                                    • Figure 49: Type of lottery tickets purchased in past 12 months, 2006-11
                                                                                                                                                                    • Figure 50: Ever played state lottery, by region, August-September 2011
                                                                                                                                                                    • Figure 51: Ever played state lottery, by race/Hispanic origin, August-September 2011
                                                                                                                                                                    • Figure 52: Type of tickets purchased in past year, by race/Hispanic origin, April 2010-June 2011
                                                                                                                                                                    • Figure 53: Purchase of lottery tickets in past 12 months, by language spoken in home, April 2010-June 2011
                                                                                                                                                                    • Figure 54: Frequency of lottery ticket purchase, by language spoken in home, April 2010-June 2011
                                                                                                                                                                    • Figure 55: Type of lottery tickets purchased in past 12 months, by language spoken in home, April 2010-June 2011
                                                                                                                                                                • Appendix: Trade Associations

                                                                                                                                                                  Companies Covered

                                                                                                                                                                  • BMW of North America, LLC
                                                                                                                                                                  • ESPN, Inc.
                                                                                                                                                                  • Facebook, Inc.
                                                                                                                                                                  • Foursquare
                                                                                                                                                                  • Gaming Standards Association
                                                                                                                                                                  • Greenfield Online
                                                                                                                                                                  • National Association for Stock Car Auto Racing (NASCAR)
                                                                                                                                                                  • National Football League Inc.
                                                                                                                                                                  • Starbucks Corporation
                                                                                                                                                                  • Twitter, Inc.
                                                                                                                                                                  • U.S. Bureau of Labor Statistics
                                                                                                                                                                  • U.S. Bureau of the Census
                                                                                                                                                                  • University of Michigan, The
                                                                                                                                                                  • US Department of Commerce
                                                                                                                                                                  • USA Today
                                                                                                                                                                  • Walmart Stores (USA)
                                                                                                                                                                  • Whole Foods Market Inc
                                                                                                                                                                  • YouTube, Inc.

                                                                                                                                                                  Lotteries - US - December 2011

                                                                                                                                                                  £2,684.63 (Excl.Tax)