The Commissioners Meeting
August 11, 2000

Below is a portion of the transcript from the Commissioners
August 11, 2000 meeting where the topic of discussion
was Lotto Texas. My comments and questions are
at the end.

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- Revised - March 5, 2001 -
(Added a link to see what the 6 month anniversary brought. Link found after
Ms. Cloud explains that she needs 6 months for the change to work for them. )

......

CHAIRMAN CLOWE: We'll now return to the agenda and Item No. 2, the report, possible discussion and/or action on lottery sales and trends. Linda, I think you and Toni are going to handle this for us.

MS. SMITH: Good morning, Commissioners. For the record, my name is Toni Smith. I'm the marketing director of the TexasLottery Commission. To review sales, we'll look at the handout that I have given you for the week ending August 5, 2000. Total fiscal year, 2000 sales to date, $2,477,898,980.00. This is up 2.36 percent from the fiscal year '99 total sales to date of $2,420,725,298.50. The weekly sales average for fiscal year 2000 to date is $50,569,366.93, which also reflects the increase of a 2.3 percent from fiscal year '99 sales weekly average of $49,402,557.10. This is based on a total of 49 weeks of sales.

To look at the year-to-date sales by product, we usually just sort of take a snapshot of the Instant product and Lotto Texas. The Instant product is up 17.94 percent from fiscal year '99. We are at $1,553,132,499.00, and this represents 62.68 percent of our current sales. For last year, for fiscal year '99, we were at $1,316,937,616.00. At that time, that represented 54.4 percent of sales.

To look at Lotto Texas, Lotto Texas is down, compared to last year, at 19.94 percent. Fiscal year 2000, we're at $542,058,768.00, and it currently represents 21.88 percent of sales. And for fiscal year '99 for Lotto Texas, we were at $677,105,235.00. And for fiscal year '99, it represented 27.97 percent of sales.

Then to take a much closer look at this past week, for the week ending August 5th, the Instant product was up 3.55 percent from $31,520,568.00 to $832,639,880.00. Lotto Texas was down 41.80 percent from the $16,010,925.00 to $9,317,959.00. But I think that change there is strictly correlated to the fact that we had a $40 million jackpot the week before. So from one week to the next, the big difference is in the jackpot itself. We were ahead and then dropped down to four. So this past week represented jackpots of $6 million and $9 million. Are there any questions?

CHAIRMAN CLOWE: Toni, I know it's very early -- I've had a conversation with Linda -- And Linda, you may want to enter into helping us understand, as best you can ground us, on what your perception is.

(Ms. Kiplin entered the room.)

CHAIRMAN CLOWE: And I think at this point in time, it probably is a perception of how it went as the jackpot built to $40 million. We clearly see what happened after that jackpot was hit. Could you give us a read on how you perceive the players are receiving the 54-ball matrix since the change.

MS. CLOUD: Commissioners, we're not going to see a big change in sales until we do have a big jackpot. Right now, what we're seeing is this is a winnable game. Our players are still winning. What we're hearing from the retailers and from our players -- and this is totally something that's very encouraging to me -- is the retailers are having bigger lines; players are playing the game. They're excited about the new game, and they're playing. Some of them are grumbling a little bit about the four balls, but the retailers are saying it doesn't matter, they're still going to play. What I think we need to recognize is that we are only three weeks into this, and we need to give our game time. I think it's going to take us six months to see a change in the sales. We've got to have an opportunity for that jackpot to roll, and it hasn't done that yet. And we know this is a jackpot-driven game, and that's what is going to drive the sales. Toni, do you want to add anything to that?

6 Months Huh? Well, lets see what the 6 month anniversary brought you. Click here.

MS. SMITH: I would just like to add that I think that the fact that we have had two winners since the matrix change went into effect is a positive thing for those players who felt that the game would be more difficult to win. I mean, in that period of time, we've had a winner at $40 million and at $9 million. So it's still a very winnable game.

MS. CLOUD: The $40 million jackpot, we were already $21 million into that roll with the old matrix. So we only had two rolls under the new matrix to get to the $40 million. So I'm still very optimistic. It's a matter of time. And I know everyone is impatient to see a change, but we have to wait until that change happens. This is a game that is going to happen based on the numbers that are drawn. And we just have to wait and see how this game is going to work. We haven't given it enough time yet.

COMMISSIONER SADBERRY: But can we definitely say, or at least say from what we've seen thus far, that we don't have this big drop-off in players because of the additional balls that some predictions are being --

MS. CLOUD: No. Absolutely not. What we have seen, Commissioner, is that the draw sales have increased slightly. But we don't want to even brag about it, because it's so slight. But we are not seeing a decline.

COMMISSIONER SADBERRY: You haven't been flooded with calls protesting it and wanting --

MS. CLOUD: We still get, through our customer service department, complaints from players that object to the rule change. Not many; it's an average of what we've always received. But we're not getting many letters or complaints like we did.

COMMISSIONER SADBERRY: And have we explained to the satisfaction of those who wanted to know how the additional balls got in the draw so quickly?

MS. CLOUD: We have responded to all of them. So, hopefully, we've explained it. Whether they have accepted our explanation or not remains to be seen. But we did explain it.

CHAIRMAN CLOWE: You're a brave man. I might substitute the word that you used about impatience for the game to develop. I don't think, on behalf of the Commissioners, we're not impatient. But I want it to be known that we're very interested, and we're going to watch this very carefully. I think your summary is correct. It's too early, and it's going to take some time -- six months, maybe longer, depending on the jackpots -- to see what the player reaction is. I know that you had a very favorable retailer town hall meeting in Abilene, Texas, I believe it is.

MS. CLOUD: Yes.

CHAIRMAN CLOWE: And the response of the retailers there was very positive. That's a good way to get feedback. But Toni, the Commissioners will be watching the sales with a high level of interest, and so your appearance before us each month will be one where, if you will, you'll give us your perceptions. And we want to watch this very closely as the players deal with these new balls, and see how the game is progressing.

MS. SMITH: Okay. I can do that for you.

MS. CLOUD: Commissioners, speaking of the Abilene town hall meeting -- I think I've shared this with you, Commissioner Clowe, but I thought the other two might enjoy this, too. One retailer spoke up and said he was sitting in his office when some players came in to his cashier and asked for -- Lotto Texas had given them the place to play Lotto Texas -- but was complaining about the four balls. And he says he came out of his office, and he said, "Folks, I just want to tell you something. The State gave you four more balls and didn't charge you a dime for it. Now, what are you complaining about?" But I thought that was real cute, and that was the kind of attitude most of the Abilene retailers had. They were very, very positive.

CHAIRMAN CLOWE: Very good. The next item, Toni, I think is yours as well; that is, report and possible discussion and/or action on lottery advertising and promotions, including print media criteria.

My Questions/Comments After Reading The Transcript ...

Ms. Cloud: - When you said, "I think it's going to take us six months to see a change in the sales." If by chance you are banking on players forgetting and getting on with the program under the old philisophy - "time heals all wounds," I think you will be sadly mistaken because your opposition is planning on hanging in there with you and reporting everything to the players. We do, however, recognize that because of the increase of balls that it is much harder to win, therefore, we know that you will get your large jackpot. Sales should be much greater for you which may bring in the percentages you need to break even. But the players of Texas will put forth the effort to prevent this from happening - as to our success when the time comes - well, that remains to be seen.

The Lotto Report
P. O. Box 495033
Garland- Texas 75049-5033
(972) 686-0660
(972) 681-1048 (Fax)