State rebranding of scratch tickets to continue after ‘Kwikies’ debacle

Posted March 20, 2013, at 10:27 a.m.
Gerry Reid, director of the Maine Bureau of Alcoholic Beverages and Lottery Operations, testifies before the Veterans and Legal Affairs Committee on Monday at the State House in August.
Gerry Reid, director of the Maine Bureau of Alcoholic Beverages and Lottery Operations, testifies before the Veterans and Legal Affairs Committee on Monday at the State House in August. Buy Photo

AUGUSTA, Maine — The state’s efforts to rebrand instant-win scratch tickets will continue despite an announcement Monday that an initiative to call the tickets “Kwikies” has been abandoned.

Gerry Reid, director of the Maine Bureau of Alcoholic Beverages and Lottery Operations, said Tuesday that widespread negative feedback about the name, mostly from retailers at the front lines of selling the tickets, made the decision to scuttle it easy. But that doesn’t change his desire to find another name in an attempt to create a powerful new marketing tool.

“Part of the branding dilemma we have is that everyone calls them something different,” said Reid on Tuesday. “In the instant or scratch game side of the business, we have 30 or 40 games out there and they change frequently. If you want to do a promotion or advertising, which are the usual tools used to market a business, if you don’t have a known identity it’s hard to do any advertising or marketing. You have to have something to market. The brand has value.”

Reid said he and his staff are exploring new names for instant-win tickets, scratch tickets, rub-off tickets or whatever you happen to call them. A common way to refer to them would make marketing them easier and reinforce that they are lottery tickets with lottery-sized payouts, said Reid.

“There’s been very little innovation in branding on instant games, which is the reason we’re laboring somewhat on our own,” he said. “We’re going back to our list of interesting candidates and will be working on that over the next few weeks.”

Reid declined to say which names were on the short list.

Timothy Poulin, deputy director of the Maine Bureau of Alcoholic Beverages and Lottery, said inventing new scratch ticket games is a constant task that involves market tests and face-to-face talks with the 1,300 retailers — most of them convenience stores — that sell lottery tickets in Maine. The goal is to keep increasing sales by bringing more players into the game, particularly young ones.

“Some people just want the latest crossword or bingo game and that’s unique for that player base,” said Poulin. “Everyone in any business in the world wants to get to the young demographic. It’s the strongest demographic of growth potential that everyone sees, that 18-35 age group.”

Reid said younger people are increasingly attuned to all sorts of gaming on their mobile devices. Two states sell lottery tickets over the Internet and mobile devices, but the Legislature and Gov. Paul LePage created a law against the practice in 2012. Jamie Py, president of the Maine Energy Marketers Association, which represents hundreds of convenience stores in Maine, said laws like that would cut into profits for store owners, many of whom count on lottery revenues to keep their businesses afloat. He said his association is supportive of any efforts to sell more tickets in Maine.

“If you can increase the number of people who come into the store, it’s always good for the retailers,” said Py.

Reid had retired after 32 years of marketing food, beverages, tobacco and spirits in other states, but said he “probably retired a little too early,” which is why he decided to take a government job. According to his biography, his previous experience includes working as managing director of Jose Cuervo and international and senior vice president of Diageo NA, both producers of tequila. He has also held high-level management and marketing posts for Kraft Jacobs Suchard, Fruit of the Loom, Inc. and has worked for Kraft General Foods, Brown and Williamson Tobacco Corp. and Bristol Myers Co. He said he decided to take his current job after being recruited for it and because he thought he could help the state negotiate new liquor and lottery contracts.

“I came back to try to help the state re-energize this business,” said Reid. “I accepted the challenge of that situation because I thought it would be interesting. I saw it as an opportunity to do something productive and useful.”

According to Reid, more than 60 percent of Maine’s $230 million in lottery sales last year were for scratch tickets. Approximately 62 percent of that $230 million was paid out to winners and retailers who sell the tickets. About 23 percent — totaling about $53 million — went into the General Fund in 2012, which pays for the majority of state government. The rest went to commissions to retailers (6.4 percent), vendor fees (4.6 percent), operational expenses (3.4 percent) and the Maine Outdoor Heritage Fund (0.2 percent).

“The priority at the moment is to get this branding thing right,” said Reid. “Keeping those games fresh and interesting is much of what we’re trying to do all the time. Once we have that bridge crossed it’s a matter of having people interested.”

Not that people aren’t interested. In 2012, some $165 million worth of scratch tickets were sold in Maine ranging from $1 to $20 apiece. That was up 5.2 percent from 2011. The cheaper games were most popular, with more than 30 million $1 and $2 tickets sold in 2012. More than 1.4 million players anted up $20 that year.

Since 2000, lottery sales in Maine have gone from about $148 million to $228 million. Proceeds to the General Fund went from $38 million in 2000 to more than $53 million in 2012, when it netted more profit for the state than lottery sales ever have.

Draw games, such as Megabucks and Powerball, where players choose or are given a set of numbers to compare to a random drawing of winning numbers, tallied about $63 million in 2012 sales, were up 6.3 percent from the previous year. The number of tickets sold in draw games was harder to compute because they feature ways for players to pay more for chances at larger prizes, but Megabucks and Powerball led the pack by far with $16 million and $22 million in sales, respectively, in 2012.

According to Poulin, draw games such as Powerball are examples of how branding can help pull in players, though a few hundred million dollars in prize money doesn’t hurt. Last November when the Powerball jackpot surpassed $500 million, the Maine State Lottery saw peak sales in that game of about $1,000 per minute. Events like that — or such as this week when the Powerball jackpot is at $260 million — can also drive scratch ticket sales and, according to Poulin, produce a marketing opportunity for other lottery games.

“This is where the infrequent, casual players get in, where there’s a jackpot in the $250 million range,” said Poulin. “Our goal is to get tickets into the hands of people who aren’t frequent players or are nonplayers.”

Poulin said that the push to continually increase lottery sales is because of the benefits, and not just for jackpot winners or the state budget.

“We are generating almost $230 million in annual sales and a lot of that goes back to the winners,” he said. “We’re also generating about $14 million in commissions and selling bonuses back to our retailers. This is a very good business for Maine.”

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