Lotteries Commission Plans For Growth

New Zealand Lotteries Commission Plans For Growth

The New Zealand Lotteries Commission (NZLC) is planning to revitalise its business and develop opportunities for growth, after a year of consolidation and change.

An expanded executive team, exciting new products and a vigorous focus on new business opportunities should lead to enhanced revenue streams in future years, Lotteries Commission CEO Mrs Burgess said.

The Commission’s Statement of Intent, tabled today in Parliament, shows that NZLC is on track to transfer its budgeted sum of $130 million to the Lottery Grants Board for financial 2001. The money is distributed by the Grants Board to fund sport, arts and community programmes right around New Zealand.

“Like most retail businesses, this year has been a difficult one for NZLC,” said Mrs Burgess. “The discretionary income market has been intensely competitive, and the disposable dollar under significant pressure, for much of the year. Our sales have also been heavily impacted by the dramatic spread of poker machines, particularly the ‘gaming parlours’ opening up in the smaller towns and provincial centres of New Zealand.”

For this reason, earnings had again fallen somewhat short of the budgeted target. However, the Commission had decided to commit its remaining reserves to meeting the promised figure. “We fully understand how reliant the organisations the Grants Board supports are on our funding stream,” Mrs Burgess said “and we are pleased to be able to make this payment in full.”

Because of continuing uncertainties in its markets, however, the Commission had adopted the more conservative earnings target of $115 million for financial 2002, while planning to focus strongly on opportunities for growth.

“For several years now, sales of our products have been drifting down,” Mrs Burgess said, “however this has not been recognised in our forecasts. Obviously no business can continue to top-up its earnings from capital reserves forever, and ours is no exception.”

The recent introduction of Powerball appeared to have stabilised, and even potentially lifted, the important Lotto revenue stream, however it was early days yet and not clear how the jackpotting product would perform over time.

Considerable uncertainties also existed in the international economic environment, which might impact upon the domestic economy during the financial year. This in turn would be bound to impact upon earnings in a business whose performance was influenced as strongly by economic factors as NZLC’s was, Mrs Burgess said.

“Taking all these factors into account, we have established a ‘baseline’ figure which we can have some confidence in our ability to deliver to the Grants Board. This in turn will help the organisations they support plan their activities for the financial year.”

In spite of the conservative forecast, however, NZLC’s Business Plan outlined a programme to identify and vigorously pursue growth and development opportunities, within the organisation’s “safe gaming” mandate.

“For some years, the Lotteries Commission has had a static product line,” Mrs Burgess said. Towards the end of that period, inevitably, sales had begun to drift downwards as products aged and promotional programmes became predictable.

The organisation had now understood that it must change and grow if it was to continue to generate the funds community organisations relied on. The process had begun in financial 2001 and would continue and gather momentum during the coming year.

“We are committed to completely re-energising and refocusing our business,” Mrs Burgess said. “We will follow up the successful introduction of Powerball and the launch of our new gameshow Risk with other well-planned initiatives to develop markets for existing and new products.”

“We are also aware of the opportunities and threats to our business that new
media gaming presents, and will carefully investigate how to respond. All our planned initiatives, however, will be designed to comply with the “safe gaming” parameters our organisation imposes on itself.

“Recent research has confirmed to us that New Zealanders like to play our games, and are keen for us to develop new ways they can have fun with the chance to win great prizes. But our customers also want us to ensure that they and their families are playing those games in a safe environment.

“It would be easy for us to develop our business by marketing hard-gambling products offering instant gratification and immediate reinvestment incentives. Some people buy these products, but they acknowledge they can cause harm in some circumstances and that is not what they want from us” Mrs. Burgess said.

“We know the coming year will be challenging, but we’re looking forward to seeing our business develop and grow. We intend to work hard to find new ways our customers can have fun and – just maybe – find themselves a lot richer!” Mrs Burgess said.

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