Lottery Day One Lottery Day Two Demographics

Lotteries Win With Slick Marketing

About This Series Frequent players Bob Barrow (left) and Duane Beach with their tickets. (James A. Parcell/The Washington Post) • Today: In a relentless quest for new customers, lotteries plumb player psychology and aggressively target customers by gender, age, socio-economic status and lifestyle. • Lotteries create political dilemma for governments. • Sunday: The Md., Va. and D.C. lotteries have become a $2.2 billion-a-year cash cow that relies on a hard core of heavy players who, on average, have lower incomes and less education than the population as a whole. • Profile of a lottery patron.

Second of two articles

By Charles Babington
and Ira Chinoy
Washington Post Staff Writers
Monday, May 4, 1998; Page A1

In Virginia, when surveys revealed that women were quicker to lose interest in playing the state lottery than men, marketing officials redesigned instant scratch-off tickets with eye-catching colors and pondered how best to position vending machines in grocery stores.

In Maryland, after lottery consultants concluded that some players – whom they dubbed "Fragile Egos" – were "easily discouraged when gambling," they suggested that faster games with more prizes might embolden the faint of heart.

And in Washington, when Powerball sales sagged, lottery officials tapped get-rich fantasies with a television commercial in which a mundane "To Do" list – "Drop off kids," "Pick up groceries" – is transformed into: "Call my yacht dealer," "Pick up Hope Diamond."

In the relentless quest for new customers, government- run lotteries in the Washington region have wholeheartedly adopted the tactics and techniques of Madison Avenue to encourage more citizens to part with more money, more often.

The three lotteries – which collectively gross more than $40 million in a typical week – plow millions back into advertising campaigns, focus groups, polls and sophisticated dissections of player psychology.

Marketing campaigns target players by gender, age, socioeconomic status or "psychographic attributes," as one Maryland study put it.

The lottery marketers also seek to "capture" citizens ordinarily not inclined to play.

A 1987 Maryland state audit, for example, proposed research into "what game is most effective in luring an individual into playing for the first time." The audit called for more sophisticated analysis and strategies for reaching particular "segments" of the market, an approach that has been taken to heart in many states. For instance, Virginia officials at a sales retreat last year pondered "ways to market to Generation X as the purchasing power of this younger generation is increasing in the '90s," according to minutes from the meeting.

The D.C. Lottery's 1997 "strategic update" similarly proposed creation of "educational vehicles to encourage newer, younger players." The document also outlines a proposed "targeted marketing effort" aimed at reaching the "rapidly growing Hispanic population" by increasing the small number of Hispanic lottery agents.

A Maryland Lottery consultant's 1994 report noted that "it will be critical to maintain [the state's] base" of heavy Keno players, who were described as "lower income, less educated [and the] heaviest minority" compared to more casual players. "Politically," the report added, "it could be difficult to defend promoting gambling to this segment."

To some officials, bold efforts to promote lottery play present an ethical quagmire; state government traditionally is seen as an institution to serve and protect rather than profit from its citizenry. Because low-income players contribute a disproportionate share of their income to lotteries, critics assert the games represent a regressive funding approach that is contrary to tax systems designed to give the poor and near-poor a break. A national commission currently studying gambling in America is focusing, in part, on the impact of lotteries and whether marketing should be limited.

"The most basic reality of any lottery," as the Maryland Lottery's advertising firm conceded last spring in a document it provided to The Washington Post, is that "most people lose most of the time." Rarely is gambling the easy path to fortune that some lottery ads suggest. At times it can have a corrosive effect, critics assert, placing government in the position of encouraging potentially addictive behavior.

"The idea that you can buy a lottery ticket and overnight your problems will go away is a terrible idea for the state to be promoting," said Maryland Sen. Christopher Van Hollen Jr. (D-Montgomery), who wants to reduce but not eliminate lottery advertising.

Yet the extent to which Richmond, Annapolis and the District now rely on lottery revenue means that advertising, market analysis and the development of faster, more alluring games continue to intensify.

As Maryland lottery sales were declining 6 percent in fiscal 1997, for example, the state lottery agency vowed to redouble "aggressive marketing efforts," including the use of direct mail solicitation for "all games." In soliciting bids from advertising agencies, the lottery cited "a critical need to increase lottery game sales more quickly."

The General Assembly responded by boosting the agency's annual advertising budget from $12 million to more than $14 million.

In an effort to heed the mandate from state governments, lottery agencies and their consultants are vigorous and unapologetic in pursuing higher sales. Said Sara Eisner, a Baltimore advertising executive who handles the Maryland Lottery's contract: "I want us to be looked at like a Sears or a Saturn or a Southwest Airlines."

'Psychographics'

In helping marketing firms ponder how best to peddle the Virginia Lottery, for example, state officials asserted that scratch ticket customers tend to play the lottery on impulse, to be "guided by what others will think" and to watch television mostly in late morning and late evening. Just as lottery consultants grouped Maryland Keno players into three "attitudinal clusters" – Fragile Egos, Entertainment Seekers and Solitary Gamblers – the Virginia Lottery classified instant game "prospects" as Belongers, Emulators or Achievers.

Players of Maryland's Pick 3 numbers game are "superstitious, playing 'their' numbers loyally unless they happen to dream a number or get a hunch," according to a 1997 analysis by Trahan, Burden & Charles Inc., a Baltimore advertising firm that handled the state's lottery account for 15 years before losing it last year.

One section of the analysis, titled "Psychographics/Demographics," asserts that Pick 3 players tend to be "less educated, lower income and more black than players overall." Pick 3 is the Maryland Lottery's biggest earner, accounting for nearly 33 percent of all sales last year.

To exploit superstitions, including widespread fears of failing to play a "lucky" number every day, Maryland and other states deftly use supernatural themes in television commercials. A recent Maryland ad, dubbed "Linguine," featured a diner customer who sees a "6" in the waitress's hairdo, a "2" in his pasta bowl and a "0" in the water ring under his glass. When he fails to play the obvious 6-2-0 combination that night, the sequence turns out to be the Pick 3 winner.

"Your numbers," the announcer asserts, "are out there."

Other lottery ads focus on fantasy rather than fear. A TV commercial for the D.C. Lottery's Powerball game suggested that a winner's lifestyle could be magically transformed, but never mentioned that the odds of winning a multimillion-dollar jackpot were then 1 in 55 million. The odds of winning second prize – $100,000 – exceeded 1 in 1 million.

Anthony Cooper, who became director of the D.C. Lottery last year after the commercial aired, said he disapproves of that ad because gambling should not be touted "as the road out of poverty." Yet, the D.C. Lottery's current marketing plan calls for the agency to "advertise the life-altering jackpots at any level, especially in the $40 to $100 million range."

"That's a term of art to describe the jackpot," Cooper said last week. "We're not advertising them as life-altering."

After extensive research, games also have been designed to appeal to particular player types. Dice and card themes, for example, allure "high rollers," according to some studies. A proposed "Star Trek" advertising theme in Virginia is designed to appeal to "upscale enthusiasts."

Some lottery marketing tools are strikingly complex. Maryland's 1997 "New Product Definition Study via Conjoint Analysis" enlisted players to try different games on a "market model simulator." The resulting 71-page assessment concluded that Maryland players care far more about total winnings than the likelihood of winning – a prescription for bigger jackpots and longer odds.

D.C. Lottery plans in recent years have delineated a "target market" for each game. The market for small-stakes Lucky Numbers is identified as "blue collar to middle income," for example, while the big jackpot Powerball is deemed better suited for "middle to higher incomes." To evaluate prospective marketing firms, the lottery last year asked them to submit strategies to "motivate people to play D.C. Lucky Numbers who might not ordinarily play a 3-digit game."

"Like any other business, yes, you have to understand your market," Cooper said. "You have to understand who's buying your product, and you have to understand who's not buying your product."

Lottery officials in Virginia, Maryland and Washington say that references to "targeting" particular slices of the population reflect an attempt to reach a wide audience.

"Our strategy is to broaden the player base," Cooper said, "and that includes Generation X, Generation Y and Generation Z." Paul Louderman, sales and marketing director for the Virginia Lottery, said, "I think it's just our whole mission to be more diversified. Our goal is not just to talk to the male player anymore."

In Maryland, lottery director Buddy Roogow said he is pushing his agency away from targeting "a specific group of people. Our advertising will be more universal than specific."