Ioe Capabilities Will Help Ontario Lottery and Gaming Create New Revenue Streams

Jurisdiction Profile

IoE Capabilities Will Help Ontario Lottery and Gaming Create New Revenue Streams

EXECUTIVE SUMMARY Background In January 2014, Cisco released the results of an in-depth analysis of the economic Objectives benefits of the Internet of Everything (IoE) for the public sector. Cisco’s model • Expand shareholder profits, attract revealed that some $4.6 trillion in “Value at Stake” would result from the adoption younger audience, and ensure that gaming dollars remain in province of IoE capabilities across 40 key public sector use cases over the next 10 years, including smart water, smart buildings, smart energy, smart parking, and more Strategy (http://bit.ly/1aSGIzn). • Modify operational abilities to reflect new oversight role and focus on analytics As a next phase of its analysis, Cisco engaged Cicero Group, a leading data- • Within 12 to 18 months of releasing the driven strategy consulting and research firm, to undertake a global study of IoE online gaming platform, launch mobile capabilities across these 40 use cases — how the best public sector organizations gaming opportunities are “connecting the unconnected,” as Cisco terms it. To that end, Cicero Group conducted interviews with dozens of leading public sector jurisdictions — federal, Solution state, and local governments; healthcare organizations; educational institutions; and • PlayOLG.ca gambling and lottery non-governmental organizations (NGOs) — to explore how these global leaders are website offers player protection, secure transactions, and data privacy leveraging IoE today. • Virtual wallet will allow gamers to collect The research examined real-world projects that are operational today, are being wagers and make deductions for lottery play delivered at scale (or through pilots with obvious potential to scale), and that represent the cutting edge of public sector IoE readiness and maturity. The aim Impact of the research was to understand what has changed in terms of the jurisdictions’ • Open new revenue streams by capturing people, processes, data, and things, and how other public sector organizations can segments of population not interested in learn from (and replicate) the trail blazed by these global IoE leaders. In many cases, traveling to physical gaming facilities these jurisdictions are Cisco customers; in others, they are not. The focus of these • Recover taxes and profit that are jurisdictional profiles, therefore, is not to tout Cisco’s role in these organizations’ otherwise going to offshore online gaming companies success, but rather to document IoE excellence, how public sector entities are putting IoE into practice today, and to inform a roadmap for change that will enable • Detect fraud and protect integrity of product more precisely than casino the public sector to address pressing challenges on multiple fronts by drawing on cameras allow best practices from around the globe. • Benefit public projects — such as infrastructure, education, and healthcare — with new facilities in municipalities • Increase efficiency and oversight • Utilize Responsible Gaming program more effectively through better information tracking

About Ontario Lottery and Gaming In order to expand shareholder profits, Ontario Lottery and Gaming (OLG) is modernizing the way it provides lottery and games. OLG is an important revenue source for the Ontario government, and as technology has developed, OLG leadership sees a need and opportunity in the growing public demand for iGames. In an effort to keep gaming dollars in the province, OLG is launching PlayOLG.ca, a new, secure website for gambling and lottery play. It will offer player protection, secure transactions, and data privacy, and will require players to register to play. The iGaming initiative at OLG is part of a larger modernization strategy aimed at utilizing technology to improve operations in Ontario’s gaming industry.

The agency realized Tom Marinelli is acting president and CEO of the Ontario Lottery and Gaming an overhaul of product Corporation. He has been with OLG for 23 years. Previously, Mr. Marinelli served delivery, as well as OLG in a number of other senior positions, including vice president, gaming support; vice president, corporate business optimization; and chief technology officer. Most operational management, recently, he held the positions of executive vice president, chief transformation was necessary. OLG saw officer, and chief information officer. He has a degree in systems design engineering that rather than expecting from the University of Waterloo, and, prior to OLG, spent time in the industrial, military, and pharmaceutical sectors. all customers to go to casinos or retail locations to purchase lottery tickets, Objectives the games should also After significant drops in casino attendance over the past decade, Ontario Lottery and Gaming evaluated what would draw more customers. The research be made available to indicated that adults under 45 bought lottery tickets less frequently than their customers online in a older counterparts. The agency realized an overhaul of product delivery, as well as responsible manner. A plan operational management, was necessary. OLG saw that rather than expecting all was developed to introduce customers to go to casinos or retail locations to purchase lottery tickets, the games should also be made available to customers online in a responsible manner. A plan online gaming (followed by was developed to introduce online gaming (followed by mobile gaming), as well as mobile gaming), as well as to transform the agency from an operational delivery organization into a strategy and to transform the agency market management agency. from an operational delivery organization into a strategy Strategy and market management OLG is working with Internet and mobile gaming providers to launch an Internet agency. gaming platform, PlayOLG.ca, in late 2014 to attract new customers. There is a procurement process to select vendors, with one vendor already creating a suite of games that will be part of the initial launch. Mr. Marinelli talks of the importance of connecting with new companies to reach demographics that are less interested in location-based casino gaming. “Are people under 45 really interested in buying a lottery ticket that’s a piece of paper? Is there something else? Could they be more entertained? We’re really trying to capture that ability,” said Mr. Marinelli. “The other thing that we’re finding is that the refresh of a game has to be quicker, so that is where we are building technology. I do think not only from Ontario Lottery and Gaming Corporation, but from a lottery and gaming vertical, we’re looking at a step into the new world. We’re not necessarily cannibalizing the existing channels — it’s actually growing the whole pie.”

Mr. Marinelli described how online gaming will improve the experience for both the customer and for OLG. “As Ontario Lottery and Gaming develops into the future,” he said, “it is going to become more of an information-driven company than an operational type of organization. We’re going to be using the information we gather from the Internet or lottery play, and eventually we want to get to what I call the ‘360’ of the customer anywhere in the province. If you identify yourself, we are going to include you in the hub of all gaming information in Ontario. This will help with fraud detection, analytics, market management, and responsible gambling. We would have a direct connection with every customer to provide them better, more capable service.” Because each customer will go through a number of screens to verify identity and age, issues like lost lottery tickets become a problem of the past.

According to Mr. Marinelli, Being in the online and mobile gaming markets will help the province recover profits the online platforms will that are otherwise going to offshore online gaming companies. “We’re getting allow OLG to detect fraud cannibalized anyways — $400 million, right now, goes out of Ontario, offshore,” Mr. Marinelli stated. “As a province, we’re watching the money leave and we said and protect the integrity of to ourselves, ‘O.K., $400 million — it’s the Internet.’ And now we have to provide a its product more precisely competitive site. We’re not going to get all of the $400 million, but we want to be than cameras in casinos competitive. Let’s say we get a quarter of that, or one-third of it. That’s a significant amount of money that comes back to the people of Ontario. It’s money that supports allow. priorities like healthcare and education.”

According to Mr. Marinelli, the online platforms will allow OLG to detect fraud and protect the integrity of its product more precisely than cameras in casinos allow. “We can collect every key click. You get a lot more information when you’re online than you do if you’re in a retail area or even on a slot machine. You can monitor everything, so it’s just sifting through that pile of information to monitor for fraudulent behavior, responsible gambling, that sort of thing.”

Ontario Lottery and Gaming will use a secure virtual wallet that enables games to collect wagers, and will also allow deduction for lottery play. According to Mr. Marinelli, it will connect to the same lottery engine that connects to retail lottery locations, but “the only difference is when you buy online, you get a nice customer service benefit because you will have self-identified and we have your name and address. If you win, you’ll be able to transfer money from the site into your bank account. When you transfer funds into your virtual wallet to play, you know you’re only allowed to do so much. That is where our Responsible Gambling Program comes in.” The “wallet” will also be credited with any winnings a player might receive.

According to Mr. Marinelli, the larger modernization program will add to OLG’s contribution to the Provincial Treasury — already the biggest source of nontax revenue for the government of Ontario. Actuals are not available because it is still in procurement and implementation stages, but Mr. Marinelli says, “We have said we will provide the province with approximately $1 billion in new revenue annually by the time we get to 2018.”

The Ontario government owns and oversees activities and budgets related to Ontario Lottery and Gaming. Therefore, if there are changes to OLG’s oversight, contracts with service providers, or how it delivers gaming, the Ministry of the

Attorney General must approve that it aligns with the Criminal Code of Canada and Gaming Control Act of Ontario.

Ontario Lottery and Gaming has a conduct and management role within the gaming industry, where gaming providers are private operators. OLG’s role, however, allows the collection and dispersion of profits, along with enforcing compliance with proper gaming controls in the province. “Gaming in Canada started out where we had to do everything. As the world unfolds and technology starts to come, you have more ability to reach into the operations and you can kind of back up over who does what, [but we] still have to have management and control,” Mr. Marinelli said.

In Sault Ste. Marie, Ontario, Ontario Lottery and Gaming does extensive public outreach through its Media, OLG has partnered with Communications, Government, and Stakeholder Relations group. This includes the Innovation Centre to a website: www.ModernOLG.ca. The public relations campaign goes beyond the gaming customers, also reaching the retail and gaming operators as well as have developers come municipalities and First Nations, vendors, and the general public. In part, this is to up with new games that broaden understanding about the project and how it might affect operator income, may be of interest to OLG as municipalities and First Nations that host gaming facilities receive a portion of the customers. Characterizing profits. the Innovation Centre as a “petri dish” of software Solution innovation, Mr. Marinelli Online casino-style games have traditionally been developed by large gaming companies such as Bally and International Game Technology (IGT). However, Mr. says the ideas coming out Marinelli says that HTML5 opens more opportunities for sourcing games from of the Centre have been other companies that might offer different ideas. “I think the world is going to truly impressive, such as fundamentally shift,” he said. “If we have specifications that we want to make sure a game that incorporates the game has integrity, we can open it up to the world and say, ‘Come up with games that meet these standards,’ and then things will open up. It will allow the elements of both bingo and smaller companies and maybe the garage guys to bring it forward. Then you are Tetris. going to get the games and ideas coming faster.” All games will have to meet the regulator’s standards for integrity.

In Sault Ste. Marie, OLG has partnered with the Innovation Centre to have developers come up with new games that may be of interest to OLG customers. Characterizing the Innovation Centre as a “petri dish” of software innovation, Mr. Marinelli says the ideas coming out of the Centre have been truly impressive, such as a game that incorporates elements of both bingo and Tetris. Innovation Centre products tend to be more community-based, competitive, and attractive to adults under 45, while also keeping baby boomers interested.

Ontario Lottery and Gaming is developing a virtual wallet that will be linked to bank accounts so customers will be able to transfer money directly to their virtual wallets. Customers will also be able to set strict amounts that can be withdrawn in a certain timeframe to help enforce personal responsibility and responsible gambling.

“OLG, through all of this, Figure 1. Ontario Lottery and Gaming: New and Better Connections. has taken the position that we want to be the gold standard in responsible gambling. We’re going to use technology to help us with that.”

Tom Marinelli, Acting President and CEO, Ontario Lottery and Gaming Corporation

Source: Cisco Consulting Services, 2014

Impact In addition to increased efficiency and customer and market management for OLG, the modernization and information tracking will allow OLG to more effectively utilize its Responsible Gambling program. “We have to provide lottery and gaming responsibly. So as you get more points of contact to do gambling, you have to be more and more attuned to responsible gambling,” Mr. Marinelli stated. “You have to be aware of how people are gambling and help them manage their own risks. And then you have to provide the ability for them to set limits and look at their own behaviors. What that does, particularly in the I-space, is actually start to increase the demand for analytics and back-end information technology. OLG, through all of this, has taken the position that we want to be a gold standard in responsible gambling. We’re going to use technology to help us with that.”

The customer-facing aspect of modernization is to release gaming platforms on the Internet. This will capture segments of the population not interested in traveling to physical gaming facilities, thus opening new revenue streams for OLG. This will be followed by a rollout of mobile app games, which OLG believes will reach even more people. “The first thing out the gate is to do casino-style games,” said Mr. Marinelli. “We will also sell lottery products on the Internet through an OLG portal. Basically, you come online and then that’s really the start of a phase of offering different products: poker, bingo, and other things down the road, and also tied to that, soon afterward, mobile. It’s really getting the Ontario Lottery and Gaming Corporation out into the Internet space to sell products that we [already] sell on the more traditional channels.” OLG will deliver interfaces that clearly define it as an OLG brand, along with access to the Responsible Gambling program run by the agency.

“The mobile is moving so Lessons Learned / Next Steps quickly, we want to make According to Mr. Marinelli, clarity of vision and leadership are essential to the sure that we get there. success of an organization-wide technological transformation. “Stability at the top It’s not just gaming; it’s all of the organization is critical as you go through,” he said. “We just had a change of president and CEO, and actually our board. The government is still committed, but at about where people are the end day, having consistent leadership over the length of time you’re doing this is getting their entertainment invaluable.”

right now. You want to Another lesson learned by Ontario Lottery and Gaming, Mr. Marinelli said, is “don’t be relevant to them and underestimate the enablement of technology. The technology roadmap actually where they are getting their has input into the business model, on how you roll it out. When you stand up parts entertainment.” of the organization, either the technology has to be there, or you are going to have more people to actually deal with the information that’s coming in, [which is] very Tom Marinelli, complicated.” Acting President and CEO, Ontario Lottery and Gaming Corporation Ontario Lottery and Gaming will continue to modify its operational abilities to focus on game development, programming, and analytics. Within 12 to 18 months of releasing the online gaming platform, OLG will launch mobile gaming opportunities. “The mobile is moving so quickly, we want to make sure that we get there. It’s not just gaming; it’s all about where people are getting their entertainment right now. You want to be relevant to them and where they are getting their entertainment.”

More Information For more information, visit http://www.ModernOLG.ca or http://www.PlayOLG.ca