LOTTO NZ STATEMENT OF INTENT - MYLOTTO
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LOTTO NZ STATEMENT OF INTENT for the financial years ending 30 June 2019 - 2022
This Statement of Intent for the New Zealand Lotteries Commission (Lotto New Zealand) meets the requirements of the Crown Entities Act 2004. It sets out the strategic objectives that Lotto New Zealand intends to achieve over the four-year period ending 30 June 2022. On behalf of the Board of the New Zealand Lotteries Commission. Matthew Boyd Tony Mossman Chair Deputy Chair 23 May 2018 23 May 2018
CONTENTS Lotto New Zealand’s role 4 Supporting the community 5 Lotto New Zealand’s organisation 6 Operating environment 7 Lotto New Zealand’s strategic direction 8 Operating intentions 10 Organisational health and capability 12 How we will measure our success 14 Directory 15 ISSN 1172-4676 (Print) ISSN 1179-0245 (Online) Crown copyright ©. This work is licensed under the Creative Commons Attribution 3.0 New Zealand licence. In essence, you are free to copy, distribute and adapt the work, as long as you attribute the work to Lotto New Zealand and abide by the licence terms. To view a copy of this licence, visit creativecommons.org. Please note that no logos may be used in any way that infringes on Lotto New Zealand’s copyright. Attribution to Lotto New Zealand should be in written form and not by reproduction of any such logo.
4 Lotto New Zealand
Lotto New Zealand’s role
OUR PURPOSE
To provide safe gaming that allows New Zealanders to play and win while
contributing money back to New Zealand communities.
OUR BACKGROUND OUR STATUTORY FUNCTIONS
The New Zealand Lotteries Commission (Lotto New The activities of Lotto New Zealand are specifically
Zealand) was established in 1987 and operates as a authorised and controlled through the Gambling
Crown Entity under the Gambling Act 2003. Act 2003 and the Crown Entities Act 2004.
We exist to promote, organise and conduct lottery This legislative framework gives Lotto New Zealand
games for the purpose of generating profits for the four main statutory functions:
benefit of New Zealand communities.
• to promote, organise and conduct New Zealand
Lotto was introduced to New Zealand in 1987. It was lotteries for the purpose of generating profits for
our first game and over the years it has remained distribution by the Lottery Grants Board, or for a
New Zealand’s flagship lottery game. Our product community purpose for which a special purpose
range has expanded over the years to include lottery is promoted under section 245 of the
Lotto Powerball, Lotto Strike, Bullseye, Instant Kiwi, Gambling Act 2003
Keno, Play 3 and Instant Play. • to maximise profits so generated, subject to
Profits from Lotto New Zealand are transferred to ensuring that the risk of problem gambling and
the New Zealand Lottery Grants Board, which works underage gambling is minimised
to build strong, sustainable communities by funding • to make rules regulating the conduct and
a wide range of social, community, arts, heritage, operation of New Zealand lotteries under section
sports, recreation and health research activities 243 of the Gambling Act 2003
across New Zealand. The Lottery Grants Board is a • to advise the Minister of Internal Affairs on matters
major funder of Sport New Zealand, Creative New relating to New Zealand lotteries.
Zealand, and the New Zealand Film Commission,
as well as over 3,000 community projects every
year.
The success of our business is built on the integrity
of our products, the transparency of our systems,
and our commitment to growing our business in a
socially responsible manner.Statement of Intent 2019 - 2022 5
Supporting the community
WHERE THE MONEY GOES HOW LOTTERY FUNDING IS
DISTRIBUTED
In the 2107/18 financial year, approximately 22%
of Lotto New Zealand’s sales will be distributed to The Lottery Grants Board is responsible for
New Zealand communities through the Lottery distributing lottery funding. Through the Lottery
Grants Board. Prizes paid out to winners across all Grants Board, Lotto New Zealand is a major
of our games will account for approximately 55% of supplier of funding for Sport New Zealand,
our sales. Creative New Zealand, and the New Zealand Film
Commission. We are proud to play a significant role
Figure 1: For every $1 from combined sales*
in supporting New Zealand artists, film-makers and
those involved in sport at all levels.
Prizes
Lottery funding also supports more than 3,000
Operating Costs
community activities and projects each year,
22c Retailer commission
with funding distributed between a national
Taxes committee, 11 regional committees and nine
(includes GST,
gaming duty and specialist committees with diverse focuses including
problem gambling
12c 55c community facilities, health research, and outdoor
levy)
safety.
NZ Lottery
Grants Board
6c
5c
*Based on forecast results for the year ending 30 June 2018.6 Lotto New Zealand
Lotto New Zealand’s organisation
OUR ORGANISATION CORPORATE GOVERNANCE:
EXTERNAL RELATIONSHIPS
The Lotto New Zealand Board is responsible for our
overall policy and direction. The Board members The Crown Entities Act 2004 details Lotto New
are appointed by the Government. Day-to-day Zealand’s reporting requirements. As outlined in
running of Lotto New Zealand is the responsibility of section 139 of the Act, we provide the Minister with
the chief executive and the other members of the a copy of our Statement of Intent, which sets out
executive team. our plans for the next four years. In addition, before
Lotto New Zealand employs approximately 125 the start of each year we prepare a Statement of
staff, who are mostly based in our Auckland head Performance Expectations, which sets our specific
office. A small number of our retail support staff, performance measures and financial targets for the
whose role is to support our network of retailers, forthcoming financial year.
work from offices in Wellington and Christchurch Before the start of each financial year, Lotto New
or are field-based. Zealand submits its budget and business plan to the
Our retail network is made up of almost 1,500 lottery Minister for approval. This includes an amount for
outlets across the country that employ more than budgeted profit transfer to the Lottery Grants Board.
6,000 people, making it the single largest retail The Treasury advises the Minister on Lotto New
network in New Zealand. Zealand’s activities and we provide Treasury with
quarterly updates on our operating performance.
CORPORATE GOVERNANCE: After each financial year, we provide the Minister
WITHIN LOTTO NEW ZEALAND with an annual report of our performance and
operations, together with a copy of our audited
The Board meets at least eight times a year, with accounts and a report from the Office of the
the chief executive and chief financial officer in Auditor-General on those accounts. Our Annual
attendance. Report is published and tabled in Parliament. Once
the Annual Report has been tabled, representatives
We provide financial and non-financial information
from Lotto New Zealand may be requested to
for every Board meeting, to enable the Board
appear before Parliamentary Select Committee to
to monitor Lotto New Zealand’s year-to-date
answer questions about our financial performance.
performance. The Board uses the information
to monitor any variances from the approved
operating and capital expenditure budgets.
Our Audit and Risk Committee generally consists of
three Board members. The Committee meets with
officials from Audit New Zealand, who conduct the
audit on behalf of the Office of the Auditor-General.
This Committee is responsible for compliance and
risk management matters, with assistance from
our executive team. Final approval of Lotto New
Zealand’s accounts is recommended by the Audit
and Risk Committee before they are approved by
the full Board.Statement of Intent 2019 - 2022 7
Operating environment
REGULATORY ENVIRONMENT THE NEW ZEALAND GAMBLING
INDUSTRY
The Gambling Act 2003 (“the Act”) provides the
legislative boundaries for all gambling bodies in Gambling as a form of economic activity is
New Zealand. The lottery rules for all of our games conventionally measured in terms of ‘gambling
are consistent with the provisions of the Act and are expenditure’, which is the amount players spend
approved by the Minister of Internal Affairs. minus the amount won as prizes.
We work closely with our regulators to bring well- In New Zealand, the four main forms of gambling
designed lottery games to market, which support are gaming machines outside casinos, lotteries,
our purpose of providing safe gaming that allows casinos, and racing and sports betting.
New Zealanders to play and win while contributing
money back to New Zealand communities. Gaming machines outside casinos is still the largest
form of gambling in New Zealand, with 27% of
The process for introducing a new game to market, expenditure in the 2016/17 year. Class 4 gambling
or making changes to existing games, involves expenditure declined from 2008 to 2013, but has
consultation with the Department of Internal Affairs seen an increase in each of the following years
and the Ministry of Health with an emphasis on since 2014, despite the continuing decline in the
harm minimisation considerations. number of venues and gaming machines.
Under the Act, Lotto New Zealand may conduct Expenditure in casinos currently makes up around 24%
approved forms of remote interactive gambling. of the total and the NZ Racing Board accounts for 14%.
Our online channel MyLotto was introduced in 2008,
following consultation with our regulators. Expenditure on Lotto New Zealand products was
$555 million in the 2106/17 financial year, accounting
for 24% of total gambling expenditure and an
average spend per person of $151.
Figure 2: New Zealand Gambling Market Expenditure 1988 – 2017
2500
Gaming machines
(outside casinos)
2000
Casinos
Lotto NZ
1500
NZ Racing Board
$ Millions
(TAB)
1000
500
0
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
5
6
07
08
9
0
1
12
13
14
15
16
7
1
1
0
0
0
1
20
20
20
20
20
20
19
20
20
20
19
20
19
20
19
19
19
19
19
20
20
19
19
19
19
20
20
20
20
20
Year
Source: Department of Internal Affairs – Gambling Expenditure Statistics 20178 Lotto New Zealand
Lotto New Zealand’s
strategic direction
OUR PURPOSE
To provide safe gaming that allows New Zealanders to play and win while
contributing money back to New Zealand communities.
OUR VISION OUTPUTS
To be a world-leading lottery for the maximum Lotto New Zealand has one class of outputs – our
benefit of New Zealand communities – through the games. By successfully and responsibly promoting
delivery of great games that Kiwis feel good about and running our games, we will deliver these results.
playing.
STRATEGIC FOCUS
GOAL
Our strategic focus in the 2019 – 2022 period is on:
Our goal for the next four financial years is to
• Driving demand
transfer upwards of $275 million to the Lottery Grants
Board every year. • Growing digital
• Increasing diversification.
KEY RESULTS
Underpinned by a focus on ensuring the integrity of
In all of our activities, we aim to: the business through:
• Maximise profits for transfer to the Lottery • Responsible gaming
Grants Board for the benefit of New Zealand • Technology
communities
• People and culture
• Minimise the harm from problem and underage
gambling associated with our products. • Risk and security
• Health and safety.Statement of Intent 2019 - 2022 9
STRATEGIC FOCUS
INCREASING
DRIVING DEMAND GROWING DIGITAL DIVERSIFICATION
Ensuring Kiwis want to play Providing inspiring solutions Developing our product
our games and can do in the digital space proposition and
so easily engaging with more New
Zealanders
VISION
To be a
world-leading lottery
for the maximum benefit of
New Zealand communities – BUSINESS FOUNDATIONS
through the delivery of
great games that Kiwis
feel good about
playing
Being world leading in Investing in technology Putting our people first
Responsible Gaming
Uncompromising Risk Adhering to the highest
STATUTORY and Security Health and Safety standards
PURPOSE
To provide safe gaming
that allows New Zealanders
to play and win while
contributing money back to
New Zealand communities10 Lotto New Zealand
Operating intentions
STRATEGIC OVERVIEW
Lotto New Zealand exists to generate essential This will be achieved through a strategic focus on
funding to help build strong Kiwi communities and driving demand, growing digital and increasing
our goal is to transfer more than $275 million per diversification, and will be supported by solid
year to the Lottery Grants Board. The strategies business foundations in responsible gaming,
outlined for the next four years focus on growing technology, people and culture, risk and security
sales in order to deliver this goal. However, it is management, and health and safety.
fundamental to our success as a business that
Our long-term strategic priorities remain in line with
we grow in a socially responsible way. This is
those set out in our previous Statement of Intent.
reflected in our overarching strategy of increasing
However, we have refined certain areas of the plan
penetration and driving frequency of play – more
to reflect the changing operating environment and
people playing our games, more often.
the performance of the business in recent years.
Strategic focus
DRIVING DEMAND – ensuring Kiwis want to play our games and can do so easily
Given the intangible nature of our products, family of games (Lotto, Powerball, and Strike) to
the ability to connect with our customers on an maximise appeal and participation – ensuring
emotional level and inspire them to play our games they capture the imagination of as many Kiwis as
is imperative to the success of the business. Every possible. In order to achieve this, we will continue
New Zealander who has ever bought a Lotto to make enhancements to each of the three
ticket has played an important role in helping Lotto family games, ensuring the strength and
to build strong, sustainable communities – from positioning of each in its own right, while continuing
funding facilities that bring communities together, to strengthen Powerball’s role as the hero of the
to fostering young talent, providing life-saving category.
community services, and preserving our national
As consumer habits, preferences and priorities
heritage and wildlife.
continue to evolve, Lotto NZ must also adapt to
This unique reason for being is a key position of the changing face of retail, by ensuring that we
strength and differentiation within an increasingly are offering our products where our customers
crowded market, and the ability to make people are choosing to shop. The in-store experience
feel good about playing our games through an also needs to evolve over time to reflect available
appreciation of where the funding goes cannot be technology and digital content, to improve and
underestimated. We therefore need to continue to enhance the interactions players have in our
evolve our brands and our brand story in order to physical retail outlets. There remains a strong
resonate with New Zealanders today and in the correlation between retail penetration and spend
future. per capita and as such we will continue to increase
our retail footprint. This will be achieved through key
The biggest driver of performance in the business
partnerships with supermarkets and fuel providers,
is by far the Powerball jackpot – with its ability to
as well as by exploring new channels that provide
generate talk-ability and exponentially increase
the opportunity to gain a presence in locations
player penetration, the positive effect a high
where Lotto is currently underrepresented.
Powerball offer has on our results is evident. We
need to continue evolving and enhancing our LottoStatement of Intent 2019 - 2022 11
GROWING DIGITAL – providing inspiring solutions in the digital space
Playing our games online is increasingly becoming of data and the ability to meaningfully analyse
the norm for our customers. However, MyLotto is no this data provides businesses with increasingly
longer simply about e-commerce, it also provides sophisticated insights about their customers –
a platform to interact and engage with our players, allowing products, services and communications
and will help enable an omni-channel experience to be developed that are more relevant and
in the future. In order to continue to grow digitally meaningful. Lotto NZ is no different and we will look
as a business, we will continue to provide relevant to further develop our analytical capability to drive
features and functionality to our customers through better decisions, across all areas of the business.
MyLotto and the Lotto NZ App to make it easier and
As video and visual content continue to dominate
more convenient to purchase our games whether
the consumer landscape, we need to ensure that
our customers are at home, on the go, or in a store.
we are providing entertaining and informative
In today’s digital world, technology and data are content that our players want to engage with –
inextricably linked, and we are producing more including the games we offer, our storytelling, and
data than ever before. The increasing volumes how we communicate directly with our players.
INCREASING DIVERSIFICATION – developing our product portfolio and engaging
with more New Zealanders
Over time, in order to deliver more consistent results performing games to make way for new product
and ensure long-term sustainability for the business, development over time. The initial success of
we need to lessen our dependency on jackpot- Instant Play highlights the potential for future game
fuelled growth and deliver a greater proportion development in the digital space.
of sales from new customers. Jackpots and their
We need to make sure our game portfolio and
associated volatility are part of the nature of a
brand experiences continue to be compatible with
lottery business. However, the ability to provide a
the lifestyle and needs of today’s New Zealanders,
strong foundation of gaming revenue that is not
and that we don’t become obsolete in an age of
subject to the same types of peaks and troughs
limitless entertainment options. We will employ
will reduce the risk of underperformance in years
a combined approach to product development
without large jackpots on offer. We therefore need
and brand building that continues to move our
to actively manage our game portfolio – enhancing
proposition forward, allowing us to engage with
our daily and instant games where there is
new players, while maintaining our core player
opportunity for growth, as well as removing poor
base.12 Lotto New Zealand
Organisational health
and capability
The integrity of Lotto NZ remains critically important for the business. Therefore,
being a world leader in responsible gaming, together with a strong emphasis
on technology, people and culture, risk and security management, and health
and safety will continue to be non-negotiable for the business over the coming
period.
RESPONSIBLE GAMING TECHNOLOGY
Lotto NZ is committed to providing a safe, secure, The integrity and performance of our operations
and friendly gaming environment that encourages and technology remain robust. However, key
responsible play. Providing a responsible gaming components of our technology infrastructure are
environment is central to all of our operations. We reaching end of life and will begin to present
cannot achieve our objective of maximising benefits challenges in terms of speed to market, especially
for New Zealand communities if playing our games with regards to developing our digital capabilities
is causing undue harm. and customer offering.
Lottery games are based on the principle of a large Therefore, an extensive capital programme of
number of players entering a draw for a low entry work is required over the coming years to maintain
price. While for most players this provides fun and integrity and ensure that we can continue to
rewarding entertainment, there are a small number develop our games and channels with few incidents
of people who may experience gambling problems and minimal disruption.
while playing our games.
Our gaming platform is central to all of our
Our responsible gaming programme is certified critical business processes, including conducting
to the highest possible level by the World Lottery draws, selling tickets and paying prizes. To ensure
Association, and we continue to look for ways to we continue to adhere to the highest levels of
improve our approach to responsible gaming. This performance and availability, a programme of
includes providing our players and retailers with work will be undertaken over the coming years to
relevant tools, information and support, building an upgrade our core infrastructure and retail gaming
internal culture that values harm minimisation, and systems.
learning from leading experts in the responsible
A new digital infrastructure, with a more adaptable
gaming field.
and flexible platform will allow us to support a
growing digital player base and keep up with the
pace of change required to deliver the strategic
goals for the business. A new platform will have
the benefit of providing easier access to player
behaviour data and facilitating greater customer
insights, which will be used to drive better business
decisions.Statement of Intent 2019 - 2022 13 PEOPLE AND CULTURE HEALTH AND SAFETY A strong internal culture is a key factor in the Lotto NZ aims to be a proactive leader in the area success of any business and we continually look of Health and Safety. We will remain compliant for ways to strengthen our internal culture. Over the with strong Health and Safety practices and coming four years, we will be focused on attracting procedures, while also placing more emphasis on the best people to Lotto NZ through continuing to promoting worker resilience and wellbeing. We will build our employer brand, differentiating ourselves maintain our focus on established Health and Safety through the benefits we offer our people, and procedures and practices, including thorough board ensuring diversity and inclusion. We will continue reporting, a strong emphasis on risk and hazard to invest in employee development through talent management, monthly site checks, and accident management and learning and development and near miss reporting, as well as effective programmes. In addition to this, we need to ensure collaboration with partners, retailers, contractors that our offices and how we work at Lotto NZ and visitors to ensure everyone is clear on their roles reflect a modern environment. and responsibilities. RISK AND SECURITY MANAGEMENT Effective risk management increases the probability of business success and reduces the chance of failure by providing better information to support good business decisions. This is not simply about minimising risks; it is also about defining opportunities by identifying, assessing and prioritising risks and then managing those risks through appropriate planning. Reflecting the importance of secure and transparent operations for the business, we are now one of only 63 lotteries worldwide to have obtained the World Lottery Association’s Security Control Standard. This demonstrates that we follow international best practice in the security management of our information systems, and we will undergo an annual audit of all elements of our programme in order to retain this certification. This continuous improvement cycle includes actions to raise our cyber security maturity level, as well as increasing the depth of our security management tools, processes and capability.
14 Lotto New Zealand
How we will measure
our success
We are able to directly measure our impacts through the profit transferred to the Lottery Grants Board each
year and through the number of times that Lotto New Zealand products are cited by individuals seeking
assistance from problem gambling service providers.
Actual Target Estimate Budget Target Target Target
Key results KPI
2016/17 2017/18 2017/18 2018/19 2019/20 2020/21 2021/22
Profit maximisation Sales ($m) 1,206.7 1,081.3 1,268.61 1,282.5 1,320.1 1,358.0 1,424.9
Maximise profits
for transfer Operating
expenses ($m) 68.8 68.0 68.62 74.93 77.0 79.3 81.0
to the Lottery
Grants Board
% operating
for the benefit 5.7 6.3 5.4 5.8 5.8 5.8 5.7
expenses1
of New Zealand
communities Net profit ($m) 275.2 225.0 286.64 274.75 289.8 294.6 314.7
Paid to the
Lottery Grants 272.8 225.0 278.66 274.7 289.8 294.6 314.7
Board ($m)
Harm minimisation Citations per
1.4Statement of Intent 2019 - 2022 15
Directory
AUCKLAND OFFICE BOARD MEMBERS
Level 1, 73 Remuera Road Matthew Boyd
Remuera, Auckland 1050 Chair
PO Box 8929, Symonds Street
Auckland 1150 Tony Mossman
Deputy Chair
Telephone 09 356 3800
Monique Cairns
Kim Gordon
WELLINGTON OFFICE Keiran Horne
Level 1 Logan Sears
The Woolstore Design Centre
258 Thorndon Quay David Tapsell
PO Box 9448
Wellington 6011
CHRISTCHURCH OFFICE SENIOR MANAGEMENT
66-68 Mandeville Street Chris Lyman
PO Box 8609 Chief Executive
Riccarton
Christchurch 8011 Dan Balasoglou
Chief Financial Officer
Ben Coney
CONTACT Chief Innovation and Technology Officer
Website mylotto.co.nz Kathryn Haworth
Email info@lottonz.co.nz General Manager, Strategy
Telephone 0800 695 6886
Sonja Johnson
General Manager,
People and Culturemylotto.co.nz
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