Considering a lottery as a fundraiser? Think carefully, says lottery consultant Tim Rayner. Although lotteries have done well in Western Canada, the first major charitable lottery in Ontario was launched only four years ago. The Children’s Hospital in Ottawa and the Brentwood Foundation in Windsor have been the most continuous operators of lotteries in the province, with a flurry of startups in the last two years.

In an address to the Games People Play conference in Toronto last fall, Rayner pointed out that until recently, the most saturated market in Ontario was the Hamilton region, with six lotteries underway in 1995 (three of them failing to reach their desired results), followed closely by Toronto. There is no way to guarantee success, he reminded the delegates.

After a long gestation in the service club field, where lotteries and raffles are a well-established fundraising tool, the last 10-15 years have seen the evolution of the mega-lottery in Canada, and the road map for lotteries is still being written, says Rayner. What is the right price: $25 … $40 … $100? How does the price affect your ability to market your lottery? A lower price would seem to make it more attractive, but does this hold true, always?

Surveys undertaken by various charities, says Rayner, have found that the cause represents 30% to 50% of the reason potential purchasers would by a ticket. That leaves 50% to 70% buying to win, and of course, failing! The Hamilton market, he believes, is suffering from too many “losers”. All the Hamilton lotteries in 1995 offered their tickets at five for $100, or $25 each, with over 400,000 sold by the six lotteries combined. Only 1,450 of these buyers won prizes, leaving 398,550 as “supporters” of the causes. Likely, he points out, if you purchased tickets in several of these lotteries and didn’t win, you are reconsidering your “support” for this form of gambling.

Arrival of provincial lotteries

The lottery concept moved quickly in Ontario from being local fundraisers to regional, and then provincial activities. The launch of the Princess Margaret Hospital lotteries in Toronto last year signaled the arrival of provincial lotteries, with the jump from $8.9 million in prizes and 150,000 tickets to $15.9 million and 300,000 tickets. (The latest Princess Margaret lottery announced $13 million worth of prizes spread among 12,600 winners on June 5; depending on how many of the 250,000 tickets were sold, the odds of winning were at least 1 in 20.)

The Ontario government has said that while it expected the lotteries to grow, it did not expect them to exceed $1 million in prize packages … and we are now well past 15 times this amount. Indeed, says Rayner, the government should review the fairness of provincial charitable lotteries in relation to their original intent. Intense lobbying and jockeying for position is underway, and will likely, he suggests, result in controls on size, frequency and range restrictions.

Unchecked, the frantic competition occurring in Ontario’s red-hot lottery market could – almost certainly must – result in some major losses for the charities that get caught off-base when the buyers decide to sit the next one out. One possible solution, however, could be a cooperative approach being pushed by Sue Carruthers, one of the pioneers in the field and the key force behind the phenomenally successful lotteries run by Toronto’s Hospital for Sick Children last year. The Dream of a Lifetime lottery run in London, Ontario by the city’s three acute care teaching hospitals, for example, demonstrates that, as Rayner puts it, “local causes can strengthen their appeal and success through cooperative operation of events such as lotteries.”

Few signs of cooperation so far

A more careful approach to the market is also part of the answer. Carruthers, in an address to the National Society of Fund Raising Executives last December, urged the Toronto hospitals already in the lottery game to pool their efforts in a similar way, but so far the signs of cooperation are few. Given the fact that Ontario is the largest gaming marketplace in North America, she says, we should also do some research as a sector in Britain, where lotteries have been underway for hundreds of years and the field is much more advanced.

Know your market, Carruthers suggests. Surveys carried out by the Hospital for Sick Children, she points out, have tested three groups:

• People who have never donated to the hospital before thought that the ticket (at $100) was very expensive, but would likely get together with friends to buy.
• Donors who have given less than $250 in total thought the lottery was a good idea, and would support it.
• Significant donors saw the idea as a risky move for the hospital, and considered the ticket price too expensive. In general, they would prefer a tax receipt for a simple donation.

 

Carruthers’ target market, not surprisingly, is the first two groups.

Not fund raising, but entertainment

It’s also important, she argues, to know what’s really going on in a lottery. Referring to the competition for the “best odds” as a misleading game, Carruthers stresses that “This is not fund raising; this is entertainment.” Anyone in the game is going to have to keep up with changing technology, new products, proven enhancements and modifications, the competition, changing buyer attitudes and demographics, the competition, the Internet, and evolving marketing techniques. While it is true, as Artsmarketing Services Inc. president Rob Brown points out, that up to 10% of lottery buyers are being converted to some sort of donor status, it is, says Carruthers, a “whole lot easier to sell [the lottery buyers] what they want than to convert them into being donors …” Unfortunately, she adds, “I expect that some of the $100 buyers will lose enough times that they will stop buying.”

The news, of course, is not all bad. Saskatchewan’s S.O. Action Corporation founded the home lottery concept with the University Hospital in Saskatoon. Planned originally as a tri-hospital lottery, it sold 8,000 tickets the first year, is now selling 15,000 tickets a year and is still working. In Alberta, there are about a dozen lotteries running at present, ranging from a $1-million, 12-week, $35-per-ticket effort by the Big Brothers/Big Sisters organization each summer and fall, to a $6-million, $100-per-ticket affair run by the four Edmonton Hospitals. Other Alberta players include the Canadian Legion, the Red Cross, the Northern & Southern Alberta Institutes of Technology and the Heart & Stroke Foundation (which canceled its 1996 lottery).

The key, says Joan Black of Calgary-based Black Fund Development, is collaboration between and among the hospitals. In lotteries, she says, “If it works, don’t fix it.” An unabashed supporter of the concept, she says there’s no need to apologize. A lottery, she points out, is a project with a fantastic (potential) bottom line, “one more opportunity to get the uncommitted segment of your market to support you, to raise awareness of your mission (lotteries, she grants, are not always the best way to achieve this), and to enhance your image in your community.” In the end, you can probably plan for a successful lottery if you can meet the following criteria outlined by Frances Neufeld of St Joseph’s Health Care Foundation last year:

• You are the first organization in your city or town to try one;
• You have a prize board that is different and interesting to your community;
• You have a significant membership and volunteer base that is involved in buying and selling tickets; and
• Your organization is able to buy, and has bought market research to determine prize, market, and image to sell, as well as the probability of success.

 

If your lottery doesn’t meet all these criteria – and even if it does – proceed with extreme caution.