Singare Pools Private Limited Revitalising TOTO – From 6 ... TOTO from 645 to... · REVITALISING...

Singapore Pools Private Limited

Revitalising TOTO –

From 6/45 to 6/49 August 2015

1. BACKGROUND ..................................................................................................................... 1

2. OPERATING ENVIRONMENT ................................................................................................ 1

3. TOTO 6/45 ........................................................................................................................... 3

4. CHANGES IN EXTERNAL ENVIRONMENT ............................................................................. 5

5. THE CASE FOR A CHANGE .................................................................................................... 5

6. DETERMINING THE CHANGES ............................................................................................. 6

7. THE NEW TOTO 6/49 ........................................................................................................... 9

8. PRE-LAUNCH PREPARATION .............................................................................................. 10

9. RESULTS ............................................................................................................................. 13

10. CONCLUSION ..................................................................................................................... 14

REVITALISING TOTO – FROM 6/45 TO 6/49

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1. BACKGROUND

1.1 Singapore Pools (Private) Limited (“SPPL”) is Singapore’s only legal lottery

operator since 1968. We are a wholly-owned subsidiary of the Singapore

Totalisator Board (Tote Board) since 2004. Our mission is to provide a

legal avenue for betting in Singapore, and to channel surplus earnings,

through Tote Board, to benefit the community.

We offer three lottery games:

• TOTO

• 4-Digit Game

• Singapore Sweep, as well as

• Sports Betting.

1.2 We have 298 shops island wide, of which 90 are operated by SPPL staff.

The remaining shops are run by authorized retailers. To cater to

customers who want to watch football matches live and place their bets

as the matches are going on, we have two live betting avenues, located at

Sentosa and Marina Bay Sands, respectively.

1.3 In addition, for Singapore Pools Account customers, they can place their

sports bet and lottery bets via a call centre and an interactive voice

response system respectively.

2. OPERATING ENVIRONMENT

2.1 Singapore has a population of 5.57million, with a GDP of $339 billion or

an average of S$62,000 per capita in 2013, making it one of the

wealthiest countries in the world.

2.2 Besides SPPL, other gaming operators include Singapore Turf Club, which

offers horse race betting, and two casinos (Marina Bay Sands and Resort

World Sentosa). Social clubs are allowed to offer jackpot betting for their

members only. Through these available channels in Singapore, an average

of S$1,024 is placed in bets yearly, the highest in the world (1).


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2.3 Despite the high gambling expenditure, there are tight rules that govern

communications, examples of which include:

(a) Unable to advertise on free to air TV or radio

(b) Unable to advertise on non-gambling dedicated cable channels

(c) Unable to advertise in any publication which is targeted at persons

under 18 years old

(d) Unable to offer free bets or their equivalent in cash, which can be

used for participation in any game to promote gambling

(e) Unable to advertise on the front and back pages of a Singapore

newspaper, or in any major section of such print media.

2.4 Besides the external guidelines, SPPL also has an internal marketing code

-- “Marketing Communications and Promotions Code of Conduct” --

which regulates the execution of communications to the customers.

2.5 In 2012, SPPL obtained the highest level of Responsible Gaming (RG),

Level 4 certification under the World Lottery Association framework. RG

has been incorporated in our corporate values since 2015. Our RG

Philosophy is as follows:

(a) RG is a value, more than complying with a set of written policies,

rules and manuals;

(b) The education of players to make informed decisions is the

cornerstone of RG;

(c) RG standards and measures should take cognizance of Singapore’s

multicultural and multi-religious diversity;

(d) RG practices and measures must be sustainable, and continue to

evolve in response to changing local and global perceptions; and

(e) RG is everyone’s responsibility. RG begins with top management

commitment. All SP staff and retailer staff selling SP products must

undergo RG training and pass the RG test before they are allowed to

serve customers.

2.6 For every S$1 in lottery sales, 30% is paid to the government as betting

duties.


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3. TOTO 6/45

3.1 Lotto, or TOTO as our product is known here, was first launched in 1968.

Since then, TOTO has undergone several changes to keep pace with

population growth and changing customers’ needs.

Table A: Key Changes in TOTO Game

1968 1969 1988 1997

Population 2.01M 2.04M 2.85M 3.79M

Matrix 6/49 5/49 6/42 6/45

Jackpot Odds 14.0M 1.9M 5.2M 8.1M

MGA* N/A $50K $300K $500K

Cost per board $0.50 $0.50 $0.50 $0.50

Draws per week 1 1 2 2

* Minimum Guaranteed Amount

3.2 TOTO 6/45 was launched in 1997, at the cost of S$0.50 for an Ordinary

Board (6 numbers), and the minimum entry was S$1. The Minimum

Guaranteed Amount for a jackpot (MGA) was S$500,000. Two draws were

held per week, on Monday and Thursday. The jackpot would cascade to

the lower prize group if it was not won by the fourth draw. Typically, the

jackpot for draw 1, 2, 3 and 4 were S$700,000, S$1.5M, S$3M and S$5.5M

respectively.

3.3 Prizes made up 54% of total sales, divided into 6 prize groups.

Table B: Game Structure of TOTO 6/45

Group

Winning

Numbers

Matched

Prize Pool

Allocation

Theoretical

Prize Per

Share

Odds

1 6 33% : shared $725,725 1 in

8,145,060

2 5 + 1 additional

number 13% : shared $47,649

1 in

1,357,510

3 5 13% : shared $1,254 1 in 35,724

4 4 + 1 additional

number 13% : shared $502 1 in 14,290

5 4 14.38% : fixed $30 1 in 772

6 3 + 1 additional

number 12.79% : fixed $20 1 in 579


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Over the years, TOTO 6/45 sales went from strong growth in the late

1990s, to moderate growth in early 2000s, to stagnant from 2007

onwards.

The market for this game started to show signs of saturation in the

following ways:

(a) High Coverage Ratio

At the first draw, with sales of about S$4M, 98% of the 8.1M

possible combinations were sold. Jackpots wins were often

shared by multiple players.

(b) Fewer Jackpot Snowballed

70% of the draws were won on MGA basis, with a jackpot of

S$700,000 or less. The jackpot prize seldom snowballed more than

2 times.

(c) Need for Special Draws

There was an absence of cascade draws for nearly 3 years. To

compensate for the lack of naturally incurred jackpots, SPPL had

to fund the jackpot prize, in a bid to reach the usual cascade draw

jackpot of S$5M during Special Draws.

Table C: TOTO 6/45 Special Draws

No. of Special Draws Jackpot Funding Amount

FY06/07 1 S$1.9M

FY07/08 2 S$4.5M

FY08/09 2 S$5.1M

FY09/10 3 S$7.5M

FY10/11 3 S$4.7M

FY11/12 3 S$4.7M

FY12/13 3 S$5.3M

FY13/14 4 S$7.2M

Total 31 S$40.9M


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4. CHANGES IN EXTERNAL ENVIRONMENT

4.1 Over the last 17 years, Singapore has experienced rapid changes in its

population and GDP growth).

Chart A: Singapore Population (1997 to 2014)

Chart B: Singapore GDP Per Capita (1997 to 2013)

5. THE CASE FOR A CHANGE

5.1 The growth in population and spending propensity of TOTO customers

resulted in stable, fairly high sales volume, even for first draws. While this

meant consistent income via the product, it also brought about a

situation where jackpot rollovers were rare.


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In a TOTO Segmentation Study, conducted in 2011 to understand the

motivation to participate, it was discovered that 36% of all TOTO

customers were prize conscious, and will only participate when the

jackpot exceeded S$1M or Draw 2 onwards.

These customers were younger, with higher income and less commitment

to playing TOTO.

5.2 Combining quantitative data and customer surveys, the following issues

were identified for TOTO:

(a) For SPPL:

• Game was too small for its customer base

• Game was inexpensive

• Frequent funding was required to create a desirable jackpot

(b) For the customers:

• Jackpot was too low

• Wanted increased winning experience, through the availability

of smaller prizes

6. DETERMINING THE CHANGES

6.1 Jackpot

The jackpot for the new game must be a life transforming one. The Toto

Segmentation Study showed that the attraction towards the jackpot is

related to its ability to purchase a private property in Singapore. The

typical cost of a decent 1,200 sq foot (99 year lease) private dwelling in

Singapore ranges between S$1M and S$3M.

However, the size of the jackpot must not be used to create new

customers. The jackpot should only be allowed to grow up to S$6 to S$7M.

This is roughly equivalent to the Special Draw Jackpot ($5M-$6M) that

customers are already familiar with.


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6.2 Type of Matrix

The new matrix should be sustainable for the next 5 years, catering to a

projected population growth to 6M in year 2020. The matrix should yield

a jackpot of S$6M to S$7M by Draw 4.

6.3 Price per Board

The price per board of S$0.50 has not changed since 1968. To fund a

higher jackpot for Draw 1, the price per board must be raised. A

comparison with 30 overseas LOTTO operators showed that the average

price per board was about S$1.40, which is almost triple the current cost.

Chart C: Average Price per Board of LOTTO

6.4 Odds of Winning

The odds of winning (1 in 321) for TOTO 6/45 were way above the

international standard of 1 in 39.

0

1

2

3

1.10

South Africa

0.39

Greece

0.39

Singapore (Current)

0.41

Sweden

0.47

Illinois

0.50

New York

0.50

Wisconsin

0.50

New

Zealand

0.50

Singapore (New)

0.81

Poland

0.94

California

1.00

Texas

1.00

Michigan

1.00

Florida

1.00

Ohio

1.00

New

Jersey

1.00

Indiana

1.00

Massachusetts

1.00

Hong Kong

1.29

Belgium

1.31

Finland

1.31

UK1.52

Pennsylvania

2.00

Ireland

1.97

France

2.62

Union Lotto

0.31

Pow

erball

0.86

Mega Millions

1.00

Oz Lotto

1.21

Pow

erball

2.00

Eurojackpot

2.62

2.62

1.10


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Chart D: Odds of Winning for LOTTO

6.5 Prize Structure

An hour-glass model was proposed for the prize allocation. The number

of mid-tiered prizes will be reduced, and more prize money to jackpot

and smaller prizes will be allocated. Among the 30 operators, the average

jackpot prize to be allocated will make up 46% of the prize pool. A new

prize category, “Match 3 to Win”, will be created to increase the winning

experience.

Chart E: Prize Allocation for LOTTO Jackpot

0

100

200

300

400

39

France

6

Indiana

6

Pennsylvania

18Missouri

20

California

23

Belgium

25

Washington

27

Wisconsin

27

Il lionois

32

Massachusetts

34

Ireland

45

Michigan

47

New

York

49

New

Zealand

50

Hong Kong

54

Singapore (New

)

54

UK

54

South Africa

54

New Jersey

54

Poland

54

Sweden

55

Florida

67

Texas

71

F inland

83

Singapore (Current)

321

EuroMillions

13

Union Lotto

15

Eurojackpot

21

Aus Pow

erball

30

US Pow

erball

32

Mega Mil lions

40

Oz Lotto

59

39

0

20

40

60

80

100%

46%

Tex

as81

%

New York

75%

Wisconsin

72%

Illin

ois

70%

New

Jersey

68%

Florida

64%

Califo

rnia

61%

Ireland

46%

Michigan

46%

Poland

44%

Singa

pore (Ne

w)

38%

Singapore (C

urrent )

33%

Finland

33%

UK32%

Hon

g Ko

ng29

%Fran

ce20

%US Pow

erba

ll64

%

Meg

a Millions

64%

Oz Lo

t to40

%

Aus Powerba

ll37%

EuroMillions

32%

Eurojackpo

t22

%

46%


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7. THE NEW TOTO 6/49

7.1 The new TOTO, in the form of 6/49 matrix, was determined after months

of study and formally launched on 7 October 2014.

Table D: Comparison of TOTO 6/45 and TOTO 6/49

Matrix 6/49 6/45

Jackpot Odds 1 in 13.98M 1 in 8.14M

Minimum Guaranteed

Amount S$1,000,000 S$500,000

Price per board S$1 S$0.50

Minimum bet amount per

ticket

S$1

(Minimum one board)

S$1

(Minimum two boards)

Prize pool 54% of sales 54% of sales

Group 1 Prize funding 38% of Prize pool 33% of Prize pool

Odds of Winning Any Prize 1 in 54 1 in 321

No. of prize groups

7

(Group 7 – Match 3

Numbers)

6

Jackpot Sequence S$1M, S$2.2M, S$3.8M &

S$6M

S$700k, S$1.5M, S$3M

& S$5.5M

Total number of winners 260,624 25,410

7.2 Prize Pool Allocation

Under the new matrix, 38% of the prize pool is allocated to the jackpot,

while another 30% is allocated to a newly created Group 7. This group

would give more than 50,000 customers a chance to win a smaller prize

at each draw, even for Draw 1.

Chart F: Prize Pool Allocation for TOTO 6/45 and TOTO 6/49


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7.3 Sales Projection and Rollover Occurrences

The annual sales of TOTO 6/49 were expected to be marginally higher

than the old matrix initially, but would grow by 20% to S$750M after five

years of operation.

Table E: Sales Projection for TOTO 6/49

Draw Type Ave Sales Ave Jackpot Theoretical

Occurrences

Draw 1 * $4.5M $1.0M 42

Draw 2 $5.1M $2.0M 29

Draw 3 $7.2M $3.5M 21

Draw 4 (Cascade) $16.3M $6.8M 12

No of draws in a year

104

Chart G: 5 Years Sales Projection for TOTO 6/49

8. PRE-LAUNCH PREPARATION

8.1 Communication Strategy

A communication strategy in line with our marketing code was crafted.

The guiding principle was to ensure that we avoid any impression of

creating new customers, or promoting gambling or getting customers

unduly excited.

It is for this reason that we did not provide any media release, on the

basis that the target audience was our existing customer base.


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The new TOTO matrix was communicated to customers via the SPPL

website and outlets, and pains were taken to ensure the information

provided was factual in nature.

The key message was that the SPPL made the changes in response to

customers’ requests, and highlighted the three salient changes:

• Revision in the cost per board to S$1 (from S$0.50),

• The minimum guaranteed jackpot of S$1M (from S$500,000), and

• The addition of a new prize group - Match 3 Numbers - to win

S$10.

8.2 Communication Strategy

A two-phased communication approach was adopted.

The first phase was initiated four weeks before the launch of the TOTO

6/49 matrix. Customers were informed that TOTO was to be modified, so

that they were not caught by surprise when the new matrix came into

effect.

A newspaper announcement was placed in the major English and Chinese

dailies, informing customers of the pending changes. The dates of the

last TOTO 6/45 draw, and first TOTO 6/49 draw, were also published.

After the implementation of TOTO 6/49 on 7 October 2014, another

round of communication was launched to ensure customers understood

the new TOTO game.

The newspaper notice, and posters used under Phase 1 and Phase 2 of

the communication strategy are as follows:


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Newspaper Notification

Phase 1 Poster

Phase 2 Poster


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9. RESULTS

9.1 Response from the Public

Most local major media covered the change in TOTO game factually, with

little adversity. Customers’ feedback was also within expectation. There

were no negative reactions from the anti-gambling public.

9.2 Design and Sales

The new game matrix has proven to be a good fit and is well accepted by

customers. Between the launch of TOTO 6/49 and as at 30 July 2015,

there has been only one instance where a draw required a top-up by SPPL

to meet the MGA.

Actual sale figures have surpassed expected sales by a margin of 10% to

20% for Draw 1 to Draw 3. Draw 4 is the only exception, with sales slightly

below what was anticipated.

We believe this to be a chain effect, as the good sales for preceding draws

may have affected the purchasing power for Draw 4.

9.3 Draw Occurrences and Winners

The higher than expected sales of TOTO 6/49 also resulted in less rollover

draws.

Table F: Draw types for TOTO 6/49

Actual

Theoretical

Occurrences Variance

Draw 1 41% 40% 1%

Draw 2 34% 28% 6%

Draw 3 16% 20% -4%

Draw 4 8% 12% -4%

100% 100%

Nevertheless, Group 1 winners have larger jackpot winnings, due to the

higher prize pool. The largest winner was an $8.0M jackpot in the draw

held on 12 March 2015, which is a record amount in TOTO’s history.


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10. CONCLUSION

The launch of TOTO 6/49 was a smooth one, with the new matrix well received

by customers. This success could be attributed to the substantial research done

prior to the game revision, taking into account views of customers,

communication with stakeholders’ and addressing their concerns in a timely

manner, as well as taking our cue from the best industry practice.

However, it is imperative for the game to continue being monitored closely,

particularly in the areas of jackpot estimation and customer communications, to

ensure the product stays relevant to its customers.

Reference:

(1) La Fleur’s 2014 World Lottery Almanac

Singare Pools Private Limited Revitalising TOTO – From 6 ... TOTO from 645 to... · REVITALISING...

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