6/49 to raise ticket prices to $3 - bad PR move

If you haven't heard 6/49 (Canada's national lottery) is raising its ticket prices in September from $2 a ticket to $3. It was only back in 2004 that they raised the price from $1 to $2. So in a mere nine years, the price of a lotto ticket in Canada has jumped 300%.

This comes on the back of a recent story about how salaries for OLG (Ontario Lottery Gaming) executives have risen by 50 per cent in the past two years.

So what exactly is going on?

It doesn't take a genius to realize that the government views the lottery as a means of generating more revenue. Approximately 30-40 percent of revenues from the lottery feed back into provincial governments (the rest is spent on prizes and operational costs).

I don't know the exact math they did, but it's pretty easy to ballpark the rationale used here. It would go like this:

We have 100 customers, each paying 2 dollars a ticket, generating 200 dollars of revenue.

We increase the price from 2 to 3 dollars a ticket. In doing so, we lose 10 percent of our customers who can no longer afford the ticket or are so mad over the increase they stop playing.

The new paradigm

We now have 90 customers, each paying 3 dollars a ticket, generating 270 dollars of revenue.

It's not hard to see why they increased the price with this basic logic.

The Poverty Tax

Lotteries have traditionally been viewed as a tax on the poor. It's the guy making peanuts who will never have a nice car, never take a nice vacation, who can't afford that dental work he needs, who is most prone to using his disposable income on the lottery in hopes of hitting it big and all his problems being solved.

Now you might think - what's a buck? If you can afford 2 bucks you can afford 3 bucks. 

But look at it another way. To have a ticket for each 6/49 draw for one year would cost you 208 dollars (104 draws a year at 2 bucks per draw).

Now, to have a ticket in each draw will cost you 318 dollars!

For folks untouched by the recession and for whom money isn't tight, that's no big deal I suppose. But for those in the lower income brackets - who also tend to be the most engaged customers of the lottery - that extra 110 dollar a year expense is a big deal.

Why this was a stupid PR move for the 6/49

One of the basic tenants of good brand management and of PR in general is to know your core audience.

If you think your audience as circles within circles (think of an onion), with the ones at the center being those most affected by your messages and those out at the edge being least, your messaging strategy should always start at the center and work its way out.

The reason for this is that your core audience - those with a high interest in your brand - are also the ones who will be the most vocal if they don't like what they hear or what you do to them.

In tech we call these types of consumers the 'first adopters'. You DO NOT want to piss the first adopters off because they will destroy your brand. The casual consumer, if they don't like your brand or product or message will simply move on, but the first adopter will shout to the world either praise or admonishment based on their experience with your new product.

This move by the 6/49 completely dismisses their core customers, who cannot afford an increase in price from 208-dollars-a-year to 318-dollars-a-year.

The comment section in the National Posts story tells you how the public feels about this:

Accepted the $1 to $2 Lotto 6/49 price jump. $3 for a negligible chance of winning even a small prize is excessive. I'm out.


Fk the government - stop buying lottery tickets.
Starve this beast until it croaks.


OLGC is out of control. First they bankrupt the racetracks by refusing them slot licenses. Then the grandiose plans for Las Vegas-style casinos in cities (preying on the vulnerable). And now they jerk around with the poor-man's daydream. Disgusting.

What the 6/49 should have done and should do

What the 6/49 should have done was leave the two dollar cost in place but offer additional options for additional cost. They already do this in the form of 'encore' (a sub draw to the main draw) which costs an extra dollar I believe.

They could have added a new 'Million for Life" draw or "New car for Life" or something, you get the drift.

But I'm sure sales of encore tickets tell them that people really just want a ticket for a chance to win a million bucks, so if you want to milk your customer base for more money you have to raise the actual ticket's price.

Now, what should they do? In my opinion they should kill the price increase.

Growing your revenues by shrinking your customer base AND pissing off your core audience is a BAD growth strategy. It's bad PR and in the long term it's bad for sales. Sure, short term you'll see a bump in sales, but in the long run you'll see revenues decline as more and more customers simply stop buying the product or curtail their spending behaviors.

Not to mention there's something just downright immoral about it when you consider that the folks most impacted by this are those who are poor. Telling them that they can no longer participate in the hope of one day being rich because they are simply too poor to afford it is, dare I say it, very un-Canadian.

I suspect though that the 6/49 won't make a U-turn on their decision to increase prices because I additionally suspect the impetus for the price hike is that the government needs more money and so a tax on the poor and middle class is what must be done.

It is only because buying a lottery ticket is a choice that the price increase is not officially a tax. But for people living in the real world, and for millions of Canadians who buy 6/49 tickets twice a week, that's exactly what it is.