Iowa Lottery Shifts Risk by Partnering With Single Scratch Ticket Vendor
For the first time in its history, the Iowa Lottery will shift part of its financial risk to a scratch ticket vendor. Beginning in January, the Lottery will work exclusively with one company to print its scratch tickets — and that company will share in both the potential gains and losses.
Lottery CEO Matt Strawn says the selected vendor, Scientific Games, won the contract through a competitive bidding process and will now operate under a performance-based agreement.
“If they exceed their performance goals, they are incented with a small bonus. If they miss their projected annual performance goals on sales, there is a small penalty,” Strawn explains.
Until now, the Iowa Lottery carried all the risk in choosing which scratch games to develop and bring to market. Strawn says the new arrangement allows the Lottery to tap more directly into the vendor’s expertise.
“This allows the Iowa Lottery to better leverage the experience and expertise of its scratch ticket printing partner,” he says.
Despite the shift, the state will continue to have full authority over game selection and design.
“The state of Iowa still has the ultimate sign-off on the annual product plan to ensure it meets revenue goals and that we’re managing the portfolio responsibly,” Strawn says.
Scratch tickets were the first products ever sold by the Iowa Lottery and remain its strongest category, accounting for 23% of total sales.
