The fortunes of gasoline and lottery are closely tied. When gas prices are low, lottery sales tend to rise because consumers flush with cash are more willing to wager. And when gas prices rise, lottery sales often take a hit.
A newer technology is attempting to further leverage the close relationship between the two categories—this time by bringing their points of sale (POS) together in one place. Play at the Pump is a technology platform from New York-based Linq3 that enables fuel customers to make a lottery draw game purchase at the pump. It operates as a software upgrade to Gilbarco Veeder-Root’s Passport v10 and v11 POS.
Here’s how it works: After the customer swipes her payment card but before the fueling transaction, she is offered the option of buying a Quick Pick Powerball and/or Mega Millions ticket, as well as a state jackpot. After undergoing age verification, the customer can make a lottery purchase in $5, $6, $10 or $20 increments, up to a predetermined limit. Play at the Pump will then text a link to the lottery numbers if the customer shares a cellphone number, and it also prints them out on the receipt at the end of the transaction. (The customer cannot make a lottery purchase until fueling begins.)
The program launched in 2012 with the state lottery of Minnesota, where it is now offered at 58 retail fueling sites. Other state lotteries soon signed on: Missouri, which has nearly 90 Play at the Pump locations; California, with 27; and, most recently, North Carolina, where four locations are piloting.
Linq3 acts as a service provider to the state lotteries. “We work closely with the states and they determine who, what, when, where and how,” says Randall Lex, vice president of business development, who also was marketing and sales director for the New York State Lottery earlier in his career. “We provide them with a list of sites Gilbarco has sold Passport to, and they evaluate it based on who sells the lottery currently.”
One of these participants is Kaposia Convenience Center in South St. Paul, Minn., which implemented Play at the Pump in November 2014. Owner Roger Green was interested in its ability to serve as a differentiator.
“I don’t want to be the last person to do something—I always want to be the innovator doing things,” says Green. “If I can do it better, or have a better tool or better mousetrap, I don’t want to be sitting around saying I wish I’d done it.”
As of press time, the program had been in operation at one of Green’s two gas stations (the other is an unattended site) for three full months. His verdict?
“It’s building up,” he says. In the first month of operation—November 2014—the site saw 44 Play at the Pump lottery transactions, with an average of $300 in sales for the three full months. But Green is optimistic about its growth potential.
“It’s not strong yet at the pumps, but you have to remember it’s cold winter weather,” and customers are still becoming acquainted with the offer, he says.
The main goal of Play at the Pump is to encourage more lottery purchases by a certain convenience-store customer subset: the casual player.
“One problem in capturing audience is the casual player—they only play when the jackpot gets super-big,” says Lex. There’s actually an industry term for this type of customer: a “permission player,” someone who feels most comfortable playing the lottery when everyone else is.
Through consumer research, the Linq3 team learned that one of the main reasons these permission players don’t play more is because it is not convenient. You must go inside the c-store—which can be burdensome for a mom with a car full of kids—and pay cash. Meanwhile, fuel customers do not want to sacrifice the convenience of paying at the pump simply to buy a lottery ticket in the store, where they possibly have to wait in line in the process.
Offering the ability to make a lottery purchase at the pump could deliver this convenience. The next step was to convince all stakeholders—customers, retailers and lottery—that the process could be secure.
“Our big opportunity is how to advertise to the end consumer,” says Andrew Syzek, commercialization manager for Gilbarco Veeder-Root, Greensboro, N.C., which partnered with Linq3 in 2013 on the Play at the Pump application. “Our big challenge is how to tell consumers this is an available and safe option, and not much different from buying a ticket inside.”
CONTINUED: Battling Security Concerns
Lex concurs: “Without its integrity, it’s nothing. You need to maintain it.” Linq3 and Gilbarco have attempted to fully fortify the offer against any abuse. For example, there’s the concern that being able to make the purchase with a debit card could encourage gamblers to empty their savings accounts.
To head this off, Linq3 can set up weekly play limits at the state lottery’s request. In addition, customers have to purchase fuel before they can make a lottery purchase, which inherently applies its own constraints.
Because lottery is an age-restricted purchase, the Play at the Pump program requires some form of age verification the first time the customer uses it. In Missouri and North Carolina, players must enter their year of birth or last four digits of their Social Security number at the keypad. In Minnesota and California, customers swipe their driver’s license through the card reader.
The fact that the lottery purchase is tied to a payment card brings an additional layer of security. “The lottery ticket selection is stored and tied to a payment card,” Lex says. “If you bought a lottery ticket on the pump and it won ... the money would automatically deposit in your account.” This short-circuits security issues, such as someone trying to cash in a stolen winning lottery ticket. (California allows purchases on either a credit or debit card, while the other states are currently debit card only.)
Finally, if the customer provides a cellphone number at the time of purchase, Play at the Pump can text him or her a link to the lottery numbers and a win notification. Winnings of $600 or less are automatically deposited in the player’s account.
For this convenience, Linq3 applies a $1 charge, or what Lex describes as an “easy feature” or “lotto plus” fee. “For the $1 you provide, we text numbers, winner notifications, redeem prizes to the card and store the ticket electronically,” he says. “You’re getting something for that dollar.” The retailer earns a 3% commission on each transaction.
With all this said, it’s only natural that a retailer might be worried that a technology such as this is too convenient, eliminating yet another reason for the customer to come inside the store to make other lottery purchases, or another item. But initial reports suggest an opposite effect.
At Kaposia Convenience Center, despite modest pump-side lottery sales, inside sales of lottery have increased each of the three months the program has been running. This includes a more than 25% increase in November 2014 vs. a year ago. January 2015 sales were more than 45% higher than the year prior. Other inside-store sales have shifted only modestly during these same time periods.
What about that close link between low gas prices and higher lottery sales? In January 2014, for example, the average price of gas in Minnesota hovered around $3.20 per gallon, compared to just under $2 per gallon in January 2015, according to the Energy Information Administration.
Green believes lower gas prices and higher volumes may be behind some of the increase, but not all. “I think it’s the fact that they’re prompted at the pump to play lottery, and they’re coming in to play lottery,” Green says.
“Coming from the lottery industry, our very foundation of sales is built on core players,” says Lex, who points out that Play at the Pump sells only jackpot games, and no more than three at a time. Scratch-offs, Pick 3 and others must be purchased inside the store.
In fact, preliminary figures from Minnesota and Missouri show a 4% to 7% increase in in-store lottery sales where Play at the Pump is offered.
Play at the Pump’s developers, who were expecting no lift on inside lottery sales, were pleasantly surprised by word from other retailers of an increase, which has averaged 4% to 7%.
“What we realized was a very simple fact: Every screen at a fueling position is an advertising screen,” Lex says. “You’re being advertised games and jackpot. You know the games and jackpot and are reminded. It’s a win/win for retailers.”
The program is free to qualifying retailers, who also do not pay swipe fees for the lottery purchase, chargebacks or disputes. And a high-volume fuel location is a natural fit for the offer, particularly one that sees mostly credit and debit transactions.
Retailers with the program have not reported problems with pumps being tied up for long periods of time while customers figure out whether to play the lottery, Lex says. The ticket transaction takes about 20 seconds, while a timeout feature bumps customers who are taking too long off the lottery and onto the fuel transaction.
“We respect the fact that for retailers,” says Lex, “the fuel pump’s primary purpose is to fuel cars.”
The Gas-Lottery Connection
Among the major in-store categories, lottery ranks second in the degree to which its sales are positively affected by lower gas prices, according to a study of retail POS data by Management Science Associates, Pittsburgh.
| Category | Indexed dollar impact* |
| Candy | 237 |
| Lottery | 215 |
| Other tobacco products | 150 |
| Hot dispensed beverages | 148 |
| Cold dispensed beverages | 125 |
| Total store | 100 |
* Indexed relative to impact for total store excluding fuel
Sources: Management Science Associates, retail POS data
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