Lottery operations: data inputs and outputs

When it comes to picking the winning numbers for lottery draws, there are infinite amounts of wrong combinations and only one winning sequence. For lottery operators, it can sometimes feel that they too have to deal with the same amount of combinations – between their systems and stakeholders. Yet they can’t afford for them to be wrong in any way.

From working with vendors’ back-offices to providing the correct tax reports for regulators, lottery operators have a lot of inputs and outputs to manage beyond gifting prize winners life-changing sums of money. That’s why it’s important to consolidate their financial data into a central hub – somewhere that allows them to connect the dots in one place, build a complete picture for themselves, and provide timely feedback to their stakeholders.

Read on to discover what applications such a resource can improve, why data integrity is fundamental to making this a success, and how it can be achieved.

Rewarding vendors

The allure of winning big might not sound like a hard sell. Nevertheless, the practicalities of purchasing a ticket must still take place if people are going “to be in it to win it” and this produces overheads. As such, sellers of lottery tickets need recompensing.

Traditionally, lotteries pay their vendors a commission percentage based on how much they sell. Whilst commission structures are easy to execute internally, when an external partner is involved and thousands of tickets are being bought via them, systems must be in place to ascertain with certainty how much is sold.

Lottery operators therefore require an input from their vendors, sometimes via POS systems, to be made aware of how many sales each individual vendor makes. It is then up to operators to cross-reference these records with their bank statements to verify that the stated sales are legitimate. Once this is confirmed, all that remains is to apply the correct commission rate and make payouts to their vendors.  

Given that lotteries are reliant on ticket sales for their prize draws, it is crucial that this process is executed accurately and on time. Lottery operators can therefore not afford to gain intel on vendor sales late and make errors when reconciling POS reports with their bank statement. Doing so would put at risk the relationships they have with vendors and, in turn, the entry numbers of their prize draws.

Voucher activations

The big cash prize of most lotteries is usually just for one player. However, that doesn’t mean that everyone else loses. Smaller prizes can be up for grabs too, including vouchers of varying values.

Assigning these prizes to their winners is no different to the big cash prize – checking of their entry and numbers must take place. However, whereas there is only one winning combination for the main prize, for these smaller prizes, many can exist. For instance, anyone who got three out of eight numbers correct could qualify for a voucher. Inevitably, a lot of cross-referencing and checking must take place to make sure that those who qualify for these prizes are notified.

However, delivery of these prizes – which are often won in high volumes – also requires reconciliation. The form that this type of reconciliation takes is one similar in nature to stock reconciliation and again requires input from another data source, that of the operator’s voucher inventory.

In simple accounting terms, vouchers that operators possess are seen as assets. Yet the moment that they are won and become the property of a player, they must be removed from this side of the accounting equation. This process requires inputs from the operator’s voucher inventory and Central Gaming System (CGS) and an output back to the former so that the statuses of won vouchers are updated to possess a label such as ‘issued’.

Ultimately, this must be done by operators for two reasons – to make sure that they know the true value of their equity and to make sure that no vouchers are re-issued. Once again, timely inputs and accurate handling of their data are therefore imperative to lottery operators, this time with a view to making sure that they do not breach any financial fundamentals and that they don’t upset their players.

Gambling regulators

The end result of any lottery is that the jackpot is either won or it's rolled over to the next draw. Whilst the latter might be anticlimactic for some, for regulators it makes no difference. All they are concerned about receiving from lottery operators is intel which helps them keep their industry fair and legitimate.

Across the world, regulators such as the UKGC in the UK, the Multi-State Lottery Association in the US, the ANJ in France, and more regulatory bodies are all interested in the likes of:

• Sales and revenue reports detailing everything from ticket sales per game type to commissions paid to vendors and revenue distribution to beneficiaries such as public projects.

• Audited financial statements to showcase profit/loss, fund allocations and more.

• Prize reports to share payout and rollover totals, verification of big prize winners, and more.

Notably, such intel is only available from operators. However, in this instance, the saying of “the data is only as good as what is put in”, is not completely true. It is also a matter of how operators handle inputted data before they share it with regulators. For example, do they record all movements of funds – including the changing status of vouchers – and the contents of discrepancy investigations to create a complete audit trail?

If not, regulators will find it difficult to comprehensively complete their job – they will be left with considerable knowledge gaps about how operators manage their finances, money reserved for good causes, player funds, and more. Ultimately, for lottery operators to produce required outputs for their respective regulators, they need to make sure that they have the infrastructure in place to ETL and reconcile various pieces of data effectively in a manner that is conducive to audits.

Tax authorities  

Similar to gambling regulators, tax authorities also require lottery operators to provide them with a selection of outputs. Furthermore, another likeness between these two types of organisations is that they both expect to receive intel on time. As such, it is vital that lottery operators are able to firstly access raw data from various sources quickly and then also have the means to ensure its integrity via reconciliation before reporting on it to tax authorities.

Whilst there might be differences on what tax authorities from different countries demand to know from lottery operators, more often than not, Gross Gambling Revenue (GGR), tax withheld per winner (if applicable), commission paid to vendors, and more are all typically requested.

Bringing it all together

Evidently, finance and operations teams of lottery operators have a lot of data sources to handle. It therefore helps to bring it all together, for many reasons:

• Timesaving – having all your data automatically fed into one central platform makes the tiresome task of logging into various resources obsolete. When this is paired with the fact that Aurum not only automatically extracts and loads data automatically from over 600 sources via APIs but also intelligently transforms this data in preparation for automatic reconciliation, total time saved soars.
  

• Clear communication – as demonstrated above, gathering various data sources often serves multiple purposes. For instance, voucher reconciliation keeps operators’ finances in check whilst also guaranteeing a good customer experience.  
  
  Interaction with data – no matter whether it is sourcing it, reporting on it, or investigating discrepancies regarding it – therefore regularly involves various departments at operators. To make sure that this takes place smoothly communication is vital and a single shared space to do this greatly helps.
  
  Fortunately, Aurum not only acts as a central hub for reconciling financial data, it also facilitates communication. How? With the ability for users to leave notified comments for one another on any transaction. Moreover, with Aurum producing dashboards, financial insights are also communicated visually to users.
  

• Compliance – when everything is brought together in one place, this creates the opportunity for every action to be accounted for. However, this isn’t always assured. After all, reconciling transactions manually in Excel doesn’t produce an audit trail.
  
  In order for centralisation of data to truly assist lottery operators with compliance, it is therefore imperative that this occurs in a space which automatically produces audit trails, like Aurum.

Locking in to get the most out of your financial data

Lottery operators can never control the numbers that are drawn each game, and similarly they have little command over the number of data sources they must extract from and feed into. However, one number they do have control over is how many tools they use to manage their financial data.

With Aurum, lottery operators can make that number, one. Extracting, transforming, loading, and reconciling bank statements, POS reports, voucher inventories, and more, along with producing bespoke reports, Aurum acts as a one-stop shop for lottery operators that need to handle data from various sources. Plus, best of all, when they choose Aurum to reduce the number of applications they log into, they also reduce the time they spend on reconciliation.

From Lottoland to La Tinka, Aurum is the preferred automatic reconciliation platform of choice for the gambling industry. Find out why by booking your Aurum demo today.