N.M. lottery, casino introduce cross-promotional scratch-off

By Liz Benston (contact)

Monday, June 20, 2005 | 10:52 a.m.

State lotteries and casinos have historically had a distant, if not adversarial, relationship to one another.

That changed in New Mexico last week with the help of a Las Vegas startup company, Vegas Games. The company has invented a product called LottoSino that is a lottery scratch-off ticket combined with a promotional scratch-off prize that can be redeemed at a local casino.

The New Mexico state lottery is selling the tickets at licensed convenience stores and the Santa Ana Star Casino, a tribal casino north of Albuquerque, is offering the tickets in its gift shop. For a $3 ticket, players get a chance at the lottery's $30,000 top jackpot as well as a second scratch-off feature at the bottom of the ticket that has a top cash prize of $5,000 redeemable at the Santa Ana Star.

Other casino prizes include free offers for bowling, the casino buffet, gambling games and merchandise such as T-shirts.

The lottery and casino offering a joint lottery ticket is expected to be offered in dozens of other states nationwide that have both lotteries and casinos.

The product was hardly a slam dunk for inventor Gary Baldwin, founder of Vegas Games and a former agent with the Nevada Gaming Control Board.

After spending a year and a half developing the product, it was an uphill battle to convince lotteries and casinos to work together, said Baldwin, who got the idea for the tickets after studying the feasibility of lottery games in Nevada.

"This ticket probably wouldn't have gotten to the marketplace five years ago," Baldwin said. "The lottery industry was saying 'This is our domain' and the casino industry said 'Don't play in our sandbox.' "

Those attitudes have softened as both industries have matured. Both sides are more willing these days to find new ways of attracting players, he said.

Baldwin co-founded Las Vegas Gaming Inc., a company that created a keno game called Nevada Numbers that is similar to a lottery. The game allows gamblers across several Nevada casinos statewide to pool their bets and draw numbers for a relatively large jackpot.

The Santa Ana Star Casino, which is owned by the Santa Ana tribe, pays for the entire cost of creating the LottoSino ticket. Besides running advertising to promote LottoSino, the New Mexico lottery doesn't incur any extra costs.

The state has 12 tribal casinos and five racetrack casinos.

New Mexico gambling officials say they know that some people who gamble in casinos also play the lottery, and vice-versa.

"When gambling started here 10 years ago, there was concern among all the entities about how much business was out there," Santa Ana Star General Manager Conrad Granito said. "Ten years later we're all succeeding."

Lottery officials, meanwhile, aren't concerned that the Santa Ana Star will poach some of their regular customers.

"We've gotten to a point where we realized that we really do coexist," New Mexico Lottery Chief Executive Tom Shaheen said of the state's casinos. "If there weren't any casinos here, our revenue would be much higher but instead of maintaining an adversarial relationship, we wanted to see if we could pick up some new players."

"Just like any other business, you're always looking for a way to increase your market share," Shaheen said.

Lottery tickets were previously sold in convenience stores across the state and on Indian reservations.

Both Shaheen and Granito said they have received calls from lottery and casino officials in other states interested in LottoSino. Baldwin said he is in negotiations with eight states to offer the tickets and that 15 more have expressed interest. He declined to name the states but said they are some of the country's biggest lottery operators.

Multiple casinos in each state are expected to eventually partner with their state lottery to offer the tickets, which could be sold by region to residents who could travel to nearby casinos to claim prizes, Baldwin said.

Baldwin is also developing a second lottery product that would combine a Powerball-type lottery game with casino prizes. LottoSlot Millions would allow players to pick numbers as with a traditional lottery but insert the bottom part of their ticket into a slot machine to win credits and other prizes.

The products would not be available for purchase in Nevada, which doesn't allow a state lottery.