OLG has initiated the next phase of the procurement process to modernize the lottery in Ontario by issuing a Request for Pre-Qualification (RFPQ). The RFPQ will allow OLG to pre-qualify service providers for the day-to-day operation of lottery in Ontario.

Interested service providers must respond to the RFPQ by April 4, 2013. The RFPQ is available on MERXTM (http://www.merx.com/olg).

 

Background

In March 2012, OLG delivered a report to the Minister of Finance, outlining a proposal to modernize lottery and gaming in Ontario. The report contained three key recommendations:

• Become more customer-focused
• Select qualified service providers for specific day-to-day operations of Lottery and Gaming; and
• Renew OLG’s role in the conduct, management and oversight of Lottery and Gaming.

OLG’s modernization of lottery and gaming in Ontario is underway and once complete, OLG will have increased its net contribution to the province by $1.3 billion annually, while creating thousands of jobs and driving more than $3 billion in capital investment across Ontario.

In the spring, OLG initiated a fair and transparent procurement process by releasing two Requests for Information (RFIs) — one for Gaming and one for Lottery — to solicit feedback from potential service providers. OLG received more than 30 responses to its Lottery RFI from a wide range of organizations, including lottery operators, marketing firms, technology providers, suppliers and others.

 

Purpose of the Lottery Request for Pre-Qualification (RFPQ)

The RFPQ will help OLG determine the skills and abilities of potential service providers.

The RFPQ asks interested service providers to demonstrate experience as it relates to the lottery business, including:

• Success developing customer driven growth strategies;  Ability to operate complex and dynamic businesses;
• Access to the resources, tools and technology needed to operate a sustainable lottery business; and
• Capacity to lead the transition of customers, retailers, employees and technology to a new operating model.

Interested service providers must also have submitted an application for registration with the Alcohol and Gaming Commission of Ontario (AGCO).

The RFPQ process will enable OLG’s procurement department to identify qualified service providers to be eligible to receive and respond to the Request for Proposal (RFP) — the next stage in OLG’s procurement process for modernizing lottery.

 

Lottery Service Provider

Following the RFP, OLG will select a qualified service provider to enter into an agreement with OLG to be the Lottery Integrator, Technology Lead and Marketing and Sales Lead.

The service provider will be responsible for recommending strategies to maximize the growth and success of the lottery business, developing products and marketing plans, operations, and process and cost optimization.

Subject to OLG’s overall conduct and management of gaming activity, the service provider will also be responsible for the day-to-day operations of the lottery business, including:

• Identifying innovative opportunities for the growth of lottery in Ontario
• Acquiring all lottery-related equipment and terminals owned by OLG
• Serving as a single point of contact for OLG in implementing lottery modernization
• Developing future lottery IT architecture
• Performing or subcontracting all lottery services
• Assuming responsibility for the acts and omissions of its subcontractors
• Assuming existing contracts
• Complying with operations controls, as defined by OLG
• Assuming existing employees in respect of the lottery business
• Financing all of the activities noted above.

The service provider will be granted the exclusive right to operate lottery in Ontario for a term of 10 years with the possibility of extensions.

 

Modernizing the Lottery in Ontario

The modernization of OLG’s lottery business has three goals:

• Introduce a new sales channel for lottery products – by expanding options for sales to include multi-lane checkouts at major retail outlets (in grocery, drug and big box stores);
• Enable further innovation of the lottery business – by allowing more rapid development and deployment of new lottery games, as well as increasing the capacity of the lottery network for non-lottery purposes; and
• Increase operational efficiencies – by engaging a service provider in assuming the responsibility for the day-to-day operation and upgrade of its network of existing lottery terminals.

As new channels and technologies emerge, opportunities will arise to further meet customers’ needs by improving the lottery playing experience by making it more entertaining and engaging.

 

OLG’s Role within the Modernized Lottery

OLG will continue its role in the conduct, management and oversight and remain the “operating mind” behind the delivery of lottery in Ontario. This includes setting the overall strategy for lottery, and managing the market by approving sales channel strategies and products.

OLG will also continue to prevent and mitigate the effects of problem gambling through its Responsible Gambling program, which is recognized internationally by the World Lottery Association’s certification program.

OLG will expect the service provider to recommend approaches to the operation of the lottery that would improve customer service, increase lottery revenue and/or increase net profit to the province.

 

What are the next steps?

Service providers pre-qualified through the RFPQ process will be invited to take part in the RFP stage of the procurement process. The successful service provider will be selected from this group. OLG will issue the RFP for the modernization of lottery in 2013.

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