Lottery solutions provider Pollard Banknote has signed a four-year extension to its scratch game printing and related services agreement with the Minnesota State Lottery.
Under the deal, which includes the option to extend for an additional two years, Pollard Banknote will provide at least 70% of the Lottery’s scratch games per contract year
The estimated value of the deal, including all optional extensions, is approximately $28m.
Pollard Banknote has been working with the Minnesota Lottery since 2007.
“We are thrilled that the Minnesota Lottery has once again chosen us to be their primary partner for scratch games and related services,” Pollard Banknote senior director and sales and marketing director Byron Peterson said.
“Having served as the Lottery’s primary scratch games partner for over a decade, we have worked to provide players across Minnesota with best-in-class scratch games and retail initiatives that foster engagement and growth.”
Minnesota Lottery executive director Adam Prock added: “Throughout our time working together, the company’s expertise has helped us to maximize revenue in support of programs that benefit all Minnesotans.
“We are pleased that this agreement will allow us to continue to collaborate and bring engaging scratch games to our players.”
The extension comes after Pollard Banknote last week it revealed that it experienced a series of challenges across its core instant tickets business during the second quarter of its 2022 financial year, and expects price rises to continue to impact operations in Q3 and Q4.
Instant tickets remains Pollard Banknote’s largest business, but increases in the prices of key inputs such as paper, ink and freight, coupled with ongoing significant demand from lottery customers, have led to increased spending.
Pollard Banknote said the nature of instant ticket contracts includes longer terms, averaging at four years, with primarily fixed prices for the entirety of the term, which in turn makes it difficult to pass on large input cost increases immediately.
Co-chief executive John Pollard said one strategy to offset costs will be to increase selling prices during contract extensions and requests for proposals (RFPs) as they come up for bid, but as these contracts do not start immediately, it could be some time before an impact is seen.
Furthermore, Pollard Banknote noted that instant ticket production volume in Q2 fell short of budget by approximately 8-10%. This was put down to continuing challenges recruiting and retaining entry level staff, increased staffing challenges with a higher number of call-outs and absences, and a higher number of unexpected mechanical and production issues.