Chris Riegel is the original digital native. Sitting in his office overlooking the Miami River in Dayton, Ohio he recounted his early tech projects. “I am a technologist born and bred,” confided Riegel, CEO of Stratacache, which purchased Carmanah Signs in November 2013. “I was a digital native before there was such a thing. I was building computers at seven and eight. When you are involved in the technology industry before you even realize it is an industry, you can trace back to being there at the dawn of the PC age.” Stratacache is the leader in point-of- retail digitally animated signs, but to call them a sign company is analogous to mistaking Netflix for a TV screen. “The customer-facing aspect of Stratacache, the signage, is the tip of the iceberg,” said Riegel. “Under the waterline is the retailer data intelligence system. That system takes a corollary between showing X on the sign and selling Y at the point of sale. The trick is to mine the data so as to learn what the customer buys, when he buys it and how he buys it.” The company manages a network of over 450,000 devices with retail updates and cached downloads. Stratacache helps large brands such as McDonalds and Walmart right size by optimizing yield. “We have a scale where we can operate these digital networks much more cost effectively,” asserted Riegel. “We can build a network model for a lottery that increases sales and operates those networks at a lower cost.” Riegel sees both opportunities and dangers for lottery organizations. On the plus side, “Lottery is transformational,” noted Riegel. “Toothpaste is not going to transform my life no matter what the marketing says. The lottery proposition states ‘give me a dollar and it could change your life.’ The aspirational story around lottery is compelling.” But there are challenges. He makes the point that for the next generation of players, lottery is foreign ground. “Millennials do not know analog. They only know how to do things digitally. The question becomes ‘how will lotteries help millennials embrace gaming?’” Another important dark cloud on the digital landscape is the invasion for social gaming developers who claim a large presence of millennial mindshare. “It would not be that much of a hurdle for the social gaming developers to make the leap across the chasm to real money gaming—just competing for mindshare with them is an existential threat,” said Riegel. Then there are big-picture hurdles. The average foot traffic has fallen in retail by 7%. “In a macro sense that might start to threaten lotteries,” contended Riegel. “No one can control that big trend on the macro but we can make lottery more attractive on a micro level with more interesting gaming.” Riegel argues that digital point-of-retail signs make a compelling business case. “In gaming, there is something of a rear guard action taking place. You already have the terminal there. Money spent on digital at the point-of-retail is more measurable than on TV. The yield is much better. The margins for lotteries are such that just a small lift from the placement of digital signs can make a big difference. Our customers see a 2% to 7% incremental increase in sales with digital. We have seen these results in hundreds of cases.” Retail is changing rapidly and the best retailers are poised to leverage the change. “As direct fulfillment increases, foot traffic will decline. Retail is off 7% since the recession. The competition from dot coms has been great for retail because it has forced them to rethink relevance and engagement. It is no longer about who has the most locations. It is now a quality play. Lotteries can learn from that experience.” “In the world of big brand, they use the phrase called digital democracy,” continued Riegel. “The player can experience the product the way they want it. It opens that democracy up to digital natives who do not know the games and fear looking stupid. We can make it easier and transnationally transparent. Digital can play a role in simplicity and ease.” Riegel stressed that there has to be an intersection between the physical and the digital, but there is also the danger of disintermediation and disruption. “Agents get only a small percentage for selling a lottery ticket, but they use it to capture foot traffic,” he explained. “If the lotteries are in direct competition with the agents, it does not historically end well. The industry has to come up with a store-enabled mobile solution. Perhaps the player could pick their numbers online and pick up the tickets in store. It is a tricky thing to land that digital intersection.” The crossroads for digital and terrestrial may be mobile-integrated signage. “I am not sure anybody has figured that out either in gaming or at retail,” said Riegel. “There is a lot of money being spent on apps that customers are not using very much. For BCLC, their app adoption rates are good by industry standards. Compared to the number of players they have, it is still a small fraction of that big group.” “We purchased Carmanah Signs because, given their track record with similar products, they are the ideal organization to customize Stratacache’s digital sign offerings for the global lottery industry.” The digital signage industry is growing 30% a year. “We are growing 100%. It is a race. There is no ‘off button’ in technology and really not in business in general,” said Riegel. This article was originally published in LaFleur's Magazine.