COVID-19 blamed for $17M project blowout at Lotto NZ

COVID-19 blamed for $17M project blowout at Lotto NZ

A project to replace the organisation's interactive gaming system falters

Credit: Lotto NZ

Government gaming organisation Lotto NZ is behind schedule and $17.5 million over budget in a project to replace its interactive gaming system.

According to its 2019 annual review by Parliament, the New Zealand Lotteries Commission (which trades as Lotto NZ), originally budgeted $11.9 million for the replacement, which was supposed to have been completed last October.

However, Lotto NZ's annual review for 2020 showed the project was now expected to cost $29.4 million and to go live this coming May.

"This is a significant project to upgrade the MyLotto website and app to ensure that back-end processes are robust and able to deal with higher traffic online," the report said. "The impact of COVID-19 has led to a rapid acceleration in Lotto NZ’s digital transformation, which has added time, complexity and cost to the project."

Lotto NZ told Reseller News the interactive system replacement (ISR) project's initial estimated budget and delivery timeline was in line with the requirements and the situation at the time, which had since evolved.

"Specifically, the accelerated shift to online play as a result of the  COVID-19 lockdowns in 2020 (from 18 per cent of our business after 13 years of operation when we started the project to around 40 per cent online in a nine month period) required us to revise our requirements for performance and scalability," Lotto NZ said.

In addition, ongoing travel restrictions and internal lockdowns in both NZ and Italy, where the system vendor IGT is based, had impacted on teams in both countries. The project had to be supported entirely remotely. 

"We had originally planned for on-site to support from IGT, the vendor, so this change to remote support has led to an increase in project cost and duration."

Lotto NZ said the product selected had been built and was is in use elsewhere, however, there was a level of customisation needed to meet Lotto NZ’s requirements. In 2019, Lotto NZ began investigating an expansion into online Bingo.

"Overall, we believe there is still significant growth opportunity for the digital channel, as the current interactive player base makes up a relatively small percentage of players that participate in our games throughout the year across all channels," Lotto NZ said at the time in a notice on the government tenders website.

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Tags gamblingLotto nzLotteries Commission



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