Incentive Program

FY 2018 RETAILER INCENTIVE PROGRAM

GOALS AND OBJECTIVES                                                 

  • To develop a program to exceed the State Sales Scratch Off Quota of $620.5 million for FY‘18.
  • To provide financial incentives beyond standard fees for Retailers achieving outstanding sales performance.
  • To provide a compensation program that is fair and equitable for all KLC Retailers.
  • To provide an incentive for KLC Retailers to increase lottery presence and sales.
  • To provide an incentive system that will motivate Retailers to promote and sell lottery games throughout the fiscal year.

SALES GOAL FOR FY ‘18

  • $620.5 Million is the goal for Scratch-off games
  • FY ’18 time period = 52 Weeks: July 2, 2017 – June 30, 2018

INCENTIVE TIME PERIODS

INCENTIVE PLAN “A”

  • Quarter 1:   July 2, 2017 – September 30, 2017

INCENTIVE PLAN “B”

  • Quarter 2:   October 1, 2017 – December 30, 2017
  • Quarter 3:   December 31, 2017 – March 31, 2018
  • Quarter 4:   April 1, 2018 – June 30, 2018

SCRATCH-OFF INCENTIVE 

FY ‘18 FIRST QUARTER ELIGIBILITY

Retailers must have an active license status on the records of KLC at the beginning and end of the quarter they qualify for an incentive.  To qualify for a specific quarter’s incentive program, the retailer must have the capability to sell scratch-off products all weeks of that specific quarter.  If not, they are ineligible for the incentive for that quarter.

Retailers who have an “Inactive” license status (often due to A/R balance issues) according to the records of the KLC on either of these two dates (first/last day of quarter) are still eligible as long as they fully pay their account balances and are eligible to sell lottery products all assigned weeks of that specific quarter.

Only retailers able to sell all weeks of an incentive period will be eligible for additional incentive rates per this plan.  Retailers who start selling KLC products after the beginning of a specific incentive period are not eligible for that specific incentive period, but may be eligible for the following incentive periods if all other requirements are met.  (i.e. Retailers beginning to sell KLC products after the start of a specific incentive period are not eligible for that specific period)

Only retailers who have no more than one NSF instance during the incentive period during which they are qualified for an incentive will be eligible to receive that incentive. Those retailers with 2 or more NSF instances during a specific incentive period are not eligible for the incentive for that period.

At the sole discretion of the KLC, a retail location having joint ownership may retain its eligibility if one of the original owners sells their share of the business to the remaining partner(s) (which necessitates a Retailer Number change).  These will be handled on a case-by-case basis.  Sales from both retailer numbers will be combined for comparison to the weekly incentive rates if eligible.

Retailers not meeting the above criteria may still be eligible, at the sole discretion of the KLC, with written authorization of the President of the KLC.

SCRATCH-OFF INCENTIVE RATES

Eligible retailers may receive additional incentive fees as shown on the following table for Scratch Off ticket sales only.    Currently, KLC’s Scratch-off  sales are only scratch-off tickets.  These rates do not apply to or include draw game sales or I-lottery sales.


FY'18 SCALE 

AVERAGE WEEKLY SALES

INCENTIVE % RATE SCRATCH OFF TICKETS


<$1,050

Does not Earn an Incentive

$1,050 - 1,700


Flat $30

$1,701 - 2,500

0.25
$2,501 - 3,600
0.45

$3,601 - 5,000

0.60

$5,001 - 6,900

0.75
$6,901 - 8,300
1.00
$8,301 or higher
1.25
 

Average weekly Scratch-off sales will be used to determine which quarterly incentive percentage (%) rate for which a retailer qualifies.  Average weekly sales refer to total Scratch-off sales during the quarter, divided by the number of weeks in that quarter (13).

The incentive rates above will be applied to calculate the total earnings of each retailer. During the normal course of business, retailers receive a 5% commission rate for our Scratch-off games which is separate from this incentive program.

If an incentive is earned, the retailer will receive it via an account credit with written notification by the Lottery.  The credit will be given as soon as administratively possible in the month following the end of the respective quarter.  At KLC’s discretion, checks may be written and delivered to retailers earning incentives above a certain amount (i.e., $1,000 or more).  Each incentive period stands alone and represents a sales quarter as defined above.

At the sole discretion of the KLC, a retail location having joint ownership may retain its eligibility if one of the original owners sells their share of the business to the remaining partner(s) (which necessitates a Retailer Number change).  These will be handled on a case-by-case basis.  Sales from both retailer numbers will be combined for comparison to the weekly incentive rates if eligible.

Retailers not meeting the above criteria may still be eligible, at the sole discretion of the KLC, with written authorization of the President of the KLC

SCRATCH-OFF INCENTIVE

FY ‘18 QUARTERS 2,3 and 4 ELIGIBILITY

Retailers must have an active license status on the records of KLC at the beginning and end of the quarter they qualify for an incentive.  To qualify for a specific quarter’s incentive program, the retailer must have the capability to sell Scratch-off products all weeks of that specific quarter.  If not, they are ineligible for the incentive for that quarter.

Retailers who have an “Inactive” license status (often due to A/R balance issues) according to the records of the KLC on either of these two dates (first/last day of quarter) are still eligible if they fully pay their account balances and are eligible to sell lottery products all assigned weeks of that specific quarter.

Only retailers who have had at least 5 complete sales quarters will be eligible for additional incentive rates per this plan.  For example – to earn a 2nd Quarter Incentive in FY18 the retailer must have actively sold lottery in all 13 weeks of 1st Quarter 2017. 

Only retailers who had no more than 1 NSF instance during the incentive period during which they are qualified for an incentive will be eligible to receive that incentive. Those retailers with 2 or more NSF instances during a specific incentive period are not eligible for the incentive for that period.

At the sole discretion of the KLC, a retail location having joint ownership may retain its eligibility if one of the original owners sells their share of the business to the remaining partner(s) (which necessitates a Retailer Number change).  These will be handled on a case-by-case basis.  Sales from both retailer numbers will be combined for comparison to the weekly incentive rates if eligible.

Retailers not meeting the above criteria may still be eligible, at the sole discretion of the KLC, with written authorization of the President of the KLC.

SCRATCH-OFF INCENTIVE RATES

The Kentucky Lottery Sales Quota equates to a 2.8% increase in Scratch-off sales in Fiscal Year 2018.  Eligible retailers may receive additional incentive bonuses as shown on the following table for Scratch-off ticket sales only.    Retailers must exceed their total sales each quarter as compared to the same quarter the previous year to qualify.  Currently, KLC’s Scratch-off sales are only Scratch-off tickets.  These rates do not apply to or include draw game sales or I-lottery sales.
 

AVERAGE WEEKLY SALES

1-2.7% SALES INCREASE

2.8% or HIGHER INCREASE IN SCRATCH OFF SALES

<$1,050
Does not Qualify for Incentive
Does not Qualify for Incentive
$1,050 - 1,700
Flat $15
Flat $30
$1,701 - 2,500
0.125%
0.25%
$2,501 - 3,600
0.225%
0.45%

$3,601 - 5,000

0.3%
0.6%
 $5,001 - 6,900 0.375% 0.75%
 $6,901 - 8,300 0.5% 1.0%
$8,301 or higher 0.625% 1.25%

 

Average weekly Scratch-off sales will be used to determine which quarterly incentive percentage (%) rate for which a retailer qualifies. Average weekly sales refer to total Scratch-off sales during the quarter, divided by the number of weeks in that quarter (13). 

The incentive rate above will be applied to calculate the total earnings of each retailer. During the normal course of business, retailers receive a 5% commission rate for our Scratch-off games which is separate from this incentive program. 

If an incentive is earned, the retailer will receive it by an account credit with written notification by the Lottery.  The credit will be given as soon as administratively possible in the month following the end of the respective quarter.  At KLC’s discretion, checks may be written and delivered to retailers earning incentives above a certain amount (i.e., $1,000 or more).  Each incentive period stands alone and represents a sales quarter as defined above.          

At the sole discretion of the KLC, a retail location having joint ownership may retain its eligibility if one of the original owners sells their share of the business to the remaining partner(s) (which necessitates a Retailer Number change).  These will be handled on a case-by-case basis.  Sales from both retailer numbers will be combined for comparison to the weekly incentive rates if eligible. 

Retailers not meeting the above criteria may still be eligible, at the sole discretion of the KLC, with written authorization of the President of the KLC. 

PROGRAM POINTS

  1. The cashing bonus for “authorized cashing agents” will remain at 2% for cashing winning tickets between $601 - $5,000.
  2. Incentives will only be awarded to those retailers meeting all eligibility requirements and who qualify by their sales.
  3. Each retailer will be considered as standing alone for purposes of this plan. (i.e., Each store in a chain account will be judged on the merit of its own sales, rather than the total of the chain account.) KLC will provide any incentive due to the retailers based on their current banking arrangements with KLC.
  4. It is anticipated that unusual situations may arise during FY ‘18 that might not have been considered by this plan.  Such situations will be brought to the attention of the Senior Vice President of Marketing & Sales, who will determine how such situations shall be treated in conformance with the intent of this Incentive Plan.