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CIO Offers By-the-Numbers Overview of California Lottery

In a recent Industry Insider — California Member Briefing, CIO Jennifer Chan offered insights into her department, its history and what makes it unique. She also offered advice to vendors seeking to do business with the department.

The chief information officer of the California Lottery, Jennifer Chan, participated in a recent Industry Insider — California Member Briefing, offering industry representatives an insight into the department’s mission, scope and priorities. Following are key takeaways from Chan’s Nov. 30 presentation:

Jennifer Chan
Fast facts: The California Lottery was founded in 1984 by a voter-approved proposition with the sole purpose of funding education. Staff: About 1,000, including an IT unit of around 140. Operations: Lottery partners with almost 24,000 retailers statewide. “Think of the lottery as essentially a $9 billion retail organization, because that’s basically what we are,” Chan said.

Department overview: “We run a very lean operation … and our administrative expenses are capped, so anything that is not spent within a year goes directly to education,” Chan said. “The lottery is completely self-funded. We don’t follow the traditional state of California budget cycle. We have the ability to ask for positions and dollars all throughout the year, because we report to the Lottery Commission. We don’t follow the normal BCP (budget change proposal) cycle that other state agencies have to follow. We are very different with respect to procurements. We have special procurement rules that we follow. … We have flexibility within how we do our requirements and our budgeting, so that allows us to be a lot more agile, a lot more flexible and to be able to be more innovative. Our largest contract is an IT contract, and it’s worth over $3 billion. So we have a lot invested in technology.”

Biggest challenges: “What’s unique is that the line of work that we do is so different within the state; it’s so specialized,” she said. “Combine that with the silver tsunami that we’re facing now, and it’s really hard to recruit and retain talented staff. We run into the challenge of losing institutional knowledge as our folks get into retirement age and move on. We’re doing a lot of workforce development and succession planning. We manage applications and systems that support our gaming system, and that is very specialized knowledge. It’s not like you can go from one department to another, because no other department does what we do.”

Goals and priorities for 2024: “I’ve been with Lottery almost three years now, and one of the things that we’ve been focusing on is modernization of our technology, infrastructure and environment, focusing on addressing technical debt legacy technology,” Chan said. “Once we get to a point where we’re a little more stabilized, we’ll be looking at how we can do some more innovative projects. So we have coming up … an HR modernization project; we’re working on our electronic document automation effort, and we are working on a gaming system market research effort.”

The importance of data: “We’re focused in on a lot of efforts related to data retention, data governance, data strategy. We have a number of efforts in line with that. And then, along with just making our infrastructure more robust, we have a network resiliency project that’s underway as well. I could go on and on; our list is very long.”

Notable procurements planned: “Because we’re in procurement development, I can’t really speak to anything specifically,” Chan said. “But I can tell you that you’ll probably see some requirements from us related to things like optimizing our services, doing some technical assessments — the normal things that we would do with respect to refreshes and technology refreshes, resellers, that type of work, new software. I do anticipate we’ll probably have some consulting efforts in the future, but again, I can’t really speak in too much detail to those.”

Biggest tech challenges: “There are certifications that we have to keep in place for security. We have to have an internal control system that independently validates our gaming system, for example. And we are subjected to a lot of audits — everything from audits of our gaming system to audits of how we do procurement, to audits of everything, like software licensing, even down into the weeds. I’ll also say that we participate in a number of multistate lottery games. So when there are national changes, like when Powerball went to a third draw day on Monday, we had to participate in that and we had to modify our gaming system. On the technology side, we have to make sure that all of our systems are up and running — our website and mobile applications — and that our vendors are making sure that our gaming system and our internal control systems are working. Because we’ve had so many billion-dollar jackpots, one thing we start to see is jackpot fatigue.”

What makes Lottery unique: “I don’t know of any other state department out there that has a sales and marketing division … so Asian marketing, Hispanic marketing, you name it. If it’s translations on the website, we’re working on that; if it’s changes to the mobile app, we’re working on that.”

Cybersecurity is paramount: “We do a lot in the cybersecurity space; we actually have a cybersecurity and engineering group. For anything that we’re doing, from how we design our applications to how we set up our website, we work towards a zero trust environment. We do our own due diligence in putting together regular penetration testing, technical assessments, security assessments, to give us an independent view of what we need to do and how we need to increase our security posture.”

Guidance for vendors: “Spend time to understand our business and understand what we do. If you can come to the table saying, ‘I understand you do XYZ and this is how I can help you do it,’ that’s a lot more valuable than having you come to us and say, ‘OK, so tell us about your services.’ If you can send me an email that really (shows) that you’ve spent time doing your research, and you’re understanding our business well, and how you can help us, that’s a way to get your foot in the door. I can’t tell you how many vendors that we’ve had some conversations with and they’re like, ‘Oh, don’t you do check cashing?’ No, that’s not part of our business model, and you would have known that if you had spent a little bit more time researching.”

How to connect: “Please email; please do not call me on my personal phone,” Chan said. “If you do that, we’ll block you. The one thing I would highly recommend is anytime we release a procurement or solicitation, if you think you’re even remotely interested in it, please submit a solicitation. That will fast-track you onto our shortlist of vendors. As vendors, you’re very important to our ecosystem. We want to make sure that you know you’re adding value. And we like to have that open, candid conversation with you all when you are part of our environment.”

Chan, who’s been Lottery CIO for about three years, has been featured twice in Industry Insider — California “One-on-One” interviews — first while she was agency information officer for the California Department of Food and Agriculture, and then again in her current role.
Dennis Noone is Executive Editor of Industry Insider. He is a career journalist, having worked at small-town newspapers and major metropolitan dailies including USA Today in Washington, D.C.