Virginia Lottery looks to AI to improve gamers’ experience
After a bumper 2024 and alongside his role as sports betting regulator, Virginia Lottery Executive Director Khalid Jones has taken inspiration from Candy Crush and other apps as he plans for the future.
Fiscal Year 2024 was a massive year for the Virginia Lottery, as it generated $5.5 billion in sales. Of that, more than $934 million was donated to K-12 public schools, the state-operated lottery’s beneficiary.
The commonwealth’s lottery operator has a rare dual function, as it also regulates sports betting and casino gambling. And both sides of its business have been growing enormously as more and more Virginians look to strike it lucky.
But the Virginia Lottery isn’t resting on its laurels, and is instead already looking at how it can embrace new technology and new sales, all while encouraging responsible gambling. Led by Executive Director Khalid Jones, appointed last year by Gov. Glenn Youngkin, the Virginia Lottery is looking to artificial intelligence to not only customize gamers’ experiences, but operate more efficiently.
Route Fifty caught up with Jones, a lawyer by training who has also founded startup finance companies, recently to discuss his tenure and the road ahead for the Virginia Lottery.
This interview has been edited for brevity and clarity.
Route Fifty: Tell me about the Virginia Lottery. What can I participate in as a consumer, and who are the beneficiaries?
Khalid Jones: The Virginia Lottery is an interesting one, because we're in a minority of lotteries. We wear two very important hats equally. There's the traditional lottery. You sell the lottery tickets, you raise money, it goes to good causes. Then on the other side of our lottery, we’re the regulator of all sports betting and casino gambling in Virginia as well. The regulatory responsibility was given to the Virginia Lottery by the legislature when they passed sports betting and casino gambling back in 2020, so we do both those things. On the traditional lottery side, last fiscal year was a banner year for us: $934 million in profit, $5.5 billion in revenue, and 100% of the profits from the Virginia Lottery goes to support K-12 public education in Virginia.
Route Fifty: Obviously, you have the traditional lottery drawings. But what does it mean to be innovative when it comes to the Virginia Lottery?
Jones: If you look at the history of the lottery in general, if someone wanted to place a legal wager, you're talking about the lottery. In New York there's horse races, Virginia has horse racing, some other places had horse racing, but no casino, no sports betting to speak of. The lottery is one of the major ways to legally play a game of chance. Now you fast forward to 2025, that's just not the case anymore. Sports betting is here, obviously still horse racing, casinos, lotteries like ourselves. There's even unregulated sweepstakes games that people are trying to figure out how they fit into the landscape.
When you talk about being innovative, that means transitioning from an era where you had a virtual monopoly on gaming, to figuring out how to talk to a different group of people and now younger. I'll give you a couple of examples of some things that we're doing. One is, I'm very much about being able to incorporate new technologies smartly. We're looking at ways that artificial intelligence can enhance what we're doing, both from a knowledge standpoint, but also from a game innovation standpoint. I see a day — and we're starting to have these kinds of conversations — where artificial intelligence is not just used to know when someone likes to play these games at certain times, we give them the bonuses there, and we then monitor if they’re playing too much.
I'm thinking about it in a little bit of a different sense. I want you to come on and I want to determine the kind of gaming experience I want to have. I'm thinking, can we use AI to say, alright I want to have a cascade game or a match game, and I want the color themes to be this, and I want to upload my cat’s face to be the things that scroll down and match every time. Right now, we traditionally have those $5 games, $10 games, those increments. I want to play a $7 increment, and I want to have this range of odds, so can I create something that fits into our rubric, that we ensure that we're doing our duty to raise money for K-12 education, but do you get a customized experience?
What was the previous buzz with Blockchain, and now that's been pushed to the side in terms of public consciousness and AI, it's all been how do I have an increasingly customized and personalized experience? If we can't provide that to someone coming to the lottery, then there's so many other options for them to get the same kind of gaming experience. That's what I'm focusing on specifically.
Route Fifty: It's very admirable, wanting to have someone have a customized experience. But there's always the worry that it could be more addictive, it could cause problems. How do you avoid that?
Jones: Someone asked me this recently, because we talked about being one of the few lotteries that have online gaming to begin with. They said, “Don't you think that when online gaming came in, or when casinos came in with more ways to game, there's also more chance that people could get in trouble with their limits?” What that means is you also have to have increased vigilance with respect to that. For AI, what that means is every time you think of a new way to use this new technology for enhanced personalized experience or enhanced gaming experience, you also need to be thinking about the way that you can use that same technology to ensure that people aren't going over their limits.
What I mean by that is, right now AI and machine learning help us know so much about our players. Previously, I think industries that had gaming online primarily thought about that as a marketing tool. How do I market better? How do I provide a better experience? How do I know more about the player? … Every time we're thinking about using the tool to enhance our player experience, we don't view responsible gaming as separate from that. Enhancing the gaming experience means including responsible gaming measures within the technology itself.
Route Fifty: I know you regulate them. But are you borrowing best practices from those sports betting folks? I'm curious about the relationship there.
Jones: We obviously have products of our own, but we're also regulating. The answer is yes, and I like to say you have to eat your own cooking. If we're saying to a sportsbook, you have to have these measures in place, or responsible gaming needs to be important, or your outreach efforts, we're having to make sure that we're doing the same things. When we're thinking about best practices, not only are we borrowing, but I'm trying to make sure that we're ahead of that too, so that we're allocating the proper number to the proper amount of resources, that we've got the right amount of brain power on it.
The most important thing is, every time we're thinking about a game enhancement, we have to think about, will that bump up the amount of people who could potentially get in trouble? It is a balance. I’ve got a big check over there for $934 million. I'd love for that to be $1 billion, but I can't do that at any cost whatsoever. That responsibility that we have to our beneficiaries is real, and we need to raise money for that. But the responsibility we have to our players is real too, and we hold that very tightly.
Route Fifty: I don't know how much of a push/pull there is between the private sector guys, versus working for the Virginia Lottery. How do you make yourselves attractive to folks who might still want to do innovative things?
Jones: One is having an open mindset to it. I think that just because something hasn't happened before doesn't mean it can't happen in the future. This is the one thing I do know, and I bring this with me. I'm fortunate that I've got people around me in the agency who helped me believe this too, and people in our legislature and governor's office that support me in this as well. I would rather be forward with technology or technological innovation, rather than be behind. Bill Belichick, who coached the New England Patriots for a long time, had a phrase that he'd rather trade a player a year too early, rather than a year too late. The thinking behind that was, if he was wrong by a year too early, that didn't cripple the team. But if you kept something that wasn't useful for too long, it was crippling. I feel the same thing about technology. I'd rather be a little bit too early than lag too far behind.
What we see sometimes in government is it's not able to be nimble, and we do compete against the private sector for mind share and dollar share. If I lag too far behind, you can start losing the race real fast. And the difference between now and 1987, not only do you not have that de facto monopoly anymore, but also the rate of technology, it's changing fast, and changing faster than it ever used to. … I'm very cognizant that the pace of technological change is not going to slow down, and so we have to be able to keep up with that. As long as I'm here, we'll always be able to keep up. It's not that we adopt every new thing just because it's new, but we're always going to make sure that we have our finger on the pulse for adoption.
Route Fifty: I’m told you were inspired a bit by Candy Crush. How has that played into your thinking?
Jones: If you go on our online platform and you look at our games, I take a lot of cues from mobile gaming. I went to the Game Developers Conference in San Francisco this past year, and I talked to some of the general managers and lead developers from King [developer] about Candy Crush. What I took away is less about the gains and the levels and the challenges and a lot about their relationship with their player through the games and development. They had something early on where they had a group of players who finished all the levels, and they said their players’ boredom comes from a lack of being challenged, not that they didn't like the levels or they didn't like the boards. The game design was just one element, it's how they made their players navigate through that process.
I think about a lottery game, we don't have things like levels or achievements or leaderboards or communities, and you think about those four elements I just named in the mobile context, they're trying to foster community and a sense of pride and wanting to stay to play through those elements. When I think about the Candy Crushes of the world, what they've done on the mobile side, I definitely want to port that into the lottery world, because it's such a phenomenal job.
Route Fifty: Broadly speaking, it's very techie now. How do you see this moving forward? Presumably there will still be a role for, if I'm hungry on a Friday and I just go into 7-Eleven and buy a lottery ticket while buying a chocolate bar. How does it mesh together?
Jones: Back in 2020, we got authorized for iLottery before, and the thought was that all these lottery games are going to be online. No one's going to go into the store and buy a lottery game anymore. That didn't happen. Last year, we set a record $2.9 billion of revenue on the online channel. But at the same time, we set a record for retailer compensation, so the amount of money that the retailers got from selling lottery tickets was also the highest ever. What we've proven is that you can do both at the same time. You can have a robust online offering, an online world and online existence, and have that help your offline existence as well.
The way that we did that was we made sure that we had a lot of omnichannel offerings. If you had a game online, that same game was represented offline, and also if you have a game offline, you need to go finish online, and vice versa, so you made sure the offerings were synergistic. And then just the reality of the lottery world, jackpots helped too. If Powerball is really big, then you're going to get a lot of people going to the stores. But I think the core of that is making sure that you have those offerings that are available in both channels, and you treat them both equally, but also in a way where they coexist and feed off one another.
Route Fifty: What are you thinking about in the next 12 months?
Jones: We've seen exponential growth. We're the largest iLottery in the nation, by far, and we've seen really large growth. I think when our numbers come out later, we're going to see another year of double-digit growth in our online platform. But that growth year one to two was 80%; year two to three, 60%; year three to four, 40%. I can see the plateau coming. Anyone with an economics degree can see that plateau coming. That big spurt of growth has happened. How do I keep it, mature and not lose it? I think about that a lot.
The second thing I think about is, alright, what is our next area of growth? I don't think it's from a great new game that’s coming out. We're constrained in a lot of ways and certain things we can't do. I can't make a mobile game in the same way that they can. But what we can do is look at the different areas for growth. Right now, 90% of our retailers are grocery stores and convenience stores. That's where 90% of lotteries are sold offline. We have not yet cracked the code for bars, restaurants, fast food establishments, and that's my next area of searching, of going for growth, is figuring out the products and those relationships that make a Wendy's or a McDonald's ask how I partner with us, or really me saying to them, this is how you partner with us. We've got about 5,300 retailers, and I'm eyeing, can I double that in the next five years? So now I have 10,000 and they all come from this new area. If I'm able to successfully do that, and we've already started down that road, that's when you're going to see us growing again, because it's a completely new channel.
Route Fifty: Anything I didn’t ask you about that you wanted to highlight?
Jones: On the AI front, one thing that we've done as well, we've started an AI Task Force, which is led by our chief technology officer, and we also started a pilot with Microsoft CoPilot. We're thinking about AI, not just in terms of the games or creating visuals or things like that. We're also using it to optimize efficiency from a workplace employee standpoint, and then thirdly, from our gaming compliance team, looking at it from being able to give people training in quizzes. If we have all the information in our own system, I'm able to say someone is a new sign-on, or this is your periodic training, and you would be able to go in and generate your own quiz that's specific to your job function. The AI has the whole compendium of our knowledge in the background and is able to pull out relevant answers. We're already starting down that line, and I'm really excited about it. We've got the consumer facing side in terms of being able to have individualized offerings, but then we have the enterprise side that's allowing us to get more out of our current information and current workforce.
https://www.route-fifty.com/digital-government/2025/07/virginia-lottery-looks-ai-improve-gamers-experience/406895/