Goldberg faces uncharted waters in push to bring lottery online
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Massachusetts Treaurer Deb Goldberg has filed a bill to allow the Lottery to expand into the online marketplace.
In the face of stagnant profit growth at the Massachusetts Lottery and local officials clamoring for the funding the Lottery provides them, Treasurer Deborah Goldberg on Wednesday filed a bill to allow the Lottery to expand into the online marketplace.
If lawmakers next session approve the measure, the Lottery would be allowed to sell its scratch tickets, drawing entries and other products over the internet and mobile apps. The Lottery sought the same authority this session, but the Legislature did not agree to the idea, and Goldberg has said she is prepared to press for passage of her bill next session.
In a political environment where new taxes are opposed by the governor and state tax collection growth has slowed, non-tax revenue sources like the Lottery are being eyed by some lawmakers for potential cash and Goldberg, who manages the Lottery, has said the Lottery cannot continue to return record-setting profits to the state unless it is allowed to move online. The situation sets up a policy challenge for lawmakers who favor annual local aid increases.
Goldberg told the News Service on Wednesday morning she filed the bill "to give us the authority to begin exploring what are all the ways in which we can do a Lottery-like product online."
The bill, filed Wednesday morning for consideration when the Legislature returns to formal sessions in January, directs the Lottery Commission to come up with regulations to require age verification for online lottery players, limit online sales of Lottery products to transactions initiated from within Massachusetts, set a maximum deposit limit for online players, and allow players to voluntarily prohibit themselves from purchasing online Lottery products.
Convenience and package store owners, who depend on the Lottery to attract customers to their stores, and responsible gaming organizations have resisted previous attempts to make Lottery products available on the internet.
"Certainly it's not going to create all new sales. A lot of the sales generated are going to come from the brick and mortar stores," Frank Anzalotti, executive director of the Massachusetts Package Stores Association, told the News Service. "The money that the state might think they're going to get is going to come not just in sales but also in the fact they wouldn't be paying a commission to the brick and mortar stores."
Anzalotti said he foresees "serious safety and legal issues here," specifically around how an online Lottery would be able to verify that the people buying Lottery products and playing Lottery games are at least 18 years old.
The New England Convenience Store Association has also opposed an online Lottery when the possibility has come up in the past. The National Association of Convenience Stores said lottery customers purchased at least one non-lottery product on 95 percent of their convenience store visits.
Goldberg has repeatedly said she wants to find a way to make Lottery products available online while minimizing damage to the Lottery's retail partners.
Her bill would not allow online players to use a credit card and requires the Lottery Commission to come up with promotions that "encourage the purchase of lottery tickets, games or shares through licensed sales agents, including, but not limited to, the sale of prepaid gift cards for online transactions through licensed sales agents."
"We do not look to use credit cards, so we're looking for ways in which we can blend what the Lottery does for retailers, gas station convenience store owners, other retailers, with also exploring a new avenue to generate revenue which, I always repeat, goes back to every city and town in the commonwealth," Goldberg told the News Service.
Asked how she thinks the Legislature will receive her proposal after declining to grant the Lottery the right to explore online opportunities this session, Goldberg said she thinks her bill will "be given a thoughtful process."
If approved, the legislation would enable state government to migrate its gambling products online, where there's a growing presence of gambling sites, including fantasy sports operations, that are competing with brick-and-mortar casinos for limited gambling dollars.
Lottery profits, which are delivered to cities and towns as local aid, were essentially flat last year and online Lottery boosters view the move as a needed transition if the Lottery is to hold its ground in gaming.
The Lottery announced in July that it expects to return to the state $986.9 million in net profit from fiscal year 2016. Though that sum is the largest in the Lottery's history, it is just $1 million more than the previous year and Goldberg said last month that $27 million of the profits came from the world record $1.5 billion Powerball jackpot in January.
The Lottery has also begun to see scratch ticket sales decline, particularly concerning to state officials because the instant tickets account for about 70 percent of total Lottery sales.
Next month, Goldberg will forecast future Lottery profits for state budget writers as they look to determine just how much revenue they can expect to have to work with when developing the fiscal year 2018 budget.
According to the Council of State Governments, at least four other states -- Kentucky, Illinois, Georgia and Michigan -- have already authorized their lotteries to sell at least some products on the internet. The Minnesota State Lottery in 2014 began offering scratch tickets online and at gas pumps without the consent of the state Legislature, and lawmakers passed a law in 2015 to end those sales, according to the council.
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