One positive by-product of the Covid-19 pandemic—at least from the standpoint of some state lottery directors—is that it could grease the skids for more legislatures to authorize online lotteries.
State lotteries have seen significant drops in sales due to the lockdown, a key discussion point at the SBC Digital Summit held last week.
During a panel discussion entitled, “State of Play—U.S. Lotteries During the Coronavirus,” moderator Richard Weil cited longtime Massachusetts Treasurer Deborah Goldberg, who for years has pressed Bay State lawmakers to allow online sales, without success. Weil quoted Goldberg as saying that the pandemic had exposed her state’s inadequate lottery business model.
Barry Pack, director of the Oregon State Lottery, noted that retailers in his state lost 70 percent of their customers when the state went into lockdown. “The recovery from this pandemic is going to force a digital transformation in our industry a whole lot more quickly than we might normally have seen it come,” he said. “When the legislature reconvenes next week, they’re facing a billion-dollar shortfall. Their opinions about mobile gaming will change. I think there will be less resistance.”
States that have already gone with online lottery sales include Virginia, New Hampshire, Kentucky, North Carolina, and Georgia, Illinois, Michigan and Pennsylvania.
Gordon Medenica, director of the Maryland Lottery, said that state suffered a hammer blow when the bars and restaurants that made up 15 percent of their retailers were forced to close. That led to a 30 percent fall in sales by the third week of the lockdown.
Medenica predicted a “sea change for the lottery industry.”
“We’ve been pushing a digital transformation and online selling ever since I’ve been in this industry, over the past 10 to 15 years,” he said. “In Maryland, they passed a law three years ago banning sales on the internet. I think we’ll see a dramatic change and I’m looking forward to it.”
GGB News caught up with Bishop Woosley, director of the Arkansas Scholarship Lottery and president of North American Association of State and Provincial Lotteries (NASPL) to talk about the future of state lotteries in a digital world.
GGB News: How has the coronavirus shutdown affected the lottery in your state and NASPL lotteries in general?
Woosley: We were fortunate in Arkansas, in that we were never under a shelter-in-place order. (Governor Asa Hutchinson) allowed the citizens, with some exceptions, to continue to do business with reasonable restrictions to help to prevent the spread of the coronavirus.
In general, our lottery felt the effects of the virus in the latter part of March. After that, our sales gradually picked up, and have been strong ever sense. I can attribute this to some of the lowest gas prices we’ve seen in years, and the closing of casinos, movie theaters and other places where people might seek out entertainment. As a result, I think lottery was one of the few sources of entertainment that people could play to pass the time.
Some states have seen similar trends in their sales. Others have been negatively impacted due to shelter-in-place orders or based on the fact that a portion of their revenue was coming from sports betting and social games such as Keno, both of which have been impacted.
Do you think forced social distancing will change the attitudes of state legislatures about allowing online lottery tickets?
I think one of the silver linings of this pandemic is that state lotteries that aren’t allowed to play online or through a mobile device will finally have real data to support the argument that their state should allow online play.
Do you see online as the wave of the future for lotteries?
Online ticket purchasing will certainly play a huge part in the lottery industry over the next several years. Whether it’s the wave of the future remains to be seen. Certainly it’ss a channel that would be very useful given the likely changes to consumer behavior and the likely continuation of social distancing following this pandemic. That said, I think brick-and-mortar retail will remain as a large component within the industry.
What direction will lottery sales take if they continue to be limited to retail sales?
Sales in retail stores remain a huge part of lottery sales nationwide. I’m not sure that will ever change. However, states that are not able to sell lottery tickets online or by using a mobile device will certainly suffer as consumer behavior changes organically and as a result of this pandemic. Those players who would prefer to purchase online or by using their mobile device will be lost to states that aren’t able to sell in that manner.
How would you envision this happening—with the use of apps or by some other technology?
No one leaves their house without their mobile phone anymore. Wherever you are, you likely have your cell phone. To me, that’s the next frontier. My assumption is that an app would be the best option, but things change so fast in that world, it’s hard to keep up. I’m excited to watch as this develops.
Have there been studies suggesting that lotteries would make more money if they transition online while keeping retail operations?
I think those studies are happening right now. States that have online sales and iLottery are experiencing huge increases in their sales during the pandemic. Hopefully once this is over, we’ll have some real data to use to make our arguments.
Are retailers worried about online sales hurting their businesses? What would you say to them?
Brick-and-mortar retailers certainly do have concerns about the impact of online sales to their business. In some states where there’s been a push to legalize online sales, retail organizations have banded together to oppose that legislation.
As online sales continue to develop, we should be able to gather new information that will allow us to provide them with data showing that there’s little or no impact on their business when online sales are legalized.
