Massachusetts Treasurer Deborah Goldberg has been arguing for years that the state lottery, which she oversees, should be allowed to sell through the internet. That not to do so threatens to relegate the lottery to irrelevancy among millennials.
Currently, the only way to play the lottery in the Bay State is by cash, in person. When she was sworn in for the second time last month she declared, “We do not want to go the way of Sears or Toys R Us.”
She made that argument during much of her first term, and she isn’t the first Massachusetts treasurer to make it. Lottery Executive Director Michael R. Sweeney seconds the treasurer. “We need to be where the consumers are,” he said recently. “I think everyone would agree that with the advances of technology, especially over the last five years, consumers are increasingly shifting some of their purchasing habits to online platforms, in particular on mobile.”
So far, however, the biggest opponents are the lottery agent retailers, such as convenience stores, who sell the games and collect 5 percent on every sale.
They see a loss of commissions, loss of the sales they make when players come in to buy the tickets and an overall decline in business.
One convenience store owner told Enterprise News that lottery sales account for up to 40 percent of total sales. Bay State residents spent $3.6 billion on instant games last year.
However, a new impetus towards the lottery moving online is the push by Governor Charlie Baker to legalize sports book in the state. Part of that package would be the eventual ability to make sports bets online and on Smartphones. This is already the preferred method of playing by such successful daily fantasy sports providers as DraftKings, which is based in Boston, and has said it wants a piece of the sports betting pie.
But it also allows existing casinos and slots parlors, which includes MGM Springfield, Encore Boston Harbor and Plainridge, to offer sports book and online betting either themselves or as partners with a third party.
Some argue that the Lottery’s worries are misplaced. “This seems to be overselling on the part of the treasurer,” Jonathan D. Cohen, a visiting fellow at Harvard University who has done extensive research on the Lottery, told Enterprise News. “It seems she’s using this as an opportunity to push for online lottery sales.” He adds, “It might cut into lottery play, but it’s more likely the market will expand rather than cannibalize itself.”
He points out that last year, when Rhode Island legalized sports betting that traditional lottery games increased 15.5 percent the following month.
Paul Grimaldi, of the Rhode Island Department of Revenue, confirms those figures but adds, “We’re obviously monitoring it all very closely. We want to see if money is just moving from one pocket to another.”
This is a serious concern for the municipalities of Massachusetts because 18 percent of the revenues before commissions go to 351 cities and towns. That was about $1 billion last year and highlights the fact that despite concerns, the Massachusetts Lottery is in the top tier of successful state lotteries.
However, Governor Baker’s proposal would also distribute sports wagering tax revenues to municipalities, at a tax rate of up to 12.5 percent. This could put another $35 million into small town general funds statewide.
Complicating matters for Goldberg’s aspirations for the Lottery is a recent about face by the U.S. Justice Department over its interpretations of the federal Wire Act of 1961.
Goldberg visited Washington D.C. recently to huddle with the state’s representatives about the DOJ’s calling into question the legality of online lottery sales. Under the Obama administration states were told they could legally sell lottery tickets online. The most recent ruling is that they may not be able to.
In 2011 the DOJ’s Criminal Division declared, “the prohibitions of the (federal Wire Act of 1961) are limited to (interstate) sports gambling and thus do not apply to state lotteries at all.” This was tossed into the wastepaper basket in November by the state that the Act’s ban on the use of a wire for sending data on wagers, “are not uniformly limited to sports gambling.”
That has created consternation among the 11 states that have online lotteries. It also seems to contradict the way federal law has appeared to evolving in its relationship gambling. The best example of that contradiction is the U.S. Supreme Court’s May decision lifting the ban on sports betting.
That opinion from the DOJ could wreck Baker’s proposed legislation, which was modeled on a New Jersey law that employs reciprocal agreements with Delaware and Nevada on online poker player pools.
The Boston Herald in an editorial declared last week: “The implications of this puzzling decision go far beyond Massachusetts. Online lotteries pump millions into state treasuries, to the benefit of its residents in the form of direct and indirect local aid.” It added, “No matter your interpretation, the Wire Act appears out of step with the digital age and the changing legal gambling landscape.”
The Wire Act predates the internet by a couple of decades. It was of a time when the only gambling allowed in the U.S. was in Nevada and was aimed principally to fight the Mafia, money laundering and interstate gaming.
At the same time Fair Play Massachusetts, a group representing small businesses, is pushing to allow sports betting at keno parlors that would be licensed by the Lottery.
Spokesman Ryan McCollum declared this week, “It is about being fair to the small businesses first and foremost so they can be a part of this, and fair to the average person who wants to be a part of sports betting.”
A member of the group, Chicopee restaurant owner Bill Stetson told the Boston Herald, “It gives people a way to enjoy the game in a safe and healthy way. People are going to sports bars anyways to watch the game so why not give them a piece of the pie?”
McCollum concluded, “We are confident that if the legislature, the treasurer and the governor really listen to our arguments that they will agree, and they are all capable enough to get together and flesh out the details on how our idea would fit in to whatever the final piece of legislation may be.”
