Horse racing aficionados have been betting on races online for more than a decade. Sports bettors in dozens of states have tried their luck since the Supreme Court ended Nevada’s virtual monopoly in May 2018. Online casino gaming is only operating in a half-dozen states, but many lawmakers have noticed that New Jersey, Pennsylvania, and Michigan operators have cleared more than $100 million in revenue per month per state for the past year or two.
But online lottery often is overlooked — and even misunderstood.
Illinois and Georgia launched online lottery play a decade ago, one year before Nevada legalized online poker in 2013 while New Jersey and Delaware authorized across-the-board online casino play.
On Saturday, iLottery got its 60 minutes in the sun. A panel on the topic took place in Boston during the three-day conference of the National Council of Legislators from Gaming States (NCLGS).
The panel’s general sentiment was that many lawmakers either don’t like the lottery or don’t understand it — and even lottery supporters sometimes mistakenly believe that it needs to be protected from “online competition” that would be overseen by the same lottery officials as those who regulate convenience-store sales.
Ted Lasso and Real Housewives enter the room
May Scheve Reardon, the executive director of the Missouri Lottery since 2009, told the audience that her previous dozen years in the state House of Representatives prepared her well for what she might be up against in her new role. She recalled that a former colleague and lawmaker once told her, “You know, every once in a while it’s just good to kick the lottery around.”
Scheve Reardon added that other lawmakers look at the lottery as “the Ted Lasso of state agencies” — meaning that they find it “goofy,” at least at first glance.
Missouri has yet to pass online lottery legislation, and the director said that there was a reason almost unique to that state: term limits that send lawmakers out after a maximum of eight years in the House and the same in the state Senate. In just over a dozen years or so, she said, Missouri has had three governors, eight speakers of the House, and six heads of the state Senate.
“The Real Housewives of New Jersey have a more consistent cast than we do,” Scheve Reardon quipped. “Teresa [Guidice], she tipped over a table [in an infamous scene in 2009], and she still has a role.”
With only 4½ months in session per year in which to hammer out a budget of almost $50 billion, Scheve Reardon said the state’s lawmakers have little time to focus on matters like consideration of new products such as iLottery. And by the time some legislators have begun to fully grasp the possibilities, it’s time for them to leave the statehouse thanks to those term limits.
But she warned that complacency is liable to be harmful, saying at times she has felt like the head of a taxi cab company that “got Uber-ed” by unexpected new competition for passengers.
“Now we’re going to get Uber-ed, if we don’t start to sell Powerball online in every jurisdiction online,” Scheve Reardon added of the multi-million dollar lottery game that is only available directly through state lotteries in a few states, such as pioneers Illinois and Georgia.
Already, “courier service” lottery companies have sprung up online to fill this void, including Jackpocket — which is officially licensed in New York and New Jersey and which is not specifically prohibited from selling lottery tickets online in up to two dozen other states.
“But many consumers are not aware of such options,” Scheve Reardon said. “If I only had a dollar for every time somebody came to me and said, ‘I forgot to play Powerball, I couldn’t get to the store,’ then I wouldn’t need to play Powerball.”
Cannibalization of lottery revenue a myth, panelists say
With a decade of data now available of states offering both brick-and-mortar tickets and iLottery, the panelists agreed that the verdict is in on cannibalization concerns.
“The idea that [iLottery sales] will hurt retail lottery is a failed argument,” said Greg Smith, president and CEO of the Connecticut Lottery Corp., whose state launched the online sales in October amid a record-breaking $1.5 billion sales of traditional lottery ticket sales last year.
Beth Bresnahan, vice president of communications for Scientific Games, cited research showing that the average age of an iLottery player is 47, compared to age 55 for traditional players. Also, U.S. retail lottery stores grew 20% in 2021, while the lotteries in the 12 states with supposed iLottery competition had combined retail sales increases of 33%.
Bresnahan said that iLottery “is bringing in new players and creating more awareness of lotteries. There’s enough room in the sandbox for everyone to play.”
Panel moderator Shawn Fluharty, a delegate in the West Virginia legislature, recommended having lawmakers hear from state lottery officials who support iLottery as a supplement rather than “a hired gun who is a paid lobbyist.”
Multiple panelists also pointed to the fact that most state budgets currently are flush with cash thanks to emergency funding from the federal government due to the two-year COVID crisis, meaning lawmakers may be able to balance budgets without raising taxes. Once that “honeymoon” ends, they suggested that iLottery might draw a more receptive audience in many states.
Julin Shaw, an executive for NeoPollard Interactive — which runs New Hampshire’s online lottery — quoted Charlie McIntyre, that state’s top lottery official, as having said, “Modernize or die.”