Nov 25, 2014, 8:36 am
By early next fall the Kentucky Lottery expects to make the sale of tickets for at least some games available through the use of computers, smart phones and other mobile devices.
The Kentucky Lottery Corp. directors took a major step toward online ticket sales at a meeting Friday by choosing to negotiate with GTECH to develop the computer-based system for what is being called iLottery services and games.
Lottery president and CEO Arch Gleason said the outcome of the negotiations will determine what games will be offered online as well as when and how the ticket sales will be handled. He said the best initial candidates for online ticket sales are probably Powerball and Mega Millions.
The lottery in the spring of 2013 approved proceeding with planning for two innovations — keno and iLottery. They were recommended primarily by state Treasurer Todd Hollenbach IV, a lottery board member.
Officials, including legislators, saw the innovations as a way to increase ticket sales and thus sorely needed new revenue for the state's general fund. More than a quarter of the lottery sales are returned to the state treasury, with the large share of the state dividend earmarked for college scholarship aid.
Keno sales started in November 2013 and, in the first year, statewide ticket sales totaled just over $40 million, about $10 million less than initially hoped, Gleason said in an interview Monday.
Lottery officials said that are projecting $8.5 million in sales for the first full year of the iLottery platform.
Gleason said no decision has been made as to which lottery products will be available at launch.
Lottery spokesman Chip Polston said that GTECH is to be paid a percentage of the sales, with its payment expected to total just over $7 million over what is to be an initial four-year contract.
As an initial move toward setting up iLottery, the corporation in July issued a request for proposals for developing the network. Five lottery-games suppliers responded, with GTECH chosen by the lottery board, Gleason said. GTECH for many years has been providing technical services for the lottery online games such as Powerball, but players have not been able to buy tickets over the Internet.
Gleason said Monday that only four state lotteries currently offer ticket sales to be purchased online. They are Illinois, Georgia, Minnesota and Michigan.
Under federal interstate commerce regulations, online tickets will have to be purchased with a device located inside Kentucky's borders. There is no residency requirement for purchases, however, so a resident of New Albany, Ind., for instance, could cross the river and buy a Kentucky Lottery ticket with a smart phone, laptop, desktop or ipad, Gleason said.
He said geolocation systems can tell where the purchasing device is being operated, and it will be up to GTECH to incorporate such detection into the sales network.
In other matters at the board meeting, lottery officials said that statewide ticket sales for the first four months of the fiscal year that began July 1 totaled $287 million, which was $13.5 million more than the same period in the previous fiscal year.
While scratchoff tickets are doing well, Howard Kline, the lottery's CFO, said draw-game sales have been hurt by the lack of large jackpot runs. "Powerball is currently down 41.3 percent, or $14.1 million from last year," Kline said.
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