Jul 12, 2016, 9:33 am
In response to declining sales among digitally savvy young adults, the Massachusetts State Lottery is calling on lawmakers to open a new gambling frontier — lottery games offered around the clock on mobile devices and computers.
"The only way to reach the younger market is via online lottery games," said state Treasurer Deb Goldberg, who oversees the Lottery Commission. "It's the future and we need to face it."
Goldberg said the state lottery has studied online games and is now seeking legislative approval of a pilot program that would require players to register online and use a credit card.
The ease of playing a digital lottery, either through a website or mobile application, raises concerns about compulsive gambling, and officials are studying potential safeguards, such as requiring players to set daily, weekly, and monthly spending caps.
When players hit their limit, they would be barred from further purchases, said Michael Sweeney, the lottery's executive director. They could not raise their limits until a "cooling off" period of several days, he said.
"We think this is a reasonable public health approach to compulsive gambling," Goldberg said.
But advocates for problem gamblers, who have long denounced the lottery as a regressive tax that preys on the poor, were unconvinced. Making drawings available around the clock will make a bad problem worse, they said.
"We think there are definite risk factors, like the speed of play, 24-hour access, the use of credit cards, and social isolation," said Keith Whyte, executive director of the National Council on Problem Gambling in Washington, D.C. "The advent of online lottery games means you can go home when you're done at the casino and continue gambling all night long."
But state Senator Jennifer Flanagan, a Leominster Democrat, said moving the lottery online could expand sales at a time when the state is facing a yawning budget deficit.
"We have a responsibility to look at every possible source of new revenue, and this is one of them," she said.
Flanagan said she believed there is significant support for the idea in the Senate. In the House, a spokesman for Speaker Robert DeLeo said only that a proposal to allow online lottery games "remains under review" by the Ways and Means Committee.
About a half-dozen states are running online lottery games, including Michigan, which quietly launched the drawings two years ago with little marketing research, said Jeff Holyfield, a spokesman for the Michigan lottery. Since then, some 350,000 people have registered to play online.
"It's really proving to be quite popular," Holyfield said. "Our launch opened a lot of eyes across the country. Lots of states are looking at it now."
The online games have increased overall lottery revenue by about $60 million a year, he said, and have not cut into sales at convenience stores or other retail outlets. On the contrary, commissions paid to lottery retailers are at a record levels, he said.
"Retailers were justifiably skeptical, but I think we've won them over," he said.
Massachusetts' lottery has been considered the country's most successful, raising about $1 billion a year for local services such as public safety and education. But marketing studies show a clear preference for online tickets among people younger than 40, and Goldberg said the state can expect a sharp decline in revenue in the years to come if the lottery fails to adapt to the new digital reality.
"There's been a tremendous change in technology, so instead of waiting for five years, and then playing catch-up, we are being proactive," she said. "There is no way to grow the business, or even sustain it, without evolving with the technology."
State lottery officials say the online drawings will supplement, not replace, traditional paper tickets. But convenience stores, many of which rely heavily on lottery sales, are worried a digital alternative would drive away many regular players.
"Online lottery games would mean a tremendous loss of business for our members," said Joanne Mendes, executive director of the New England Convenience Store and Energy Marketers Association, which represents convenience stores from the giant chains such as 7-Eleven and Cumberland Farms to neighborhood mom-and-pop stores. "We need foot traffic to survive and thrive."
If online games are approved, the state lottery plans to launch a marketing plan to help stores maintain sales, Goldberg said. One idea is to link the sale of gift cards at brick-and-mortar outlets to online lottery games, with the possible inclusion of free play. Another is to require anyone who wins a certain amount to claim it in person at a lottery retailer.
"It used to be lottery tickets sold themselves," Goldberg said. "Now we will go out and market them."
Outside a convenience store in North Quincy, a middle-aged man named Chester, who asked that his last name not be used, juggled his mobile phone and a fistful of recently purchased lottery tickets. Online lottery games, he said with a grin, would "make things a lot easier."
But another lottery patron, Barbara, 65, said she was old-fashioned and liked her daily routine of buying at the store.
"For one thing, I really don't trust using a credit card online," she said.
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