Online Lottery Proponents Beg Massachusetts To Move Into 21st Century

The Massachusetts Joint Committee on Consumer Protection held a hearing on Wednesday to hear arguments from both proponents and opponents of online lottery.

During the hearing, Lottery Executive Director Michael Sweeney, together with Massachusetts State Treasurer Deborah Goldberg, expressed their strong support for the state’s authorization of online lottery sales.

During the hearing, Scott Bowen, who had previously served as the director of the Michigan Lottery during its authorization and launch of the online lottery, joined Sweeney.

The pair dedicated their time to advocating for the adoption of online lottery.

Sweeney stated that the Massachusetts Lottery should adapt its presence to align with the consumers’ preferences, which are predominantly shifting towards online and mobile platforms.

In addition, Sweeney further elaborated:

I have full confidence that by collaborating with you, our chosen state representatives and senators, we can establish a strong online presence for the Lottery. This presence will ensure the protection of consumers and local aid, while also maintaining our longstanding and cherished relationship with our retail agents and their physical locations, both now and in the future.

Cannibalization still a point of contention

Sweeney and Bowen made efforts to refute the arguments of those against online lotteries. In one instance, Sweeney emphasized to the committee that online platforms do not replace the importance of having a physical retail presence.

The central argument put forth by opponents of online lottery is that it will lead to the decline of physical lottery retailers, resulting in reduced foot traffic. This group of opponents consists of the usual anti-gambling advocates as well as a strong alliance of retail association groups, which includes:

• The Association of Convenience Stores and Energy Marketers in New England
• Retailers Association of Massachusetts
• Massachusetts Package Store Association
• The Association for Service Stations and Auto Repair in New England
• Association of Convenience Store Owners in Boston
• Massachusetts Food Association

Save Our Neighborhood Stores was created when the groups joined forces. The committee received the following statement from the organization.

The iLottery’s arrival will severely impact foot traffic in local stores, posing multiple additional difficulties for business owners who are already facing challenges. These convenience stores serve as vital hubs within communities.

Owners of convenience stores form deep and distinctive connections with both their customers and their local communities. Nevertheless, it is crucial to acknowledge that these retailers cannot endure any further financial setbacks, and there is a looming possibility of vacant, desolate store fronts replacing the comforting presence of our beloved neighborhood shops.

Why online lottery can help brick and mortar retailers

Regrettably, these groups could be inflicting harm upon themselves.

During the hearing, Bowen emphasized that iLottery does not pose a risk to retail lottery sales; instead, it actually strengthens it by appealing to a younger demographic, many of whom are not currently engaged in lottery games.

Afterward, Bowen elaborated on Michigan’s decision to reserve certain scratch-off games solely for retail outlets. Additionally, the state introduced a promotion where customers can purchase a $25 online gift card for only $20 at physical lottery retailers. These measures were implemented to address worries about a potential decrease in foot traffic at brick-and-mortar lottery retailers due to online sales.

As of now, the impact on Michigan lottery retailers has been minimal. In fact, according to Bowen’s implication, a study conducted by Digital Gaming Group in December 2016 revealed that online products have actually been advantageous for current retailers.

The actual player channel preference aligns with the findings from focus groups conducted before the launch of iLottery in Michigan. In those interviews, a significant number of existing retail players expressed their disapproval of registering online, were hesitant about sharing their banking information, had doubts about the fairness of iLottery games, and favored the interactive experience (such as scratching) offered by retail games compared to their online versions.

One could argue more convincingly that iLottery enhances player engagement and boosts sales across channels. Initiatives like the Online Game Card, which can be bought in stores and redeemed online, effectively connect these two channels and bring additional foot traffic and commissions to retailers.

Online lottery omitted from special commission

In 2017, a dedicated commission appointed by the Massachusetts legislature extensively examined the realms of online gambling, daily fantasy sports, and esports. After thorough research, the commission presented its conclusions in July. It advised the legislature to establish permanent laws for daily fantasy sports in Massachusetts, while proposing a cautious approach towards legalizing online casinos and online poker, suggesting a temporary pause in their progression.

The online lottery was not part of the recommendations.

The legislature made the decision to separate online lottery from the other online gaming products being studied by the commission when it granted authorization for the special commission.

It appears that this was done because the issue had already caught the attention of the legislature.

The inclusion of online lottery in the special commission’s agenda would have postponed the online lottery legislation until after the publication of its final report.

It turned out to be unnecessary.

During the 2017 session, online lottery bills were introduced, although they did not progress beyond the initial stage.

Instead of capitalizing on the progress made in 2016, when the State Senate successfully passed an online lottery bill, individuals from opposing sides firmly entrenched themselves, creating a tense atmosphere that paves the way for a potential conflict in 2018.

The hearing on Tuesday appears to be the opening shot in that battle.