Will Online Lottery Follow Online Sports Betting in Massachusetts?

For many years, officials at the Massachusetts State Lottery Commission have been pushing for lawmakers to legalize online lottery sales. With online sports betting on the horizon, could the legislature finally agree to allow citizens to purchase lottery tickets online and via mobile devices?

Last week, we reported Massachusetts Treasurer Deb Goldberg expressed concerns that the sports betting market could infringe on lottery sales. While no evidence has been shown that sports betting negatively impacts lottery sales in that same state, there are unique circumstances for Massachusetts.

Christian Teja, director of communications for MSLC, told Play Massachusetts that the Michigan Lottery, for instance, does offer online sales. Massachusetts does not have that ability.

“In addition to revenue they are able to generate through online play, they are able to offer in-store promotions to their online players to bolster their traditional brick and mortar location sales,” Teja told Play MA.

That means Michigan and other states can promote both lottery and online gaming at convenience stores and any lottery center.

Teja said online lottery bills have passed in the Massachusetts House or Senate in years past, but both branches have yet to agree on a bill. Historically, governors of The Bay State have supported online lottery sales, but have yet to have an opportunity to affix their signature to such legislation.

“The Mass Lottery has been making the case for online sales for a decade,” Teja said.

He hopes the launch of online sports betting in Massachusetts can change that.

State Lottery Drove More Than $1 Billion in Tax Revenue Last 2 Years

In an interview last month on WCVB, Goldberg noted that the lottery creates significant tax revenue for her state.

“My concern is the impact of online and in-person sports betting on the lottery,” Goldberg said. “The lottery is what really benefits (the state). We give back more than $1 billion to the local communities.”

Goldberg is accurate. The Massachusetts State Lottery, which can only be played at licensed lottery retailers at brick-and-mortar locations, generated a record $1.1 billion in taxes in the 2021-22 fiscal year. That marked the second consecutive fiscal period that the lottery brought in at least $1 billion in taxes for the state.

The state has had eight straight years with lottery sales exceeding $5 billion. Since selling the first lottery ticket in Massachusetts in 1972, the state has generated more than $31 billion in tax revenue. Most of that has gone to local governments for education and other programs.

READ MORE: How Massachusetts Sportsbook Tax Revenue Will Be Spent

Sports betting, either online or retail, will not create as much tax revenue for Massachusetts. A tax rate of 20% is applied to adjusted gross revenue of online sports operators. That means operators are taxed on what’s left after expenses such as promotional play and advertising. It’s a 15% tax for retail sportsbooks.

Most estimates project Massachusetts will receive $60-70 million in sports betting tax revenue. While that’s obviously a large amount of money, it pales in comparison to the state lottery’s $1.1 billion contribution.

“I have not studied what sports betting will generate in revenue. I think it’s a lot less than what people are anticipating,” Goldberg said in January during her WCVB interview.

How Online Sports Betting and Lottery Sales Could Work Together

Though there has been little research into the effect of co-marketing sports betting and lottery sales, it could be helpful for retailers to be able to use displays and advertising to promote both online lottery sales and sports gaming.

In Michigan, for example, lottery retailers can promote lottery sales through promotions in the mobile apps for sports betting.

Normally, the industry looks to online casinos and online poker as the next online gambling dominoes to fall after online sports betting becomes legal. But it also makes sense to look at online lottery in Massachusetts. 

It seems likely that new customers will be drawn to online and mobile sports betting who have not played the Massachusetts Lottery in the past. Being able to offer a lottery app or sales mechanism online could benefit those consumers. 

Existing lottery customers may welcome the convenience of buying their lottery tickets online.

No bills are in the queue in the Massachusetts state legislative bodies. But it wouldn’t be a surprise if one appears following the March launch of online sports betting. Retail sports betting launched at three locations on Jan. 31.