The drop in U.S. lottery sales during the COVID-19 lockdown, when states have lost billions in revenue, may prompt legislatures across the country to allow digital and online purchases, state lottery directors said Wednesday at the SBC Digital Summit.
During a discussion titled “State of Play — U.S. Lotteries During the Coronavirus,” panel moderator Richard Weil quoted Massachusetts Treasurer Deborah Goldberg, who said that the pandemic has exposed the all-cash, in-person, business model and that consumers want to be able to use their phone or credit cards.
Barry Pack, director of the Oregon State Lottery, said his state has video lottery terminals at 2,800 retailers and 70 percent of that business got shut off overnight.
“The longer our bars and restaurants stay canceled, the more we’re looking at a significant revenue shortfall,” Pack said. “It’s a pretty grim reminder that we need diverse product sales channels to weather storms like this as we are preparing for a potential reopening of our economy and possible second wave of the virus. I think the recovery from this pandemic is going to force a digital transformation in our industry a whole lot more quickly than we might normally have seen it come.”
States with online lottery sales include Illinois, Michigan, Pennsylvania, Virginia, New Hampshire, Kentucky, North Carolina and Georgia.
Oregon recently launched mobile sports betting, which has mostly stalled due to the shutdown of almost all sports across the globe. Park said they have always planned to move in the same direction with the lottery but have faced legislative resistance.
“When the Legislature reconvenes next week, they’re facing a billion-dollar shortfall. Their opinions about mobile gaming will change,” Park said. “I think there will be less resistance.”
The Oregon Lottery funds schools, parks and recreation and economic development.
Gordon Medenica, director of the Maryland Lottery, said they had an immediate revenue hit with the closure of bars and restaurants that made up 15 percent of their retailers. Sales fell 20 percent the first week and 30 percent by the third week. Lottery revenue for the state has generated $16.7 billion since 1973, $593 million in 2019 alone, for the general fund.
“I think this could be a sea change for the lottery industry,” Medenica said. “We have been pushing a digital transformation and online selling ever since I’ve been in this industry over the past 10 to 15 years. In Maryland, they passed a law three years ago banning sales on the Internet. I think we will see a dramatic change and I’m looking forward to it.”
Medenica said concerns that digital is more dangerous and contributes to problem playing isn’t true. On the contrary, digital is a way to monitor player behavior, unlike anonymous retail sales, he said.
The other concern, that it hurts brick-and-mortar, isn’t backed by evidence either, Medenica said. And states like Pennsylvania and Michigan that have moved to digital have seen significant increases in revenue.
Missouri Lottery Executive Director May Scheve Reardon, president of the North American Association of State and Provincial Lotteries and government relations chairwoman of the Multi-State Lottery Association, said her state last week had its strongest instant scratch-off sales in its 34-year history. But she added another distribution channel is needed for other lottery sales, especially with a $700 million hole in the state budget. The Missouri lottery funds education.
“We can turn the page on these dark days and grow the lottery as a business and as an industry throughout all the jurisdictions in the United States and beyond,” Reardon said.
