Massachusetts Inches Closer To Legalizing Online Lottery

Throughout 2016, online gaming proponents have focused on several states considered to be strong candidates for online expansion, namely, New York, California, and Pennsylvania.

For the most part, they haven’t been disappointed:

• New York went one for two, hitting on daily fantasy sports but missing when it came to online poker.
• Ongoing efforts in California have produced the state’s most specific bill to date, and a possible date on the assembly floor for a vote.
• And with the recent passage of an online gaming amendment in Pennsylvania, the state remains the most likely candidate to pass an online gaming bill this year.

Recently, another state quietly jumped into the online gaming conversation: Massachusetts.

Massachusetts isn’t looking to legalize daily fantasy sports. Nor has it pushed hard for online casino and poker legislation. Instead, the online expansion it’s exploring is on the lottery front, as State Senator Jennifer Flanagan’s S 151 aims to allow the Massachusetts State Lottery to sell tickets online and via mobile apps.

S 151, which has been renamed S 2351, cleared an important hurdle when the 15-member Joint Committee on Consumer Protection and Professional Licensure issued a favorable report on the measure on June 15. The bill’s next stop is in the senate’s Ways and Means Committee.

The Massachusetts legislature is in session until July 31, meaning time is somewhat of the essence.

S 2351 allows for diversified gaming options

The effort to modernize and expand the state’s lottery has been several years in the making. Former State Treasurer Steve Grossman was a proponent of online gaming, and proposed online lottery sales as well as the legalization of online gaming.

Grossman’s efforts didn’t bear any fruit, but in December, the Massachusetts Lottery Commission (MLC) solicited proposals from major online gaming companies for “digital versions of existing and new lottery games, including but not limited to social gaming and daily fantasy sports options.”

These proposals seem to have fueled Flanagan’s current online lottery proposal.

Flanagan’s bill leaves the types of lottery games available online up to the Massachusetts Lottery Commission. This could lead to online scratch off cards (which are little more than slot machines by a different name when played online), and as noted in their proposal request, social gaming and state run DFS contests.

With such wide-ranging options being considered, the MLC received responses from a number of interested companies. Major iLottery providers, like IGT and Intralot, were among the respondents, as was the parent company of PokerStars, Amaya, and B2B/B2C DFS operator Flower City Gaming (formerly Star Fantasy Leagues).

In all, the MLC announced it had received 20 responses to its request.

Lottery bill links online sales to retailers

Online lottery sales in other states have proven to be a net win for sales.

Furthermore, online sales in Minnesota (which has since suspended online lottery sales), Michigan, Georgia, and Illinois have been driven by a younger demographic. These new players had mostly abstained from purchasing lottery tickets at brick and mortar locations in the past. So even though there was some signs of cannibalization, the impact of online lottery legalization on existing physical retailers has been negligible.

Still, lottery retailers are vehemently opposed to online expansion. And Massachusetts has one of the healthiest lotteries in the United States. The key for the bill gaining traction is for Massachusetts to find a way to involve the state’s 7,500 brick and mortar lottery retailers in the new online operations.

The bill accomplishes this by requiring players to fund their online lottery accounts by visiting a brick and mortar lottery location and purchasing what amounts to a prepaid, reloadable online lottery card. This would tie any winnings and sales back to the brick and mortar location where the card was purchased or where funds were added.

Additionally, any winnings between $200 and $599 would have to be claimed in person at a brick and mortar lottery retailer.