The future of the Connecticut lottery was up for discussion on Monday in Hartford.
The Committee on Finance, Revenue and Bonding held its first public hearing on S 540, a new bill that would allow the lottery to expand into online sales and sports betting.
Several representatives testified in support of the measure, which would open up new avenues for growth. There is significant support, in fact, alongside some vocal opposition.
Several members of the Connecticut Lottery Corporation were present to testify before the committee. Most notable among them was Chelsea Turner, the lottery’s interim CEO.
Turner read from her written testimony, which laid out a long list of arguments in support. Here’s the gist of her statements:
While our current business model has proven very successful, we need to think strategically if we are to maintain, nevermind increase, General Fund transfers. This includes meeting consumers where they are, in the mobile space. Virtually everything you can think of purchasing today, you can purchase online.
Like any smart business, we want to utilize the best that modern technology has to offer, including modernizing our distribution channels through the internet.
Turner argued that the CLC is capable, citing its early adoption of the GameSense system and its award-winning problem gambling program.
Turner, along with the other lottery representatives, indicated that the corporation is fully prepared for expansion.
On the software side, the CLC has a partnership with Scientific Games to power its point-of-sale terminals. Scientific Games also offers an online sales platform, of which the lottery appears keen to take advantage. It already has a mobile product for ticket verification, and the addition of online sales would be fairly straightforward.
There are currently four states with legal online lottery sales:
The Illinois iLottery is operated by Camelot Global, a technology provider from the across the pond. Camelot also runs the UK’s iLottery, and the group presented supporting testimony before the committee. VP of operations Adam Barry offered these three selling points regarding online lottery:
According to Barry, the know-your-customer controls within the virtual realm make online lottery safer than its brick-and-mortar cousin. “Retail is an anonymous channel,” he said, covering ways in which technology creates a comprehensive understanding of customers.
Citing case studies from other markets, he testified that retail operators can expect to see growth, too, thanks to increased brand awareness. The UK, for example, sells about 25 percent of its lottery tickets online while retail sales continue to increase, too. Barry expects Connecticut to realize $100 million in incremental sales within three years.
The current CT lottery product generates about $1.2 billion in annual sales, with more than $300 million going back to the state’s general fund.
The CLC says it’s capable and prepared for expansion, but recent evidence calls that into question.
Turner’s title includes the word “interim,” as she’s sitting in for departed CEO Anne Noble. There have been a string of errors and investigations in recent years.
In 2017, the ticket-reading app incorrectly misread some winning numbers as losers. The issue persisted for about 36 hours, forcing the product to shut down for a short time.
A few months later, the lottery held a $10 New Years’s Super Draw game with a $1 million prize. Because of human error, 100,000 eligible tickets were not included in the drawing. Almost a third of the 315,000 tickets sold had no chance to win from the start. A second drawing was held, but many players complained that they’d already disposed of their “losing” slips.
More than a year later, the issues are still lingering. Just last month, Michelle Seagull asked for permission to open a “wide-ranging investigation into the operation and management” of the CLC. Seagull is the commissioner of the Department of Consumer Protection, and she cites a “revolving door of cronyism” that includes questionable disciplinary action and a sweetheart separation deal for the former CEO.
More than a dozen stakeholders submitted verbal and/or written testimony to the committee, coming down squarely on both sides of the issue.
The CLC is the primary proponent, supported by its software provider and other interested iGaming parties. NeoPollard, which operates the Michigan online lottery, provided supporting testimony. Tech companies Scientific Games and IGT also support the measure, as does Sportech, which operates several OTBs.
Professional sports leagues are agnostic when it comes to lottery, but they did offer their support for the included sports betting provisions. The NBA and Major League Baseball testified in favor, though there are some details they’d like to revisit with lawmakers.
The state’s two gaming tribes also weighed in, and they’re very much on the other side. The Mashantucket Pequot and Mohegan tribes have agreements with the state that prohibit gambling expansion. According to testimony from tribal leaders, that prohibition extends to “sports betting, iGaming, and iLottery.” They oppose the bill.
Retailers also showed up to push back against the claims that iLottery bolsters brick-and-mortar sales. Three separate groups expressed concerns about protecting a key revenue stream for convenience stores, and they each take issue with the suggestion that iLottery is safer than retail sales.
This is from Global Partners:
In-store lottery agents are specifically trained to ensure proper age verification so that the lottery is played safely and securely. Additionally, online lottery will provide adults battling gambling addiction issues the opportunity to play the lottery 24-7 from their phones instead of only when they are in convenience stores. It would be a shame to eliminate some of the current checks and balances that help mitigate gambling addiction issues.
All three groups submitted testimony firmly in opposition to the bill.