The North Carolina Education Lottery appears to be on the verge of expanding its range of gaming options. Sometime in the next year, folks in the Tarheel State should be able to buy instant-win “scratch” tickets online.
Progress on that front has been helped along in large part by a change in leadership atop the agency. The NC Lottery Commission has toyed with the concept for several years, but there’s been a lack of general consensus until now.
The NC lottery already sells tickets for its draw games online, including Pick 3, Pick 4, and Cash 5. Tickets for multi-state PowerBall and Mega Millions are also available. Keno, too.
Conservatives in the state legislature, however, are historically resistant to all forms of gambling. The party in power has consistently fought to thwart the expansion of the lottery’s offerings and its marketing initiatives.
For that reason, gambling in NC remains limited. Casinos exist only on the state’s tribal reservations, while non-profit groups are allowed to run raffles and bingo. Apart from the lottery, that’s about it for legal options.
The state does, however, have a long-standing problem with gray-market gambling machines that incorporate an element of skill to skirt the law.
Video poker was prevalent before lawmakers issued a ban in 2006, while so-called “fish games” are the newest iteration. These arcade-like action machines allow players to shoot sea creatures in order to earn points that can be redeemed for cash prizes. The state also began cracking down on these machines earlier this year.
A proposal to allow digital instant-win tickets almost made it to a vote in 2017 before being pulled from the agenda at the last minute. Some members of the commission indicated that further study was needed to garner their support.
Earlier this month, however, 80-year-old chairman Tony Rand suddenly resigned. Rand is a former Democratic senator who was instrumental in passing the 2005 law which established the lottery, still one of the youngest in the country. He’s no opponent of gambling, but the commission took a fairly restrained approach under his tenure.
The job now belongs to Courtney Crowder, who was the driving force behind that 2017 proposal for digital instant-win tickets. It’s likely no coincidence, then, that there’s suddenly a renewed push for approval — and with some enthusiasm behind it.
Crowder comes from a background in consulting rather than politics. He recently became the Managing Director for APCO Worldwide, which bills itself as an “advisory and advocacy communications consultancy” serving both the public and private sectors.
Crowder will presumably bring a more business-oriented mindset to the commission than Rand. And he’s clearly eager to expand the lottery’s offerings.
The new chairman said that he expects the new instant-win digital tickets to bolster the lottery’s revenues by $80 million annually. The state uses proceeds from the lottery to fund both education and responsible gambling initiatives.
Not everyone is equally enthusiastic about the idea, however. Pushback has come largely from two camps.
First, there are social conservatives who are broadly opposed to gambling in general. There’s also the North Carolina Retail Merchants Association (NCRMA), which worries that digital tickets will hurt retail sales.
The objections from conservative lawmakers are twofold. They are, foremost, concerned that online play is more addictive than purchasing physical tickets and will therefore increase problem gambling.
There will be some measures in place to guard against this, such as a universal deposit limit. The limit the commission proposes, however, is $505 per day, $2,000 per week, or $4,000 per month.
Frankly, that is far more than most citizens can afford to lose.
Players will be able to voluntarily lower their limits, but studies have shown that such features do little to help curb problem gambling.
Second, there is the fact that the proposed digital “tickets” are interactive in a manner similar to slot machines or video poker. This, they say, means they bear too close a resemblance to the very same gray machines the state has been trying to eradicate over the past decade.
This resemblance risks making the state appear hypocritical, and sends mixed messages to residents about the legality of those machines.
“It is essentially video sweepstakes right there on your device,” said John Rustin, president of the NC Family Policy Council. “It would create, in our opinion, a very significant conflict with the policy that has existed in the state for many years.”
The NCRMA objection is equally predictable but not so well founded.
Owners of convenience stores and supermarkets that sell lottery tickets are worried that an online option will hurt retail sales. Customers who come in to the stores to buy tickets, they argue, also tend to pick up other small items at the same time. They fear that if ticket sales decrease, there will also be a corresponding decline in overall sales.
This sounds a lot like the argument often recited by lobbyists for the land-based casino industry whenever the topic of online gambling legislation arises.
It’s a natural assumption to make — that online and retail gambling would be competing products and that the introduction of the former would eat into the latter’s revenue. In practice, however, that’s almost never what happens.
New Jersey, for instance, has the oldest legal online casino industry in the US dating back to late 2013. And land-based casino revenues have increased steadily since NJ online gambling first began. Growth in Atlantic City is, in fact, outpacing the national average.
Lottery tickets are different than casino gambling, but there’s hard evidence to refute the NCRMA’s fears there too. NC officials point out that five other state lotteries offer instant games online:
In all cases, retail ticket sales have increased since the introduction of digital tickets.
The lottery committee won’t officially vote on the proposal for another few weeks. Commission members, however, seem to consider it a done deal. They’ve established a business plan to roll the new products out sometime in the coming year, and they’re already scouting candidates for the director position.
That’s am aggressive timeline, considering Crowder has only been the chairman for a few days. Chances are, however, that the discussion has been ongoing since 2017. Rand’s resignation and Crowder’s appointment have presumably only accelerated something that would have happened eventually, one way or another.