Online lottery failed to make cut in late-session flurry

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STATE HOUSE — Having been denied the legislative authority to move products online, the head of the Massachusetts Lottery said the agency will continue to make its case to lawmakers and seek approval to offer its products on the internet.

The economic development legislation sent to Gov. Charlie Baker’s desk late Sunday dropped a Senate-approved provision that would have allowed the Lottery to expand into cyberspace.

Lottery Executive Director Michael Sweeney had been pushing this session for an OK from the Legislature necessary to move forward with an exploration of online opportunities for the Lottery.

Lottery profits, which are delivered to cities and towns as local aid, were essentially flat last year and online Lottery boosters view the move as a needed transition if the Lottery is to hold its ground in gaming.

Convenience store owners, who rely on the Lottery to attract customers to their stores, have strongly opposed a Lottery move to the internet, which also raises concerns about the age of players and gaming safeguards.

But in a political environment where new taxes are opposed by the governor and tax collection growth has slowed, non-tax revenue sources like the Lottery are being eyed for potential cash.

“That issue, iLottery, is a major public policy as well as business decision for the Commonwealth to make and there are a lot of complexities to it that may not be obvious at first glance,” Sweeney said. “I wasn’t surprised. Again, it’s a very complex public policy question and I think they got as much done that they could get done and I’m sure at some appropriate point in the future we will revisit it.”

The online Lottery piece in the economic development bill marked the second time this session that the Legislature has declined to authorize the Lottery’s online exploration. A budget amendment filed by Sen. Jennifer Flanagan was withdrawn — often a sign that the amendment lacked support. A redraft of a Flanagan bill (S 2351) appears unlikely to emerge from the Senate Ways and Means Committee this session given that similar language was added to the Senate’s economic development bill by a narrow 22-17 vote.

Treasurer Deborah Goldberg, whose office oversees the Massachusetts Lottery, expressed disappointment Tuesday that the online language failed to prevail before a six-member House-Senate conference committee that conducted its deliberations privately.

“It’s disappointing,” Goldberg said as she walked into her monthly meeting with Gov. Charlie Baker.

Sweeney has said for months that the Lottery must have the ability to move online in some fashion if it is to continue to thrive and return hundreds of millions of dollars to cities and towns.

“It’s been over 25 years now since the Lottery has offered what I would deem a truly new and innovative game, that was Keno. Everything since then has really been a reissuance of existing concepts, mostly instant tickets,” he said. “If you look at, safely, any business model that’s out there in the United States, being online is a critical component of that business plan.”

In May, Sweeney said the Lottery must move online if it “wants to stay relevant and, respectfully, not become the next bingo.”

Faced with the likelihood of waiting until the next session begins in January to renew the Lottery’s request, Sweeney said he and his team remain focused on the day-to-day operations of the Lottery.

“They have made a decision, we will obviously live with that decision and just go back to work,” he said.

He added, “I think clearly we need legislative approval and direction before we would make that type of leap. We’re going to look at the resources we currently have, the games we have to offer, if there is some sort of different platform that presents itself, we’ll explore that possibility.”

The Lottery has already begun to study some of the possibilities the internet could hold. In December, the Massachusetts Lottery Commission issued a request for information, inviting organizations to submit proposals for development, implementation, operational support and maintenance of an online lottery system.

That RFI — which garnered 20 responses — asked for proposals for “the development and integration of digital versions of existing and new lottery games (‘iLottery Games’), including but not limited to social gaming and daily fantasy sports options.”

Goldberg late last year cautioned lawmakers that the string of record Lottery sales will not continue unless the Lottery adapts to compete with the state’s growing casino gaming industry and daily fantasy sports contests.

The treasurer has touted the idea of a Lottery-run fantasy sports game, which she said would attract a younger audience that favors playing on mobile devices, particularly 25-to-45-year-old males “who are not Lottery players (and) who are extremely excited by sports-related fantasies.”

— Written by Colin A. Young

Copyright State House News Service