The lot­tery of the fu­ture?

Our view: We need to have a pub­lic de­bate be­fore adopt­ing on­line gam­bling

Baltimore Sun - - MARYLAND VOICES -

Among the most in­ter­est­ing de­tails ex­posed by the dis­pute over the $263 mil­lion con­tract to run the oper­a­tions of Mary­land’s lot­tery is one buried on page 126 of the agency’s re­quest for pro­pos­als. At some point dur­ing the term of the con­tract, the Mary­land Lot­tery and Gam­ing Con­trol Agency may, at its sole dis­cre­tion, ask the suc­cess­ful ven­dor to cre­ate a web­site and ap­pli­ca­tions “for play from per­sonal com­put­ers or mo­bile de­vices.”

That’s not a novel idea — a hand­ful of other states have al­ready be­gun in­ter­net lot­tery sales to one de­gree or an­other, and many oth­ers are con­sid­er­ing it. The mod­els range from sell­ing sub­scrip­tions to par­tic­u­lar draw­ings, as states have done by mail for years, to new, high-tech in­stant games that marry pop­u­lar, skill-based mo­bile game ex­pe­ri­ences with some­thing akin to an elec­tronic scratch-off.

De­spite the in­clu­sion in the RFP, Mary­land Lot­tery Di­rec­tor Gor­don Me­denica in­sists that mov­ing to­ward in­ter­net play is “not a pri­or­ity for us,” and for good rea­son. The ex­pe­ri­ence of states that have been lead­ers in in­ter­net lotteries — no­tably Min­nesota, Michi­gan, Ge­or­gia, Ken­tucky and Illi­nois — has been that they pro­duce pid­dling sales. In the first two months of Min­nesota’s pro­gram, for ex­am­ple, it sold $200,000 in scratch-off tick­ets on­line and $139 mil­lion at tra­di­tional re­tail­ers. Ken­tucky projects on­line sales will ac­count for about $7 mil­lion of its nearly $1 bil­lion in to­tal lot­tery sales this fis­cal year.

Mean­while, Mr. Me­denica notes a num­ber of costs and com­pli­ca­tions re­lated to on­line sales, in­clud­ing the need for soft­ware to ver­ify that play­ers are over 18 and within state bor­ders, plus elec­tronic trans­ac­tion fees. Mary­land’s re­tail­ers are di­a­met­ri­cally op­posed to on­line sales — out of pro­por­tion, per­haps, to their likely im­pact; Ge­or­gia and Michi­gan both claim re­tail sales have in­creased since they adopted on­line lotteries. None­the­less, Mr. Me­denica said that, in the clas­sic An­napo­lis for­mu­la­tion, the juice wouldn’t be worth the squeeze. He says he sees much more up­side in Mary­land max­i­miz­ing tra­di­tional scratch-off rev­enues.

None­the­less, in­ter­net lotteries re­main a hot idea na­tion­ally at a time when a younger gen­er­a­tion has proven rel­a­tively un­in­ter­ested in the tra­di­tional va­ri­ety. Illi­nois’ ex­per­i­ment in on­line lotteries didn’t end with­out a fight from pro­po­nents who see them as the wave of the fu­ture, and Min­nesota only stopped its pro­gram be­cause Na­tive Amer­i­can casi­nos there lob­bied to kill it out of fear that it would erode their busi­ness. Oth­ers back in­ter­net lotteries as a gate­way to Ie­gal­iz­ing on­line poker and other casino games.

Al­though in­ter­net lot­tery sales have been com­mon in Europe for years, it’s clear that the medium is evolv­ing rapidly, and what looks to­day like a bad bet may seem more com­pelling to Mary­land lot­tery of­fi­cials in the fu­ture. This fall, Ge­or­gia’s lot­tery de­buted Star Match, a mash-up be­tween a Candy Crush or Be­jew­eled-like game and a scratch-off ticket. (The bet­ter a player does in the ini­tial skill por­tion of the game, the larger the prize he or she might win in the luck por­tion.) The CEO of Lot­toIn­ter­ac­tive, the com­pany that de­vel­oped Star Match, noted to USA To­day that “the mo­bile gamer spends al­most $300 a year and they don’t win any­thing. They just win vir­tual prizes,” adding that they would un­doubt­edly spend more if they had a chance at win­ning real-world cash. It may not be a big busi­ness now, but it’s not hard to imag­ine that it could be. (In­ci­den­tally, Star Match runs on the iLot­tery plat­form de­vel­oped by IGT, which is one of the com­pa­nies protest­ing the award of Mary­land’s new lot­tery con­tract.)

The state Se­nate voted in 2013 to pro­hibit Mary­land’s lot­tery agency from mar­ket­ing in­ter­net games, but the bill died in the House of Del­e­gates. When law­mak­ers re­turn to An­napo­lis in Jan­uary, they should amend the law to make clear that the lot­tery agency can’t move for­ward with on­line sales and games with­out ex­plicit leg­isla­tive ap­proval. Noth­ing in cur­rent law pre­vents it, and al­though we are heart­ened by Mr. Me­denica’s as­sur­ances, cir­cum­stances could change. In­ter­net lotteries clearly have the po­ten­tial to be­come a new form of gam­bling with new so­cial and eco­nomic con­se­quences — not to men­tion chal­lenges as­so­ci­ated with mak­ing sure a prod­uct ex­plic­itly tar­geted at young peo­ple isn’t used by those un­der 18. The leg­is­la­ture needs to make sure we don’t move for­ward with in­ter­net lot­tery games with­out a ro­bust and pub­lic de­bate.

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