While country moves forward, Ohio may move backwards
The Ohio Lottery has not joined the move to sell tickets directly to players on the Internet, and a provision in a state budget bill would make sure it doesn't.
The bill, which has passed the House and gone to the Senate, would prohibit Ohio from following the lead of states that already let players buy tickets via their computers and handheld devices.
Online sales could help lotteries attract younger customers and compete with more glamorous casinos, but critics oppose what they view as an expansion of gambling and, despite promises of safeguards, cite fears that minors could buy tickets using their parents' credit or debit cards. Internet sales also worry retailers who use the lottery as a draw and receive commissions.
State Rep. Cliff Rosenberger, a southwest Ohio Republican, led the push for a ban in the House, said Mike Dittoe, a spokesman for chamber's ruling Republicans. Rosenberger could not be reached for comment Thursday.
The Senate is working through the budget and will introduce its own version, said John McClelland, a spokesman for the Republican majority. He said it was too soon to comment on specific provisions.
Both sides of the online-purchase debate seem to agree that the House ban is too broad and could shut down the computer network that stores use to print and sell tickets. The Ohio Council of Retail Merchants helped draft the proposed ban and supports clarification, said Gordon Gough, executive vice president and chief financial officer.
The Ohio Lottery had $2.7 billion in sales last fiscal year. The 9,400 retailers average only about $15,000 a year in commissions and bonuses, but Gough said lottery terminals have spin-off benefits.
"When people come in to buy lottery tickets they also buy other items," he said. "If people can buy tickets online, they wouldn't have any need to go into the store."
The Ohio Licensed Beverage Association supports the ban, Executive Director Phil Craig said. He estimated that up to 30 percent of the group's 1,200 members, mostly bars, restaurants and private clubs, sell lottery games.
Talk of prohibiting online sales concerns Ohio Lottery officials. The lottery wants "to keep all of our options open as the market evolves," spokeswoman Danielle Frizzi-Babb said in an email.
"It's not in the best interest of the Lottery or the state to close a potential avenue of purchase for our games," she wrote. "At this time there are no immediate plans to move forward with internet gaming in Ohio, but we are closely watching how it is performing in other states."
Illinois became the first state to sell games online within its borders, acting early last year after the Justice Department said restrictions in a 1961 federal law applied only to sports betting. Georgia followed in the fall.
The Michigan Lottery could launch online sales early next year, spokeswoman Andi Brancato said. She said officials estimate that Internet sales could increase the lottery's profits by $100 million over the next four years.
"A consumer can now buy almost anything they want online," Brancato said. "The lottery should really be no different. If we want to remain competitive in today's economy and today's market, this is something we need to do."
Illinois' online sales started strong, thanks to a $656 million Mega Millions jackpot, then leveled off and reached a meager $6 million for the year, spokesman Mike Lang said. The lottery's sales have totaled more than $2.6 billion a year.
The state and a company that manages the lottery have worked to resolve customers' concerns, including removing the need to enter Social Security numbers, and 100,000 players have registered to use the service. Lang said the lottery believes that number could grow tenfold but has no way of estimating the impact on revenue.
Online sales can help capture the "emerging market" of younger customers but are just an option and should not be viewed as a huge driver of sales, said David Gale, executive director of the North American Association of State and Provincial Lotteries. He said the games matter more than the means of delivery.
"The lottery industry, like other industries out there, has to always be in product design," Gale said. "You still need to have games that players want to play."