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Massachusetts retailers resist Lottery's push for online sales

Jul 8, 2019, 8:57 am

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Massachusetts LotteryMassachusetts Lottery: Massachusetts retailers resist Lottery's push for online salesRating:

The Massachusetts Lottery's technological systems are on par with an old, wall-mounted rotary phone — outdated and inconvenient, but it still works — while customers increasingly expect to be linked to the world through a smartphone at all times, the agency's executive director told lawmakers last week.

Holding up a large, black rotary phone, Executive Director Michael Sweeney made his latest pitch to lawmakers to allow the Mass. Lottery to offer its current products — scratch tickets, draw games, Keno and more — to customers over the internet. It's an idea that Sweeney, the lottery and Treasurer Deborah Goldberg have been pitching unsuccessfully for years and again Monday the idea was opposed by retailers who sell lottery products and rely on that foot traffic to boost their sales.

"This device still actually does work, if it's properly connected. As you know, obviously it's a land-based device, it's heavy, and it's also a little bit clunky. But it was revolutionary in its time, much like the Massachusetts State Lottery was when introduced in the 1970s," Sweeney told the Joint Committee on Consumer Protection and Professional Licensure. "Times have rapidly changed and what has now occurred is we have undergone a huge consumer and technology revolution."

The internet has become home to a growing presence of gambling sites, including fantasy sports operations and potentially soon sports wagering sites, that are competing with brick-and-mortar casinos and the lottery for limited consumer gambling dollars.

"The Massachusetts State Lottery is at a pivot point and we need to have some serious conversations about technology and how we engage consumers because consumers have already radically changed," Sweeney said. "We'll do a billion in profit this year for our cities and towns, but more than 99 percent of that was brought in by cash... therein lies the problem."

A 2017 survey conducted by U.S. Bank found that 47 percent of consumers prefer to use digital apps to make payments versus cash, which was the preference of 45 percent of respondents. The survey also found that 50 percent of people carry cash less than half the time, and half of the consumers who do carry cash keep less than $20 on hand.

"The incredible consumer response to digital and mobile banking solutions is changing the entire industry and diminishing the historic use of cash," Gareth Gaston, executive vice president of omnichannel at U.S. Bank, said in a statement. "ATM withdrawals and branch visits are slowly declining, while mobile transactions are increasing dramatically year over year."

Highlighting how far from favor cash has fallen, Sweeney told the committee that he recently took a phone call from a man who said he was a 72-year-old lottery player. The man was upset that he could not buy a season ticket for a lottery game with a cashless method and instead had to get a bank check to bring to the lottery's regional office in Worcester to get his tickets.

"When a 72-year-old customer is calling you and asking you why you're not in the modern age trouble is not on the horizon, it is already behind us," he said. "We need to adjust to where those consumers are of all ages."

A group of retailers who sell lottery products testified in opposition to allowing the lottery to move online, arguing that brick-and-mortar retailers fuel the success of the Massachusetts Lottery and in turn benefit from foot traffic from players. Allowing the lottery to move online would destroy small businesses and threaten the lottery's success, the retailers said.

"The people who got you to the dance are also the ones that can get you home," Ryan Maloney, owner and operator of Julio's Liquors in Westborough, said.

Robert Mellion, executive director of the Massachusetts Package Stores Association, took issue with Sweeney's comparison of the lottery's brick-and-mortar retail base to an old telephone.

"We were earlier in this hearing compared to a telephone, essentially," he said. "That's what brick-and-mortar was compared with and this is what retailers across the state were just compared to. I'll say this about a telephone, it works. It works in a snowstorm, it works when it's sunny out, it works in a hurricane. So it's not necessarily a bad thing."

Online lottery is not a new issue on Beacon Hill. Former Treasurer Steve Grossman appointed a task force to look into it, and Goldberg made her intentions known early in her term, when one branch signaled its approval for the idea.

By a narrow 22-17 vote, the Senate approved an amendment to a 2016 jobs bill that would have allowed the state to sell online lottery products, but that provision did not survive negotiations with the House. It has not gained significant traction since.

According to the National Conference of State Legislatures, at least five other states — Kentucky, Illinois, Georgia, Michigan and New Hampshire — have authorized their lotteries to sell at least some products on the internet.

New Hampshire's move towards an online lottery last year, paired with an expansion of Keno in the Granite State, left the Massachusetts Lottery "sitting here like dead ducks," Goldberg said last year.

Sweeney brought the executive director of New Hampshire's lottery, Charlie McIntyre, to Monday's hearing to tell lawmakers about the experience in the Granite State.

"It's been a significant growth for us. We are the fastest growing lottery east of the Mississippi [River]. So our growth in the past year is 16 percent. So the suggestion that it cannibalizes, that it attacks, the traditional lottery would be inaccurate. Our retailers will receive a record year of income this year," McIntyre, who helped expand Keno here as the Massachusetts Lottery's assistant executive director and general counsel, said. "Any new areas you get into obviously cause nerves to be increased, but for us the experience has been a positive one."

Goldberg and Sweeney have previously argued that the lottery's survival and the hundreds of millions of dollars it returns as local aid are at risk if it is not allowed to move online. But the lottery's recent financial performance may undercut that argument.

Through May, the lottery had counted $1.044 billion in profit, Sweeney told the state lottery commission last week. Through the same 11 months of last fiscal year, the lottery had tallied an estimated profit of $926.8 million. The lottery set its record for annual profit in fiscal 2017, when it brought in $1.035 billion.

WBUR

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14 comments. Last comment 12 months ago by Stack47.
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music*'s avatar - DiscoBallGlowing
Fresno, California
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Posted: July 8, 2019, 10:35 am - IP Logged

They are talking about progress and that is good. Group Hug

When will COVID-19 be finished?  A vaccine may protect all of us.

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    Sweden
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    Posted: July 8, 2019, 1:58 pm - IP Logged

    Are you saying that Mass has gotten this new thing called internet now?

    Return of Lotto Investment, ROI: 2019: 41% (march) | 2018 50% | 2017 47% | 2016 12,6% | 2015 20% | 2014 20%
    Return of Stock market investment: 125%

    Notable wins: Viking Lotto $1.152 - 2017

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      Posted: July 8, 2019, 2:47 pm - IP Logged

      Online sales would be awesome!  Retailers make it so hard to buy tickets around here.

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        Kentucky
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        Posted: July 8, 2019, 5:06 pm - IP Logged

        Online sales would be awesome!  Retailers make it so hard to buy tickets around here.

        Retailers only make 5% of lottery sales so it's not like they'll be losing lots of money. Besides most of the states that have Online wagering don't offer pick-3 and pick-4 games and those games coupled with scratch-offs probably make the balk of store lottery sales.

        Oh and if your state offers 4 minute Keno, playing Online as opposed to at most stores is a no-brainer.

          Coin Toss's avatar - shape barbed.jpg
          100
          Zeta Reticuli Star System
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          Posted: July 8, 2019, 5:48 pm - IP Logged

          Lottery tickets aren't the only things that retailers sell, duh.

          As with any business the idea is to get people to come into the store.

          Those who run the lotteries love it when players look for consistency in something that's designed not to have any. So many systems, so many theories, so few jackpot winners. 

          Lep

          There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

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            Kentucky
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            Posted: July 9, 2019, 12:53 am - IP Logged

            According to the National Conference of State Legislatures, at least five other states — Kentucky, Illinois, Georgia, Michigan and New Hampshire — have authorized their lotteries to sell at least some products on the internet.

            Wonder exactly how many and why Mass retailers are resisting Online lottery sales unless of course it's because the lottery will offer all games Online. But considering 67.7% of all Mass Lottery sales are scratch-off/instant tickets with another 6.1% in "number games" sales, there must be a unknown reason why they are resisting Online sales. 

            Players in KY can purchase Online play vouchers at any lottery retailer and I've never read where any KY retailer complaining that Online lottery play cut into their profits. And maybe because Online revenues are only about 1% of all lottery revenue.

              cottoneyedjoe's avatar - cuonvFT

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              Posted: July 9, 2019, 4:16 am - IP Logged

              If you buy a ticket online with a debit from your bank account, then I assume any winnings are paid by direct deposit to your bank account? If that's the case then I can see exactly why Mass retailers are mad -- they won't be able to scam online players out of their prizes! Aw, poor babies.

              ... Sooper dooper top seekrit winning numbers: 5 16 17 24 33 52 ...

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                Simpsonville
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                Posted: July 9, 2019, 7:58 am - IP Logged

                Kicking an old horse here again.   Remember I wrote a letter to Deborah Goldberg who is progressive in her thinking.   Told her in KY, one of five states mentioned above that we can buy MOST products on-line.   To satisfy the retailers, Pick 3 and Pick 4 can only be purchased brick and mortar.  Also the instant tickets are different than those bought in the stores.

                 

                So we can play PB, MM, Lucky 4 Life, Cashball 225 and Keno on-line. 

                 

                Problem with my home state, they can be a stubborn bunch.  When the bottom line starts nibbling @ their bottom line and Millennial folks, those that play that is, will demand on-line by voting with their dollars.

                 

                Previously mentioned I'm done with their Subscription service for me and another LP member that I bought tickets for.   Like I said before, MA state lottery outsourced that and added extra service charges.   Voting with my wallet on that too.   Had also put that in the letter to Ms. Goldberg.

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                  Simpsonville
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                  Posted: July 9, 2019, 8:08 am - IP Logged

                  Their contact page on MA treasury will not allow the state default to be changed from Massachusetts.

                  So I put a comment on their FB page for all to see in the Treasury Dept about on-line purchases.

                  Will anything come of this....seriously?   I've got a bridge for sale if you believe a reply is coming from them.   

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                    Kentucky
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                    Posted: July 9, 2019, 2:55 pm - IP Logged

                    If you buy a ticket online with a debit from your bank account, then I assume any winnings are paid by direct deposit to your bank account? If that's the case then I can see exactly why Mass retailers are mad -- they won't be able to scam online players out of their prizes! Aw, poor babies.

                    LOL

                    And you're correct about any withdrawals going directly to your bank account including winnings over $600.

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                      Kentucky
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                      Posted: July 11, 2019, 3:35 pm - IP Logged

                      Kicking an old horse here again.   Remember I wrote a letter to Deborah Goldberg who is progressive in her thinking.   Told her in KY, one of five states mentioned above that we can buy MOST products on-line.   To satisfy the retailers, Pick 3 and Pick 4 can only be purchased brick and mortar.  Also the instant tickets are different than those bought in the stores.

                       

                      So we can play PB, MM, Lucky 4 Life, Cashball 225 and Keno on-line. 

                       

                      Problem with my home state, they can be a stubborn bunch.  When the bottom line starts nibbling @ their bottom line and Millennial folks, those that play that is, will demand on-line by voting with their dollars.

                       

                      Previously mentioned I'm done with their Subscription service for me and another LP member that I bought tickets for.   Like I said before, MA state lottery outsourced that and added extra service charges.   Voting with my wallet on that too.   Had also put that in the letter to Ms. Goldberg.

                      Just for a follow-up on Online lotteries, I withdrew funds from my Kentucky Lottery account Tuesday evening and the funds were in my bank account this morning. 

                      And a related question; does Mass currently have Online horse racing wagering?

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                        Simpsonville
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                        Posted: July 11, 2019, 4:13 pm - IP Logged

                        Just for a follow-up on Online lotteries, I withdrew funds from my Kentucky Lottery account Tuesday evening and the funds were in my bank account this morning. 

                        And a related question; does Mass currently have Online horse racing wagering?

                        Some months ago had trouble getting my KY winnings---$500 to withdraw from my account.   Was on the phone with IGT in Cranston, RI; and she transferred me to some company in Chicago.  It finally went through after about four days.

                         

                        As for on-line horse racing wagering in MA I'd say an unqualified NO.  As of this writing only checked with Plainridge Casino near Gillette Stadium.  There you can bet on the horses.  That is the last place for horse racing in MA; Harness racing in Foxborough, MA 3 days/week and only certain months.   Suffolk Downs in E. Boston just closed last weekend for good.  Was following/commenting on Caesars taking that over for a casino vs. Encore in Everett.  Will check with those other two casinos to see if they have OTB; though I kind of doubt they do.

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                          Simpsonville
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                          Posted: July 11, 2019, 4:19 pm - IP Logged

                          No mention of any on-line horse racing betting @ Encore or MGM.  I didn't pay attention the two times visiting Plainridge, though suspect you can only bet on their track the few months/year it is open.

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                            Kentucky
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                            Posted: July 12, 2019, 3:50 pm - IP Logged

                            No mention of any on-line horse racing betting @ Encore or MGM.  I didn't pay attention the two times visiting Plainridge, though suspect you can only bet on their track the few months/year it is open.

                            Online horse racing is basically the same as off track betting. Instead of going to a track or a betting parlor, people can play from any where using any device with an Internet connection. And it's legal in Mass.