AP NEWS

Goldberg Calls Online Lottery a Ticket to Growth

March 24, 2019
Big lottery jackpots like this one, promoted at Dracut Convenience in 2012, keep retailers busy and provide the state with billions of dollars. Expanding the lottery online would take that revenue to another level, says Treasurer Deborah Goldberg.

By Elise Takahama

Boston University Statehouse Program

BOSTON -- The lottery has been a Massachusetts staple for almost 50 years. Now, lawmakers are considering a big change.

State Treasurer Deborah Goldberg recently filed a bill to establish an online lottery system -- something that’s never been done before in Massachusetts, although residents can bet on horse races and fantasy sports games online or over the phone.

Eleven states currently offer online lottery games, and New Hampshire -- which began transitioning to an online system in September -- raked in more than $1.3 million in revenue from online sales in its first 12 weeks, according to the State House News Service.

The lottery received $997 million in net profit in 2018, which is the second highest total in its history, according to a Massachusetts State Lottery press release. In 2017, the lottery recorded a net profit of $1.04 billion. Revenues came in at a record high of $5.3 billion -- marking the fourth consecutive year that sales passed $5 billion.

While Goldberg acknowledged that the lottery, which consistently delivers local aid to all 351 cities and towns in the state, is successful and high-performing, its growth hasn’t kept up with inflation, she said.

Keno sales are up by 8 percent and Mega Millions sales are up by 105 percent, but Powerball sales are down 15 percent as last week, a lottery spokesman said. Mega Millions and Powerball sales are largely dependent on the size of the jackpots, he said.

Rep. Stephan Hay, D-Fitchburg, said that while he has a few concerns, he would be open to supporting the bill.

“Personally, I was opposed to legal gambling in Massachusetts,” he said. “But a majority of my residents voted for it, so I needed to support that. Obviously, the treasurer and other people who are in charge of operating that believe this action will help generate more revenue.”

Goldberg also added that she thinks Massachusetts retailers and owners of convenience stores and gas stations would suffer without an online option.

“Bringing the Lottery online is critical in continuing to maintain profits, stay relevant, and deliver maximum local aid,” Goldberg said in a statement. “As a former retailer myself, I want to make sure we protect our retailers - particularly our convenience store operators and gas stations/quik-marts.”

But other local lawmakers and some convenience store owners are skeptical.

Sen. Tom Golden, D-Lowell, said while he’s supported the treasurer in many of her decisions, his main concern is that a new online system would draw people away from shopping at local markets and stores.

“The treasurer does a fabulous job and I do love what she’s been doing with the lottery, but my concerns are the local stores, which I have many of in my district,” Golden said. “We need more people shopping there, not less.”

For many customers, Golden said, a lottery ticket is a point of purchase. It gives people incentives people to make the trip to a local store, but once they’re there, they might do some shopping or buy a coffee, he said. Stores also receive 1 percent of the amount of the prize with a maximum bonus of $50,000.

“It’s a form of entertainment to some folks,” he said. “It’s beneficial financially to the store owners. ... It’s also financially incentivized if someone wins.”

Area store owners are also concerned about the proposal, despite the treasurer’s intention to bring them more business.

Nittin Patel, who has run Lowell’s Store 38 since 1993, said his store rakes in about $2 million per year from lottery ticket sales and he’d be worried about losing that revenue.

“That’s going to hurt a lot of small businesses,” Patel said. “A lot of them survive on lottery ticket sales. I only get about 5 percent of commission, but every nickel and dime add up.”

JD’s Variety in Fitchburg also relies heavily on lottery sales. Owner Himanshu Patel, who has run the convenience store for six years, said online ticket sales would definitely affect his business, but he’s also concerned about paying for tickets online.

“If something from the lottery is coming in the mail, people could steal the envelope. It could be a safety issue too,” he said.

This change, however, wouldn’t just affect small independent convenience stores, said Jonathan Shaer, executive director of the New England Convenience Store and Energy Marketers Association. This would affect all retailers that sell lottery tickets, he said.

“The idea of putting that product online is extremely concerning to us,” Shaer said. “Until it can be demonstrated that an online component of the lottery won’t do harm to retailers both in the short-term and the long-term, it’s hard to get behind it.”

Instead, he proposed other ideas, including making lottery ticket purchases cashless.

“This is a cash-only product,” Shaer said. “And millennials and soon to be Gen Z are not going to be carrying cash nearly to the same extent as older generations. That’s an obstacle.”

Despite some roadblocks, Goldberg said she’s committed to working out a solution that would boost lottery sales without hurting physical stores.

“Done correctly, an online (lottery) will help them by directing new customers through their doors,” she said in a statement. “As we continue the process of modernizing our [lottery], we will work closely with our retail partners to achieve a common goal of increased profits that benefit everyone.”