Lottery

U.S. Lotteries Aim To Keep Building Market Lead Over Other Forms Of Gambling

Each legal, regulated aspect of gambling in the U.S. got its chance to make a case to state lawmakers in San Diego over the weekend — but only lotteries could claim “top dog” status.

Lottery revenues in the latest fiscal year totaled $85 billion, said Howard Glaser, the global head of government affairs and special initiatives for Scientific Games, as he spoke at a panel for the National Council of Legislators From Gaming States.

That compares, he said, to:

  • $42 billion in revenue for commercial casinos
  • $32 billion for tribal casinos
  • $30 billion for the U.S. video game industry
  • $24 billion for streaming services
  • $11 billion for movie box office sales
  • $8 billion for concerts

“So the good news is that the lottery is holding its own, and it is the only one that provides a significant share back to good causes” such as education and aid to the elderly, Glaser said.

And while $160 billion has been wagered on sports betting since the mid-2018 U.S. Supreme Court ruling allowing any state to offer it, Glaser said that net revenue is a mere $140 million.

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In the same span, Glaser added, Pennsylvania’s online lottery has netted $50 million to little acclaim.

Still, with only 38% of adults age 18 to 34 playing the lottery, May Scheve Reardon, the Missouri Lottery’s executive director, said that “the player base is dying, and we need to find a way to engage with millennials.”

No credit, no sale for next generation

One obstacle for the lottery is the same as one being faced by the brick-and-mortar casino industry.

“We’re not cashless yet, but we are trying to get that way,” Reardon said. “Some states will never get that way unless they pass a major change in legislation. In Tennessee, you have to purchase a lottery ticket with paper or coins. That’s a major hurdle.”

Missouri now allows lottery tickets to be bought at Wal-Mart, a partnership she described as “very successful.”

Reardon and Glaser both pointed out a much-overlooked issue: the proliferation of illegal video lottery terminal machines at “mom-and-pop” grocery stores and other small retail outlets.

“This is criminal activity — not an accidental system where machines just fell out of a truck and landed in the bar,” Reardon said. “It is a deliberate strategy to explore loopholes in state laws.”

For years, Reardon said, such machines were placed in the back of convenience stores and mostly only played by locals. But in the past 18 months, she said, there was a movement to put the machines out front so travelers might also play.

“It’s unfair to players because they think it is legal,” Glaser said. “They know that at a casino, there is some governmental entity watching out for them, and here they think they have that same backstop.”

In Missouri, Reardon said of such machines, “The state is not making one dime [in taxes], but we are losing millions.”

North Carolina, Texas, and Pennsylvania are among the states where this is a major issue, she said.

But both said a challenge is that small business owners say they need the profits from such machines to survive — while local law enforcement officials tend to respond that they don’t even have enough manpower to handle far more serious crimes.

Still, Reardon said that “12 to 14 counties” now have prosecutors who have agreed to look into the issue.

“You may listen to this and think, Well, I haven’t seen this in my state,” Glaser told lawmakers and aides from more than a dozen states. “But you will. This is just a matter of time for each state, and you want to get there before they do by having rules in place once you identify the issues with regulators and law enforcement.”

Parlaying speculation into information

The bi-annual NCLGS events often help highlight the perspective of state legislators who haven’t had the time to focus directly on gaming issues.

For instance,  one Midwestern lawmaker speculated that “parlay” — or multiple game — wagers would be “the riskiest bets” in sports betting because of the possibility of a host of jackpot payouts of $50,000 or more in the same month.

But Stefano Monterosso, senior VP at IGT for global lottery products, explained that over time, Europeans discovered many years ago that parlays pay out far less than single-game bets. Nevada and now New Jersey have had the same results.

“I want to go after parlay bettors — the more casual bettor,” Reardon said, with a maximum $30 bet offered by her 5,000 lottery retailers. “They’ll bet on the [St. Louis] Blues and the Cardinals — and against the [rival Chicago] Cubs. And we’ll return the profits to public education.”

Reardon said that while in her state “[the lottery] and casinos go together like oil and water,” she hoped to see more compromise on sports betting.

Photo courtesy of Shutterstock.com