Online Products Task Force Releases Recommendations
Recognizing Inevitability of Online Play, Report Advocates Strategic, Measured Approach
The Online Products Task Force, an advisory group formed by Treasurer Steven Grossman to assess the implications of Internet lottery products and gaming in Massachusetts, today issued a final report detailing its findings and recommendations. Calling the introduction of online products “inevitable,” the group urged that a number of immediate and longer-term steps be taken to best position the interests of the Massachusetts Lottery and the Commonwealth overall.
“With the help of our 7,400 agents, Massachusetts has the most successful lottery in the country, and we need to preserve that success by moving forward strategically and thoughtfully on this issue,” said Grossman. "We cannot ignore the fact that online gaming products are going to become a reality, and it is important for us to act now to ensure that local aid to 351 cities and towns is protected.”
The Massachusetts Lottery generated a record $4.75 billion in sales in the last fiscal year, resulting in profits of $984 million. It is the largest source of unrestricted local aid for Massachusetts cities and towns. Per capita spending on the lottery is $720 per person -- about double that of any other state.
The report notes that if the Lottery doesn’t enter the online marketplace, other entrants – such as casinos, commercial gaming companies, and other states – will likely fill the void to the detriment of the Lottery and the revenue it generates. "Given the high per capita spending now and the fact that personal incomes are growing modestly at best," the report said, "the inevitable consequence would be that those new entrants would cannibalize Lottery sales, putting at risk local aid."
The report repeatedly stressed that a plan to introduce online product sales must protect the interests of the 7,400 retailers – many of them small businesses – that presently sell Lottery products.
“Massachusetts has the strongest retailer network of any lottery in the nation, and it has helped us grow to record levels,” said Massachusetts Lottery Executive Director Paul Sternburg. “We recognize the critical role that our retailers have played in our success, and we will work to protect the Lottery revenue stream at their store locations as we seek to build online sales platforms.”
Treasurer Grossman is committed to avoiding any step that might jeopardize the successful launch of casino gaming in Massachusetts and its attendant construction and service jobs, and the report calls for coordination with the Massachusetts Gaming Commission on Internet issues. The Task Force also emphasized that steps should be taken to address problem gaming online.
Other recommendations include:
- Calling on the Legislature to repeal the statutory ban on selling most Lottery products online and to provide affirmative authorization for the Lottery to enter the online market
- Ensuring that the planned replacement of the Lottery’s obsolete mainframe computers and point-of-sale terminals have the flexibility to accommodate online gaming and sales
- Creating a Lottery business model for conducting online gaming by collecting additional data, including exploring the launch of an online sales pilot program and the near-term introduction of at least one mobile test app without a cash prize
- Exploring licensing rights to run an online, intrastate poker game, as well as the possibility of developing an interstate compact among lotteries that might enable Massachusetts to launch a New England-wide poker game
- Exploring whether partnerships with other potential entrants into the online market might prove to be cost-effective for the Lottery
- Calling on elected officials and other stakeholders to oppose federal efforts, such as legislation recently offered by U.S. Senators Harry Reid and Jon Kyl, that would compromise the Commonwealth’s autonomy on gaming issues
The importance of the Online Products Task Force’s mission was heightened in December, 2011, when the U.S. Department of Justice found that intrastate online gaming, with the exception of sports betting, falls under the jurisdiction of state law. The decision opened up a host of new possibilities for the Task Force to consider.
The Online Products Task Force is comprised of representatives of the Legislature, the Governor, the retailer community, the Massachusetts Gaming Commission, the Massachusetts Mayors Association, the Lottery Commission, Treasury, as well as other stakeholders.