iGaming Stalls While Online Lotteries Spread in the US

New_York_Lottery.svgIn 2013, amid much fanfare, three states launched online poker and/or casino websites: Nevada, Delaware, and New Jersey.

The ups and downs of online gambling in these three states have dominated the headlines for over a year now, with a healthy dash of Sheldon Adelson’s proposed federal iGaming ban thrown in for good measure.

However, lost in the shuffle of federal bans, underwhelming revenue numbers, and casino and website closures was the launch of online lottery sales in three other states: Minnesota, Illinois, and Georgia, and the approval of online lotteries in three others: Kentucky, Maryland, and Michigan.

Online poker and casino expansion may be overshadowing online lottery expansion, but it may be online lottery that lights the way for more comprehensive online gambling expansion down the road.

More iLottery expansion on the way

As we get ready for the calendar to turn to 2015 it appears the number of states offering lottery sales online will be on the rise.

Michigan has already approved online lottery sales and is expected to have their online lottery website up and running in the not so distant future.

New York, along with Illinois, was the impetus for the DOJ’s current interpretation of the 1961 Wire Act offered in September 2011, after the two states requested clarification regarding the Wire Act’s application to online lotteries. While New York has yet to enact online lottery sales they could do so at any time.

Kentucky has just officially selected GTECH as their online lottery platform. The Kentucky Lottery expects to have the state’s iLottery up and running by fall of 2015 according to a report in the Courier-Journal.

West Virginia’s Lottery Director John Musgrave has indicated the state will give serious consideration to online lottery sales, telling local papers, ““We’re still exploring (online gaming) because we feel that’s the way the industry’s moving, so we want to plan for it.” Musgrave feels the state’s laws allow the lottery commission to expand into online sales without the legislature passing a new law.

The Florida legislature will also take a look at online lottery sales after State Senator Gwen Margolis introduced a bill that would allow Floridians to purchase lottery tickets online.

By the end of the year there could be more than a dozen states where lottery tickets are available or have been approved for sale online.

What it means for online gaming expansion

Online lotteries are certainly not the end-game online gaming proponents are hoping for, but they could be the intermediary that eventually leads to comprehensive online gambling proliferating across the country.

As the reason behind the Wire Act opinion written in 2011 online lotteries also complicate the Restoration of America’s Wire Act (RAWA) bills currently sitting in Congress. Under the current version of Sheldon Adelson’s RAWA, online lotteries would receive an exemption along with online horse racing and fantasy sports.  These exemption are extremely hypocritical, considering there is little difference in the safeguards and regulations covering online lottery sales and online gambling.

Both would require the same geolocation and player verification checks that are so maligned by the opposition to iGaming, making it hard to argue that one is somehow safe while the other is not.

The success (regulatory speaking) of online lotteries can also disprove many of the fears being raised regarding online gambling. If online lotteries can be shown to be safe, secure, and well regulated, it destroys these same arguments against poker or online casino games, which would have to abide by the same regulations, and have also proven to be safe, secure and well regulated in Nevada, New Jersey, and Delaware.

If online lotteries succeed, it makes the path towards legal online poker easier, and makes a potential ban at the federal level that much more difficult.

*This article was updated on December 2, 2014, to reflect that Maryland has not approved online lottery sales

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