Michigan’s Successful Online Lottery Now Five Years Old

On Aug. 11 five years ago, Michigan began online lottery gambling. Since the games launched, 1.1 million people have signed up to play.

While online casino gaming hasn’t yet become a reality for Michigan, the state’s online lottery celebrated its five-year anniversary earlier this month. The Michigan iLottery underwent a soft launch on Aug. 11, 2014, becoming the third state in the country to kick off the offering.

In a release announcing its “birthday,” the lottery said it has 1.1 mm accounts for its 79 games. The iLottery has awarded $2.4 billion in prizes since its inception. In 2018, Lottery players won $676 mm playing games online. Through last year, the online lottery has generated nearly $240 mm in net win for the program.

Brief history of the Michigan online lottery

The late-2011 Department of Justice opinion on the 1961 Wire Act paved the way for states to wade into the online gambling waters, whether it be through their lotteries or through online casinos offered by commercial gambling firms. Michigan began considering an online lottery in 2012, but early discussions also included legislation to prohibit it.

Those conversations continued into 2013, when then-Gov. Rick Snyder, the man who ended up vetoing the online casino bill in late 2018 out of concerns that online casinos would take a bite out of the School Aid Fund, supported bringing an online lottery to the Wolverine State. Though no legislation was enacted, the Michigan Lottery began work on bringing some of its games to the Web.

Development took some time, and in August the following year the games soft launched.

The Detroit casinos didn’t sue the state over the new competition, as it’s been assumed for years that they too would get a chance to offer gambling over the internet. The Michigan iLottery did create a rift between the state and the tribal casino industry, with concerns about how statewide online lottery gambling would impact tribal-state compacts.

Under the proposed Michigan online casino bill on the table this legislative session, the tribes would get a chance to offer online casino gambling, including sports betting.

In November 2014, the Michigan online lottery officially launched. In 2014, iLottery sales and prizes produced a net win of $556,451.

Whole lotta lotto

The following year, Mega Millions, Powerball, Fantasy 5, and Lotto 47 draw games were announced to be coming to the iLottery online game offerings. In 2015, the first full year of operation, iLottery sales produced a net win of $18.5 mm. The state also celebrated its first $1 mm winner from iLottery gambling.

Those draw games were added to the betting menu in January 2016, helping propel net win to $48 mm. As of September 2016, 38 instant games and four draw games were available. In 2016, more than 50% of the iLottery’s sales occurred through mobile devices. The Lottery said in 2016 that it wanted to reach $500 mm in online handle the following year. It had more than 400k online accounts by the end of 2016.

In early 2017, the Lottery’s Players Club loyalty program was made available for the first time on the Lottery’s mobile website. The Lottery also kicked off an affiliate marketing program that year. Net win from online lottery gambling grew to $77.9 mm in fiscal year 2017.

In 2018, the Lottery continued to bolster its menu of games, with net win growing to $93.7 mm. It also continued work on payment processing in an effort to speed up transactions.

The following year, the Michigan online lottery, as well as other state online lotteries, were faced with an existential threat in the form of a new legal opinion on the 1961 Wire Act. Fortunately, state lotteries were taken out of the legal crosshairs earlier this year thanks to a federal court ruling in New Hampshire.

2019 online gambling debate

The iLottery has taken center stage in the debate about online casino gambling in Michigan. The state, under Gov. Gretchen Whitmer, has balked at the idea of online slots, which some argue could cannibalize online lottery instant games. That’s the fear, so the governor wants online slots excluded from online casino legislation. So far, they haven’t been taken out.

Additionally, the governor wants a higher tax rate on online casino gambling, in an effort to keep money flowing to the state’s School Aid Fund.

In FY 2018, the Lottery contributed just under $941.3 mm to the School Aid Fund. The three Detroit casinos paid about $117 mm to the state for public education in 2018.

The Michigan Lottery has also made it known that it sees online casinos as competition.

The efforts to legalize online casino gambling, as well as sports betting, will continue in Lansing, possibly through the end of 2019. A sports betting bill is forthcoming.


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