The lottery industry is a controversial one in the U.S., with the lotteries saying that they provide revenue for social services. Critics have long called the lottery a regressive tax on poor Americans. It’s a pernicious debate that will never end, and for better or worse, lotteries are here to stay.
At any rate, the lottery industry says it’s hurting amid the COVID-19 pandemic. Not hurting like the scores of Americans who are dying, losing their jobs or homes, going hungry, and so on, but hurting in a business sense. Of course, the industry isn’t asking for sympathy, but it’s already thinking ahead about how to adapt after the pandemic.
On Wednesday, a panel at the SBC Digital Summit met to discuss what’s ahead for lotteries.
Online play is the future
The minority of states with online lottery games have experienced a noticeable uptick during stay-at-home orders across the country. Pennsylvania, for example, saw a roughly 30% increase right off the bat when people started social distancing. Michigan is another state with a growing online lottery.
“I think the recovery from this pandemic is going to force a digital transformation in our industry a whole lot quicker than we would have seen it come” otherwise, Barry Pack, CEO of the Oregon Lottery, said on the panel.
Pack added that relying on brick-and-mortar sales is not the best model for the next couple of years.
Maryland Lottery CEO Gordon Medenica echoed that sentiment. Medenica said that selling lottery tickets on the internet is “no more dangerous” from a responsible gaming perspective.
“I think we will see a dramatic change,” Medenica said. “We also need to recognize it’s just another channel” for revenue.
He added that online play doesn’t cannibalize revenue from brick-and-mortar retailers, and that a “change in attitude” about online play is coming at the state level.
More than 40 states have a lottery but just six have online play.
Right now, however, the industry is being cautious.
As economic cruelty sweeps a hyper-unequal America, lotteries don’t want to appear insensitive to the suffering. Thus, state lotteries have pulled back on advertising their products, according to the panel.
“When we go back into paid advertising is an open question,” Medenica said.
According to Pack, “Most lotteries have suspended their advertising for fear of appearing tone deaf.”
Going forward, however, “we really have to be listening to the voice of our customer,” Pack said. “A lot of people aren’t going to go back to the prior [consumer] behavior.” Pack cited delivery services for groceries that are becoming much more common these days.
“I think we are going to have to be very careful to meet their expectations,” Pack said. “Ways to increase our digital offerings … is going to be important. People are going to expect to be able to buy their Powerball tickets like they buy their groceries.”
As mentioned, the lotteries also make the argument that they can better monitor problem gambling behavior via the internet than through traditional retailers. It’s an argument that the casino industry has long used to push for regulation of online casino gambling.
Six states have legalized some form of online casino gambling, but more could be looking at legalization in the months and years ahead.
Changes, concerns during pandemic
Earlier this month, the D.C.-based advocacy group Stop Predatory Gambling called on all state lotteries to halt their operations as the country grapples with the economic crisis. SPG penned a letter to state governors seeking the action.
The SBC Digital Summit panel didn’t discuss that letter on Wednesday.
Many lotteries have closed their respective claims centers amid the pandemic, but the games have continued. SPG argued that when people are hurting financially, gambling — in this case, the lottery — shouldn’t be used as a way to escape the suffering.
The lottery is a huge business in the U.S.
According to Pew Research, U.S. lotteries had $91.3 billion in sales during fiscal year 2019. From that amount, about $25 billion went to state and local governments “for services such as education, infrastructure, health care, pensions, conservation, and elderly assistance.” Players received back $52.8 billion in the form of prizes. The remainder was used for administration and compensating retailers.
One thing the lotteries have done to help players right now is extend the time period under which they can claim their winnings before the ticket expires, according to Medenica. He said that the lotteries don’t want players to lose their winnings under those circumstances during a pandemic.