Online lotteries are providing much-needed revenue to state programs, as land-based lottery sales have plummeted during the COVID-19 pandemic.
States with online lotteries have seen internet sales surge more than 10 percent. New Hampshire, one of eight states with online lotteries, says it experienced a 38 percent jump in first-time internet players between February and March.
This pandemic has dramatically exposed the limitations and vulnerabilities of the lottery’s all-cash, in-person business model,” Massachusetts Treasurer Deborah Goldberg told state lawmakers today.
States with online lotteries are Georgia, Illinois, Kentucky, Michigan, New Hampshire, North Carolina, Pennsylvania, and Virginia.
Goldberg said more than 1,800 of the state’s 7,500 lottery retailers are closed. That includes the state’s three casinos – Plainridge Park, MGM Springfield, and Encore Boston Harbor.
Total lottery sales last week in Massachusetts were down 33 percent. Keno dropped over 53 percent, one of the lottery’s most profitable games. Revenue from the Massachusetts State Lottery is distributed to cities and towns, and not earmarked for any specific programs.
Interstate Games Hurting
Powerball and Mega Millions have both amended their games in response to reduced sales. Guaranteed starting jackpots and minimum jackpot increases have been eliminated.
Powerball initially said it was reducing its guaranteed starting minimum jackpot from $40 million to $20 million, and guaranteed increases from $10 million to $2 million. But because of the coronavirus, Powerball officials decided the game’s “advertised jackpot should be determined by game sales and interest rates.”
“Since last week, more states and cities have asked their residents to stay at home, which has affected normal consumer behaviors and Powerball game sales,” said Powerball Product Group Chair Gregg Mineo on April 2. “In response to the public health crisis, interest rates have declined. As a result, additional game sales are necessary to fund comparable jackpot amounts.”
Mega Millions followed suit the next day, Mega Millions Consortium Director Gordon Medenica explaining, “These adjustments will allow the states and jurisdictions that sell Mega Millions tickets to continue generating much-needed revenue to support state budgets.”
Lotteries continuing their operations have been criticized by some. California’s lottery remains active, as the Department of Health maintains it serves an essential function by providing money to the state education budget. However, a lottery employee was placed in a coma in late March after testing positive for coronavirus.
Where Money Goes
Forty-two states, plus DC and Puerto Rico, remain under stay-at-home orders. With most non-essential businesses closed, in-person lottery sales are being drastically reduced.
The states with online lotteries are also reporting reduced revenue. But online is offsetting some of those losses. Here’s where the money goes in states with online lotteries:
- Georgia: public education, including tuition grants and scholarships
- Illinois: public education, infrastructure projects, and special causes
- Kentucky: college scholarships, grant programs
- Michigan: public education, local businesses
- New Hampshire: public education
- North Carolina: public education
- Pennsylvania: programs for older residents
- Virginia: public education
New Hampshire is the oldest lottery in the United States. Between 1953 and 1963, state Representative Larry Pickett introduced sweepstakes legislation five times. He finally succeeded in 1963. Sales went live on March 12, 1964.