Virginia Legislature Kills Online Lottery Bill For Now

January 18, 2017
Virginia Legislature Kills Online Lottery Bill For Now

Opposition from convenience stores and religious groups thwarted an effort to authorize online lottery sales in Virginia.

The latest on Virginia and iLottery

Introduced by Delegate Roxann RobinsonHB 2010 was soundly defeated in the House General Laws subcommittee in a voice vote.

Virginia would have joined Michigan, Illinois, Kentucky and Georgia as having online lottery products. (The Minnesota legislature repealed the state’s online lottery in 2015.)

In addition to Virginia, several other states are exploring online lottery sales in 2017. Massachusetts is the most likely to pass a bill. There, Sen. Jennifer Flanagan introduced similar legislation to Robinson’s Virginia online lottery bill.

The Massachusetts Senate passed an online lottery bill in 2016 before it died in the House. Even though Massachusetts is further along in the process, the same pockets of opposition are likely to rear their heads — namely, the convenience store lobby.

Lottery cannibalization concerns persist

Despite a lack of evidence from the states with online lotteries, convenience stores are still fearful they will lose business if the lottery goes digital.

“Customers don’t just buy lottery tickets: they buy cigarettes; they buy soft drinks; and sometimes they buy beer,” Chuck Duvall, a lobbyist representing 7-Eleven told local press in Virginia. “And all of those are higher markup items than the lottery ticket. So if we don’t have that body in the door, we are probably not going to sell those other products.”

But the convenience store lobbyist is missing something: The type of cannibalization he fears has not come to fruition in the states where online lottery sales are authorized. The four states with online lotteries have found, much like casinos that are now involved with online gambling, online lotteries increase the size of the player pool, attracting new, and more importantly, younger, players.

Furthermore, both Virginia and Massachusetts included provisions in their online lottery bills that would benefit brick-and-mortar lottery retailers.

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Differences in Virginia and Massachusetts

Only weekly draws would be available online per Virginia’s online lottery proposal, with retailers retaining exclusive rights on daily games.

Massachusetts’ online lottery bill limits the funding of online accounts to verified bank accounts and debit cards, as well as pre-paid lottery cards only available at brick-and-mortar lottery retail locations.

“We are so confident that if we can do more on the internet it will not hurt the brick-and-mortar retailers that one of our ideas is to guarantee to them that they will continue to grow,” said Virginia Lottery Executive Director Paula Otto.

In a Boston Globe editorial from 2015, columnist Shirley Leung wrote:

Another concern is whether online sales would cannibalize the brick-and-mortar business of tickets sold through convenience stores and other retailers. Michigan thinks it can grow the market, and in the first year, online sales generated about $15 million in profit, a tiny fraction of the overall lottery’s take.

The state projects that by 2022 or so, online sales will bring in, on average, an extra $60 million in profit a year. The proceeds from Michigan’s lottery go into a state school fund.

“There is zero indication that the online games have taken away sales from others,” said lottery spokesman Jeff Holyfield. “The indication is that it’s exactly the opposite.”

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