Lotteries, Unable to Fight Online Gambling, Look to Join Instead

Considering that efforts to prevent online gambling have been unable to stem its growth in popularity, lottery officials are thinking the best strategy might be to prepare to participate in regulated Internet gaming.

A recent study has found that state lotteries are losing as much as $7 billion to Internet casinos. Considering that efforts to prevent online gambling have been unable to stem its growth in popularity, lottery officials are thinking the best strategy might be to prepare to participate in regulated Internet gaming.

The survey by Frost and Sullivan finds that young players are both more Internet savvy and less likely to have interest in the lottery. Peak spending years on lottery gaming runs from 50 to 64.

What lottery sales are made to players under 24 tend to be scratch-offs, a form of more instant gratification than lottery jackpot tickets, says a UCLA study of California lottery participants.

To address the changing tastes of gaming consumers, and help lotteries generate revenues necessary to fill gaps in state budgets, Frost and Sullivan make several recommendations.

First and foremost, states need to support efforts to regulate online gambling. While state lotteries are exempt from the ban imposed by the UIGEA, credit card companies are blocking lottery transactions along with all gambling payments made online. Both North Dakota and New Hampshire have suffered millions in lost sales.

Once the Internet market is opened to all competition, increased jackpots also drive lottery sales up. A study of New York Lottery sales show higher prizes more than covered their expense by more than doubling profit.

Advertising has also shown to be highly cost-effective. In Florida, after advertising a scratch-off game while leaving a virtually identical game unadvertised resulted in over two dollars returned for every dollar spent.

Lotteries are already competing with online casinos. The only way to bring more revenue back to the states from these gambling mechanisms is to straighten out the Internet gaming law mess federally, so that lotteries compete on an even field.