One can scarcely blame officials at the Maryland State Lottery Agency for showing interest in the potential revenue that could be generated by selling their traditional products online. Agency employees are paid to look for ways to maximize lottery earnings, and there's no denying that betting on the various drawings would increase if they were just a point and click away.
In a recent lottery agency report to the Maryland General Assembly, there's even a revenue estimate: 12-18 percent sales growth (which amounts to $200 to $300 million annually, and one suspects that's on the conservative side). Such a haul would surely go a long way toward resolving state government's projected $1.1 billion budget shortfall in the next fiscal year.
An expansion of the lottery undoubtedly sounds a lot more appealing to lawmakers than the customary choices of raising taxes or cutting spending, since either tends to irritate a fair number of their constituents. After all, those who wager do so by choice. Taxpayers aren't forced to gamble, and they don't have to give up valued services either.
But before delegates and senators stumble over each other to approve what could easily appear to be "easy money," they ought to instead express some serious reservations about how fast and how far Maryland is promoting gaming of all forms. Online gambling is a complicated business, and legislators ought to first recognize that the revenue comes with strings attached.
Perhaps first and foremost is how much a lottery expansion might merely cannibalize projected sales, not only from stores that sell lottery tickets now but from a potentially competing form of gaming, the state's fledgling slots parlors? Maryland has yet to even open its preeminent slots facility, the Maryland Live! Casino at Arundel Mills, which is now in the process of hiring and is scheduled to open in June. A major slots parlor in Baltimore — one with great economic development potential and run by Caesar's Entertainment — is little more than an artist's rendering at the moment.
Together the two projects represent at least 2,500 full-time jobs, not even counting the hundreds of temporary construction jobs involved. While online gambling might require the state to hire a private contractor — located somewhere in the U.S., one can only hope — the effort is unlikely to yield significant numbers of jobs or bring in out-of-state gamblers as brick-and-mortar casinos can.
Indeed, other states that have invested in online sales have done so very modestly, primarily by allowing state residents to purchase lottery subscriptions. The U.S. bans private online gaming under the 1961 Wire Act, but lottery tickets and state-sanctioned gaming, in general, may fall into a murky area of interpretation. States have likened online lottery sales to e-commerce rather than gaming — just another forum for buying tickets the same as convenience stores and vending machines.
Some of the most ambitious plans to date have been shaping up in nearby District of Columbia, where Maryland's former lottery director, Buddy Roogow, has been advocating for web-based poker, blackjack and other casino games. Similar efforts are being pursued in a handful of other states, including California and Florida.
Still, if Maryland is going to further expand gaming, lawmakers ought to be guided by principles other than what might produce the most revenue the most quickly for the state. What might help their budget woes of today could harm the state's economy in the long-term.
Nor do we see a particularly compelling reason why Maryland should be a pioneer in this problematic arena that may or may not be permitted under federal law, especially when slot machine gambling is just gearing up. Better to be cautious.
One of the disappointments of the Maryland lottery agency's 15-page report on the matter is that the authors don't really consider the social implications of increased lottery sales, particularly on poor households. Nor is there much examination of what happens when so much discretionary income is devoted to gambling. Is there a tipping point at which retailers, the tourism industry and others who depend on the same revenue stream suffer as a result?
The lottery agency may be anxious to push its frontiers as other states have done. But it's up to Maryland's elected leaders to take a longer view and proceed with caution, recognizing that gambling revenue sometimes comes with a price.