3:23 PM EDT, September 26, 2012
While Marylanders are consumed with the debate over whether to allow a sixth casino and table games like poker and blackjack, the state is quietly moving ahead with an idea that could make gambling much more pervasive: Internet lottery sales. And in contrast to the state's casino program, which has been playing catch-up with neighboring states for years, the State Lottery Agency is contemplating plans that would instantly catapult Maryland to the cutting edge of this new frontier of gambling — all without the General Assembly ever taking a direct vote on the issue.
Twice, the legislature has included language in the state budget requiring the lottery agency to submit reports on its plans related to online gambling. In 2011, the report focused on the rationale for moving into online gambling, the potential effect of online sales on traditional retailers and the legal issues associated with Internet lotteries here and in other states. That report didn't go into detail about how and when the agency might move forward, but it did not suggest that the agency had in mind anything more than extending online its long-standing subscription sales service whereby players can automatically purchase tickets to Mega-Match and Mega Millions for 13-, 26- and 52-week increments.
But a new report issued last week goes much further. It says the agency intends to introduce not only subscription sales but also same-day ticket sales, an online version of monitor games like Keno, and scratch-off and instant games. The report says the agency envisions some games where players would use a mouse or other device to move an imaginary coin across a virtual ticket to reveal prizes. Other games would be more interactive, requiring players to point and click on various parts of the screen.
The games would be available not only on computers but also smartphones. In fact, the lottery agency indicated in its 2011 report that it sees mobile devices as a key way to expand sales among younger players and minorities, specifically African-Americans and Hispanics. (Whites account for 61 percent of Maryland's population, but, according to the report, they are 69 percent of Maryland lottery players, "proving that ethnicities outside the Caucasian market continue to be a growth area.")
The lottery has traditionally been a cash-only business, but the agency notes in its reports that online gaming would provide it an opportunity to move into e-commerce. Specifically, the agency says it plans to allow customers to fund accounts with direct links to checking accounts or debit cards. And as a new service to customers, the latest report says, winnings could either be collected in the traditional manner or, up to a point, deposited back into the players' accounts so they can more easily buy additional tickets. In all, lottery officials say they expect a mature Internet lottery program could increase sales by 15 percent or more.
The moves toward Internet lottery sales in Maryland and other states follow from the theory that the federal Interstate Wire Wager Act of 1961 does not bar intrastate electronic gambling. The Department of Justice has not issued a definitive ruling on the matter, but it hasn't stopped other states from dipping their toes in Internet lotteries either. New York, Minnesota and North Dakota all offer online subscription services, and Illinois offers both subscriptions and same-day sales of tickets. A number of other states are considering Internet lottery sales, but so far none has gone nearly as far as Maryland officials are suggesting.
This is not a race in which we need to be first. Since online lotteries are strictly intrastate affairs, we will not be losing out to competition from our neighbors if we take our time to debate all the implications of this shift. And there are plenty of implications, both practical and philosophical, that we need to think through.
An online lottery program requires age and location verification. That's certainly possible — other industries have managed it — but the mechanism for it isn't necessarily simple. There are also key questions about whether and how traditional retailers should be compensated for online sales and what limits should be placed on players' ability to add funds to their accounts. Philosophically, the state needs to consider whether it wants to make gambling available anywhere and any time.
The State Lottery Agency's mission is to maximize sales and the resulting revenue that flows back to Maryland's treasury, and from that perspective, an aggressive push into online gambling makes sense. But a question like this needs to be considered from a broader perspective, particularly in light of the legislature's recent decision to put on November's ballot a plan to expand Maryland's brick-and-mortar gambling operations.
The lottery agency may have the legal authority to move forward with Internet sales without action by the General Assembly, but it would be a mistake. This issue requires the kind of public debate that only full consideration by the legislature can provide. The General Assembly's budget committees have 45 days to comment on this report. They need to make clear that the lottery should not move forward with this project on its own.
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