STATE HOUSE NEWS SERVICE
THERE ARE PROVERBIAL TROOPS amassing at the New Hampshire border and the Massachusetts Lottery is “sitting here like dead ducks,” Treasurer Deborah Goldberg said Tuesday of the New Hampshire Lottery’s move to sell products online and introduce Keno.
New Hampshire Gov. Chris Sununu in July signed a bill that seeks to fund full-day kindergarten with revenues from the introduction of Keno in New Hampshire and the game is expected to launch early in 2018. The Granite State also approved some online lottery sales.
There appears to be a healthy market for Keno in New Hampshire as six of the Massachusetts Lottery’s top 10 Keno retailers are located within 10 miles of the New Hampshire border, Lottery Executive Director Michael Sweeney said.
“We’re facing a lot of different types of pressure as a lottery and New Hampshire being more aggressive and receiving more empowerment from their state legislature will have an impact on us, and clearly a negative impact as revenue goes,” Sweeney told the Lottery Commission on Tuesday.
In New Hampshire, Executive Director Charlie McIntyre — who helped expand Keno here as the Massachusetts Lottery’s assistant executive director and general counsel — is making the case that there is more to be won by playing Keno in New Hampshire, which does not levy a tax on income.
“In New Hampshire you will win 5 percent more because unlike Massachusetts, you don’t have to pay income tax,” he told the New Hampshire Union Leader earlier this month. “Trust me, we will be marketing that benefit in a big way.”
The Massachusetts Lottery reported a record high of $915 million in Keno sales last fiscal year, accounting for about 18 percent of all Lottery sales. Sweeney on Tuesday called Keno “one of our higher net profit games.”
Keno is “what’s carried us” over the last two years, said Goldberg, who on Tuesday again aired frustration that her effort to secure legislative authorization for the Lottery to offer its existing products online has not gained traction.
“I think the thing they have to really look at is what drove the profit last year. Keno, for the last two years, we’ve beefed up sales and it has helped carry the ball,” she said. “To have (New Hampshire) be able to do a double hit — which is online and Keno — and we’re sitting here like dead ducks, I feel like.”
Goldberg and Sweeney have argued the Lottery’s survival and the hundreds of millions of dollars it returns as local aid are at risk without authority from the Legislature to offer current products — scratch tickets, draw games, Keno and more — to customers over the internet.
“I don’t know how much clearer a message we need to send the Legislature relative to this issue. It’s become one of those things that we’ve said it ad nauseum at this point and now we’re starting to see, literally, the troops on the borders of Massachusetts,” Comptroller Thomas Shack, who serves on the Lottery Commission, said Tuesday. “This has a potential devastating effect on the Lottery and it’s going to be profound and cities and towns are going to be the ultimate recipients of that downturn. I hope the Legislature is listening.”
Online lottery has not been a priority for the Legislature this session. A special commission recently wrapped up its study of online gambling and eSports, but was forbidden by statute from considering online lottery.
While his branch has previously signed off on the idea of an online lottery, Senate President Stanley Rosenberg said any action related to online lottery will likely have to wait until 2018.
“Online lottery and online gaming are both issues that are being reviewed now to try to figure out how we manage the situation so we don’t hurt the Lottery, and in the case of online gaming, that we don’t hurt the casino industry we’re building in Massachusetts,” Rosenberg said on Boston Herald Radio in May.
Rosenberg said research on both topics is expected to be completed this calendar year, “So we could potentially act next year, potentially.”
Massachusetts lawmakers authorized resort casinos in 2011 to churn up new revenues from the gambling sector, but Beacon Hill since then has been reluctant to wade more deeply into additional gambling ventures. Critics of the Lottery and online gaming have warned of disproportionate negative impacts on low-income individuals and problem gamblers.
Goldberg and Gov. Charlie Baker have talked about online lottery “often,” the treasurer said Tuesday, though she could not say whether Baker supports her push.
“We will carefully review any legislation reaching the governor’s desk,” Baker spokesman Billy Pitman said in an email Tuesday.
Absent a push for action from the governor or legislative leaders, Goldberg said Tuesday she has asked municipal officials, who rely on the Lottery for local aid funding, to talk to their representatives and senators about supporting online lottery and has pitched the Massachusetts Municipal Association on the idea.
“We’re supportive of giving the Lottery the tools to be able to continue to thrive and having some kind of online presence apears to be the next step, especially since New Hampshire and other states are starting to go there,” Geoff Beckwith, executive director of the MMA, told the News Service on Tuesday. “It is important to have the state engage in that process of reviewing what the modernization of the Lottery would look like.”
Beckwith said the Lottery could help its case by more clearly articulating what an online lottery would look like, what its impacts would be, and how the Lottery could apply safeguards to be sure players are at least 18. Moving the Lottery forward and keeping it successful, Beckwith said, is important to local officials, but also state officials.
“The more Lottery dollars there are, then the fewer state tax dollars are needed to meet the local aid committment,” he said.
Goldberg said “no local elected official wants to see less money coming from the Lottery, ever,” and indicated that she thinks lobbying from municipal officials will be key if she is to be successful in expanding the Lottery onto the internet.
“I think that the pressure will need to come from other places. We’ve been very clear for several years now what the Lottery needs. I look at this and … I don’t want to wait until we no longer have the level of profits we have, I would like to be more proactive. But that doesn’t seem to be happening.”
The Lottery Commission on Tuesday heard from Sweeney that sales in July were down $17.3 million compared to July 2016, and that net profits last month were down $6.7 million when accounting for accruals related to an end-of-game prize. Not including the accruals, the Lottery’s net profit in July was $9.9 million greater than the previous year.