Try Your Luck

Two states consider selling lottery tickets online.

by / May 26, 2005
Across the nation, states under the thumb of oppressive debt look to new revenue streams to help assuage the need to raise taxes.

This year, legislators in Illinois and Georgia introduced controversial bills directing the states to consider selling lottery tickets online. No state in the union currently allows purchasing lottery tickets on the Internet, but the issue has been brought before the federal government on two occasions. Neither motion made it out of congressional committees.

The notion of selling lottery tickets online appears simple. In reality, anti-gambling activists, children's advocates, and a vague, 40-year-old federal law raise questions about the proposition's feasibility and legality.


The Bills
In the Georgia General Assembly, Rep. Terry Barnard, R-Glennville, introduced HB 346, which merely calls for the state to investigate selling lottery tickets online. The Illinois legislation, in contrast, mandates a pilot to test whether it will work. Both states are trying to determine if it's legal.

The legal question stems from the Federal Interstate Wire Act. Passed in 1961, the Wire Act bans the use of any "wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placement of bets or wagers on any sporting event or contest."

Advocates of online lottery ticket sales contend that the Wire Act pertains only to sports betting. Opponents, including some in the U.S. Department of Justice, believe the act applies to modern Internet communications, thus disallowing states from selling lottery tickets over the Internet.

"I had my Attorney General's Office take a look at the issue earlier in the year, and they're reporting that it's really unsettled," said Barnard. "It's unclear if Congress can regulate the Internet. Even though I think the Justice Department may take a broad look at the Wire Act, there is case law that agrees it pertains only to sporting events."

Barnard explained that his legislation is still preliminary. "The legislation is pretty narrow the way it's written," he said. "We're trying to devise a way to offer online access to residents of Georgia only. Obviously there are still a lot of questions out there as to interstate commerce and so forth. We're trying to develop a strategy so we might be able to offer residents the opportunity to purchase tickets online."

In the Illinois General Assembly, Sen. John Cullerton, D-Chicago, introduced SB 0198.

The Illinois legislation heads down a different path -- backers want to skip the consideration phase and move directly to testing. Cullerton said his intent is to motivate the Illinois Lottery and the state Department of Revenue to action.

"We would require the lottery department to do a pilot," Cullerton explained. "They don't actually need authorization. Under current Illinois law, they could do it right now. But they haven't, so we're kind of pushing them to do it with this bill."

Courtney Hill, Illinois Lottery spokesman, said his department was unable to comment on any details regarding the pilot.

Meanwhile, Cullerton said he wrote the legislation in broad terms to avoid micromanaging the Department of Revenue. "What I would recommend to [the Department of Revenue] is to have Internet sales limited to people from Illinois over 18, of course," said Cullerton. "That would be enforced because the only way to redeem any winnings would be in person."

Verification before or after play would restrict out-of-state play. Under Barnard's plan, a player in Georgia would have age and residency requirements verified before purchasing a ticket online.

"You would have to go to a retailer to get your authorization to play," Barnard explained. He said a player would register with a retailer and be given a code or PIN. The player would then be registered in a state database. "There would be a one-time fee, and the retailer would verify your age and residency by checking your license or state ID."


Opposing Expansion
Of course, numerous people and organizations oppose easier access to lottery tickets. Rev. Tom Grey, executive director of the National Coalition Against Legalized Gambling (NCALG) and one of the nation's leading advocates against gambling, said states expanding lotteries is little more than another tax.

"Instead of a paycheck where the government withholds taxes, they can now do it through the Internet," said Grey. "They're going to bring in an addictive product. The government isn't content with traditional marketing -- they're going to bring it directly into the home."

Despite many state lotteries' profits earmarked for causes such as education or the environment, many opponents still decry expansion of state-sanctioned gambling. Grey says lotteries have not lived up to their promises and hurt those who are addicted.

"Lotteries have not been a boon to education," he said, disputing claims made by lottery officials in other states. "What we have is government driving people through false advertising to buy tickets, like saving the salmon in Oregon. The lottery has not taken care of education in Maryland, Illinois or California. Lotteries are simply another state tax with better marketing."

Much of the concern expressed by anti-gambling activists concerns gambling's effect on youths. Dr. Durand F. Jacobs, professor of psychiatry at Loma Linda University School of Medicine and former president of the California State Psychological Association, is an expert on juvenile gambling addiction. He believes the sale of lottery tickets online sets a dangerous precedent.

"It's ill-advised, number one," said Jacobs. "It puts juveniles in further danger. My concern is with juveniles who can get hold of a credit card -- their parents' or someone else's -- and play or gamble on the lottery. That's all it takes."

Jacobs explained that although it may not appear so, juveniles playing state lottery games make up a portion of lottery revenue.

"We now have about 40 lotteries across the country," Jacobs said. "Their last take was estimated to be $45 billion. I would estimate about $1 billion of that was compiled by kids. Lotteries, where they exist, tend to be No. 1 or 2 of all forms of gambling pursued by kids."


Uncertain Benefits
Supporters of the online lottery ticket idea don't see a problem with kids accessing the system. Though opponents fear the spread of gambling addiction, legislators like Barnard and Cullerton believe in a simple solution.

"Yes, juveniles could steal their parents' credit cards," Cullerton admitted. "And yes, they could purchase tickets, but they are not going to be able to redeem the tickets for money. This is no different than purchasing something on the Internet right now."

"There was a lot of concern about kids accessing the tickets, and we devised a way to reduce, and likely eliminate, that from happening by using a method of physically identifying players and verifying their age," Barnard said.

In Illinois and Georgia, all lottery proceeds go to education. And both legislators agree that online tickets could be a real boost for the cash-strapped states. In addition, the idea enjoys widespread and bipartisan support, the legislators said, especially considering the relative technical ease in setting up an online lottery ticket sales system.

"There are a lot of people fascinated by the opportunity," said Barnard. "On the other side, they are nervous about implementing such a new technique."

Cullerton explained that setting up an online account would take very little time, citing Finland's national lottery as an example.

"It's relatively simple in that you would register a credit card, pick your numbers, print out a receipt and you're registered in a central database," he said. "If we could sell $100 million more [after costs], we'd make $45 million extra. My attitude is even if we sell $1 million more, I mean why not? These are voluntary purchases of lottery tickets. It's not an expansion of gambling any more than it would be to open up a new terminal at a new gas station."
Chad Vander Veen

Chad Vander Veen is the former editor of FutureStructure.