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Maryland lottery games may be coming to Internet

Maryland Lottery Agency Director Stephen Martino (File photo)

In what some experts call a step toward full-fledged online gambling, the Maryland State Lottery Agency appears poised to join a handful of states that run Internet programs through which players can buy — and then play — an shopping cart of lottery games.

Lottery Director Stephen L. Martino presented a report on the program — dubbed iLottery — to the Maryland State Lottery Commission Thursday.

The report, mandated by the budget passed by the legislature in April, was sent last week to General Assembly budget committees. It will be scrutinized and open to public comment for 45 days.

Unless the Senate Budget and Taxation Committee and the House Appropriations Committee strenuously object to the iLottery proposal, which would let players link their bank accounts to an online store of electronic lottery tickets, limited Internet gambling could be operating in Maryland as quickly as regulations are finalized.

The report — which draws a distinction between iLottery and Internet casino gambling — is potentially a giant step toward legalizing online casino-style gambling, experts say.

“It flat out is gambling,” said Patrick Pierce, a political science professor and lottery expert at St. Mary’s College in Notre Dame, Ind. “They certainly can make a distinction between playing the lottery and playing a slot machine or roulette, but as soon as you start making it that easy, you’ve really changed the game.

“I think that’s something one should be really concerned about.”

But Martino stressed to the lottery commission that online casino-style gambling was not coming to Maryland. Rather, the program would create online, interactive versions of lottery games, including some that simulate the action of scratching off a ticket.

Virtually any lottery game that could be bought in a retail store could be played online.

“This is not a proposal for Internet gaming,” Martino said. “This is limited to purchasing traditional lottery products … as a way to attract younger players.”

Martino said just under 50 percent of Maryland adults purchase lottery tickets or play monitor games such as Keno and Racetrax, a percentage that is dwarfed in neighboring states, including Pennsylvania, where more than 60 percent of adults play lottery games.

And, in Maryland, two-thirds of lottery players are 45 years old or older, Martino said.

“We simply are not attracting younger players,” he said, adding that Internet play could bring more on board. “Lottery is one of the few consumer products not accessible through the Internet.”

If Maryland makes lottery games Internet-accessible, the state will be among the first to do so.

Of the 43 states with a lottery, plus Washington, D.C., only four have Internet lottery programs: New York, Minnesota, North Dakota and Illinois. Only Illinois offers the same-day purchase of lottery scratch-offs Maryland is considering.

James Karmel, a professor at Harford Community College and an expert on the mid-Atlantic gambling industry, said that taking the lead in Internet gambling would be a good thing for the state, because West Virginia, Pennsylvania and Delaware beat Maryland to the punch in opening casinos.

“It’s inevitable that we’re going to have online gaming at some point, and I think it might be a good opportunity for Maryland, for a change, to be out front in the mid-Atlantic on this,” Karmel said. “Instead of ‘Maryland always playing catch up’ … maybe it’s an area where Maryland could move forward.

“If the lottery sales are a first step toward that, that makes sense.”

But Ellen Valentino, a lobbyist for 7-Eleven and the National Federation of Independent Business, said iLottery did not make sense for brick-and-mortar retailers that depend on customers buying lottery tickets at their stores.

“Clearly, we could not be more concerned,” said Valentino, who was the only person to testify against the proposal Thursday. “I think the majority of the retail community all oppose this.”

In its report, the lottery details a commission system through which retailers would receive a percentage of iLottery revenue generated in their zip code.

The revenue percentage — set at 5 percent now, though that could change — would be disbursed to retailers in that Zip Code based on lottery ticket sales at individual stores. For example, the store that sold the most lottery tickets in a given week would receive the largest share of the week’s iLottery revenue in that area.

Valentino said that wasn’t enough, and that retailers were not adequately involved in the planning process for iLottery. Two meetings were held with retailers — one on May 17 and another on June 14 — but Valentino said those meetings were invitation only.

“It was not a town hall meeting,” she said. “They were closed meetings.”

Martino countered that “the belief that this is a detriment to brick-and-mortar retailers” is unfounded. Retailers have actually benefited in countries — such as Australia — where online lotteries have been established, he said.

“You get some who are strongly opposed … some who are strongly in favor,” Martino said. “Most are ambivalent.”