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Maryland task force eyes eLottery games

Bryan P. Sears//Daily Record Business Writer//May 9, 2014

Maryland task force eyes eLottery games

By Bryan P. Sears

//Daily Record Business Writer

//May 9, 2014

A nascent attempt by the Maryland Lottery to move into the world of digital lottery services will be delayed while a newly formed commission studies the proposal and its potential effect on lottery agents.

Yet- to-be-named members of the newly created State Task Force on Lottery Revenue will have about six months to look at the issue of reversing declines in sales of traditional lottery products such as Pick 3 and Pick 4 tickets, Keno and scratch-off products. A coalition of agents who sell those products say they are concerned that moving to digital products that can be played on any home computer, smartphone or tablet, could decrease sales and cut into needed commissions that last year totaled nearly $119.8 million.

Ellen Valentino, a lobbyist who works with the coalition of retail, convenience store, gas station and bars and liquor stores, said the Maryland State Lottery and Gaming Control Agency has shown an interest in digital gaming—sometimes called iGaming or eLottery— for much of the last two years.

“They’ve been aggressive and very clear that they would like to move forward with Internet lottery and iGaming,” Valentino said.

Over that same period of time, lottery agents across the state have pursued legislation that would prohibit those same games, claiming it will further decrease business.

Gov. Martin J. O’Malley signed Senate Bill 374 into law last week. The law, which goes into effect on July 1, and creates a task force to review how the agency can increase lottery sales through the use of digital gaming. The commission is required to deliver recommendations by Jan. 1 for the next General Assembly to consider.

Currently, the state lottery agency has the authority to create and implement the games. Under the bill, the agency will now have to wait until April 6 in order to give legislators a chance to weigh in on any proposals.

Valentino said the games could be similar to those implemented in Minnesota in February — electronic scratch-off and other games. Users created a digital wallet and can transfer money back and forth between it and their bank accounts. The games are designed to keep players online and engaged in the games for long periods of time.

In Minnesota, legislators are currently debating whether or not to impose a moratorium on the games after the agency created the games under legal authority similar to that which exists in Maryland.

Del. Eric G. Luedtke, D-Montgomery, chair of the House Ways and Means Subcommittee on Finance Resources, said the overall goal of the task force is to look at growing revenue for non-casino-related gaming in Maryland.

Since the institution of full table game casinos, traditional lottery gaming has seen decreases even as overall gambling revenue has gone up. That trend, which legislators and lottery agents say was expected, will likely deepen with the opening of the Horseshoe Casino in Baltimore and the MGM Resorts International venue at National Harbor in Prince George’s County.

Overall, net sales for traditional lottery games decreased by more than 2 percent in fiscal 2013.

That modest decline hides sharper declines in monitor games such as Keno and RaceTrax. The lottery agency reported that revenue for those games decreased $28.1 million or nearly 5.4 percent year over year.

Instant game sales decreased by $21 million or more than 4.1 percent, according to the same report.

“Some of the more casino-like games have seen a decline,” Luedtke said. “The demographics of who plays is changing. Those who play the traditional lottery are different from the state as a whole. For generations of younger players, scratch-off or Pick 3 isn’t what they are looking for.”

Stephen L. Martino, director of the State Lottery and Gaming Control Agency, was not available for comment, according to a spokeswoman.

Luedtke said that while the lottery agency was not happy with everything in the bill, officials were interested in having the task force do a public review of the issues.

“Transparency is good government,” Luedtke said.

Jack Milani, chairman of the legislative committee of the Baltimore County Licensed Beverage Association and owner of Monaghan’s Pub in Woodlawn, said many who currently sell lottery tickets and other related products are concerned.

“To me, it’s just like the casinos,” Milani said, describing the decrease in sales he expects if Internet gaming is implemented.

Milani said some businesses depend on the revenue. The most dramatic effects might come from small businesses that employ workers who handle lottery game sales. Milani employs two people to handle a 12-hour shift at wages higher than the current minimum wage.

“Hopefully, when they look at this, they’ll see we’re employing people,” Milani said.

There’s also the concern that, ultimately, implementing Internet gaming could result in the death of retail sales. Milani and others said they have already seen reductions in commissions because of decreased sales. They have also had to fight off an attempt by the state to delay an increase in the commission rate intended to offset expected decreases related to table gaming.

Luedtke said he does not believe traditional lottery products or those who sell them are destined for the scrap heap.

“I don’t think we’ll ever see the day when there are no retailers,” Luedtke said.

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