Maine: The Insanity of Targeting the Young

Online lottery sales, meant to draw in younger gamblers, draw opposition
By Mal Leary, Capitol News Service

AUGUSTA, Maine — Legislation allowing the Maine State Lottery to sell tickets on the Internet drew strong opposition from the network of stores of all sizes that get a commission from the state to sell the tickets. The grocery and convenience stores, along with Hollywood Casino Hotel & Raceway, say they should manage any online gaming in the state.

“Internet communications and business is a massive and rapidly moving part of our culture,” said Jerry Reed, director of the Maine Bureau of Lottery Operations. ”States are starting to actively pursue Internet sales.”

He told members of the Legislature’s Veterans and Legal Affairs Committee that the lottery needs to bolster sales to the “Generation Y” segment of the population, 18-to 30-year-olds that embrace the Internet.

“While our lottery revenue generation is doing reasonably well, our consumer or customer head count participation is flat to slightly down,” he said.

The measure would allow the state to engage in online lottery sales no sooner than September 2013. Reed sought the ability to adopt rules to implement the sale of tickets on the Internet.

Online gambling long was banned under an interpretation of federal law by the U.S. Department of Justice. A ruling in December reversed the DOJ’s interpretation of the 1961 Wire Act that banned online gambling and said state lotteries are not prohibited from offering online wagering within their state.

“We want to pursue this new opportunity of online gaming in the process of negotiating a new contract with our gaming system vendor,” Reed said.

Lawmakers on the committee said they have been “beat up” over the issue from local store owners concerned they will lose sales if Mainers can buy tickets online directly from the state lottery and that will have an impact on the commissions they receive on sales. Criticism continued at the public hearing with opposition from groups representing retailers and by Hollywood Casino, which also is concerned about competition.

“The slow move to games that provide instant gratification through the Internet will have a significant impact on bricks and mortar casinos like Hollywood Casino as well as retailers via the lottery,“ said Cheryl Timberlake, lobbyist for Penn National Gaming, owner of the Hollywood Casino in Bangor.

She suggested that casinos and lottery retailers should be the ones to operate any sort of Internet sales operation and would require that users establish accounts and prove they are of age to gamble.

“There are a lot if unintended consequences in this as proposed,” she said.

Jamie Py, president of the Energy Marketers Association, represents many of the 1,100 convenience stores in the state.

“It’s a pretty big piece of our business,” he said. “I am concerned about what will be booked in a budget for next year and if there is something booked, I am not sure how we back out of that.”

Py urged the panel to move slowly and deliberately on the issue and get all of the stakeholders together to work out legislation.

Shelly Doak, executive director of the Maine Grocers Association, said there are 400 grocers that sell lottery tickets, both through terminals and scratch tickets.

“This proposal will place the state in direct competition with the 1,300 Maine-owned and -operated Main Street businesses — the grocery stores, the convenience stores and the grocery stores that are now in partnership with the state,” she said.

Sen. Debra Plowman, R-Hampden, apologized to the opponents, saying the intent of the committee was not to give a green light to allow Internet sales but to allow the development of a proposal for the next session of the Legislature to consider.

“I know it’s not written that way,” she said.

Many states have moved quickly to allow online sales and the legislation is designed to put Maine in the position to react to Internet lottery sales in other states. Three committee members, Plowman, Rep. Linda Valentino, D-Saco, and Rep. Doug Damon, R-Bangor, went to a conference in Las Vegas in January to hear about the latest changes in the gambling industry. All three say they expect online gambling, such as online poker and the Internet sale of lottery tickets, must be addressed by the state.