The Pennsylvania Lottery can consider 2018 a success. However, the first few months of 2019 have already presented a number of obstacles.
According to an article on PennLive, state lottery officials said profits for 2018 were up about $50 million over the previous year. They were also ahead of projections for the early portion of this year.
But a ruling last month by the US Department of Justice, some budgetary concerns from the state’s senate, and some competition from rapidly spreading dubiously legal games of skill have stalled all that momentum. They’ve also raised concerns about the lottery’s long-term health.
New ruling leads the list of concerns
Last month, the US Department of Justice issued an opinion that extended the federal Wire Act to apply to any form of gambling that crosses state lines. This includes online gambling and online lottery, not just sports betting which had been the previous stance.
“It represents a huge threat to the lottery industry as well as the Pennsylvania Lottery as well as the gaming industry,” Drew Svitko, executive director of the Pennsylvania Lottery, told PennLive.
If that decision stands, it could force the Pennsylvania Lottery to move its backup data center in Georgia. The data center would then move in-state. This process would carry an exorbitant cost.
In response, both Pennsylvania Attorney General Josh Shapiro and the North American Association of State and Provincial Lotteries (the top lottery lobbying group) have authored letters challenging the new position of the Department of Justice and asking for further clarification.
Senate Appropriation Committee has lotto questions
At a meeting last week of the PA Senate Appropriations Committee, Republican senators raised concerns about the state lottery’s revenue projections, according to PennLive.
Senators worried that the lottery revenue projections were overly optimistic. The fear is revenue and could fall short by $50 million or more. That kind of deficit creates a huge budgetary problem. After all, the state lottery funds a wide variety of entitlement services and financial support for seniors.
“If you qualify, you get them,” Senate Appropriations Committee member Pat Browne told PennLive. “If we don’t have the money (to pay for them), the exposure is huge.”
Growth in games of skill also a concern
The Pennsylvania Lottery launched online games in May 2018 and has nearly tripled its game offerings in the ensuing months. The online lottery games have fared well, but the monitor-based games such as keno and Xpress Sports, which launched last year, haven’t been quite as successful. According to PennLive, those games produced just $9 million for the lottery fund in the first six months of the fiscal year.
Svitko blames the spread of illegal games of skill for some of the lottery’s struggles. Games of skill typically return greater revenues for their owners than the commission the lottery pays. This makes them popular options for some retailers.
The fact that the state police considers the games illegal hasn’t seemed to slow the spread of them either.
“We still feel that the (skill) machines are illegal,” Major Scott Miller, director of the Pennsylvania State Police Bureau of Liquor Enforcement, told PennLive.
Svitko told PennLive that almost 18 percent of lottery retailers have at least one skill game machine. A year ago, it was half that. But in the absence of a higher court decision that will eliminate the games of skill as a competitor, the state lottery is left to take up the challenge on its own.
The growing senior population needs the PA Lottery
The state lottery already has a number of hurdles in its path. Yet another one will appear in the near future. Last week’s PennLive article cited statistics from the state’s Independent Fiscal Office highlighting the growth projections for Pennsylvania’s senior population. The number of senior citizens in the Keystone State is expected to grow 23 percent by 2025. That increases the total number of seniors to nearly 2.8 million people.
And thus, the PA Lottery, which already funds essential services for existing seniors, will have to do even more to keep pace in the years ahead.
“The expectations are really high,” Revenue Secretary Dan Hassell told PennLive. “We have to be concerned about where things are going.”