If the Massachusetts Lottery were a boat taking on water, this would be the moment when diligent bailing still has a chance to prove fruitful. Failure to act all but guarantees the agency will sink.
The cause of the agency’s predicament is, as one expects, the coronavirus pandemic.
Up until now, the Lottery’s model comprised in-person cash sales. As little as five months ago, we went down to the local convenience store, or supermarket, or wherever the Lottery was sold, and played our numbers and/or bought scratch tickets. It seems like another world.
Indeed it was. As people stayed home and most businesses shuttered due to COVID-19 safety restrictions, sales tanked. April’s net profit dropped to $71.6 million, about $22.5 million less than in April 2019, Lottery Executive Director Michael Sweeney told the Lottery Commission Tuesday.
Other states, including New Hampshire and Rhode Island, pivoted to taking some or all of their lottery business online.
“Technology, as much as it was increasing previously, has really in a lot of people’s estimates moved forward three to five years in the course of three months,” Sweeney said.
“The lost revenue to the Lottery is permanently lost revenue,” said Comptroller William McNamara, a member of the Lottery Commission. That lost revenue is vital to the state’s 351 cities and towns to which it is dispersed.
Treasurer Deborah Goldberg, long a proponent of taking the Lottery online and cashless, said Tuesday that lawmakers could make an “immediate impact” to stem massive losses by making our system like that of states who went the online route.
“Everyone is looking for where are we going to get revenue from?” she said. “We have to note, and I said it in the last meeting but it’s only continued, that the states that do have an online lottery have had incredible increases in sales. One day in March in Michigan had not a $1 million gross, but a $1 million net.”
That’s the kind of money Massachusetts desperately needs — not just to offset losses at the agency, but to shore up a state budget that’s borne the brunt of the pandemic’s economic fallout.
Rhode Island began offering instant games and Keno online this month, which Sweeney described as “the only logical business model to follow in this world.” In Massachusetts, Keno is generally played in bars and restaurants — which remain closed.
Reports indicate that the work-from-home model is one that many employers and their staffs want to maintain going forward. That’s fewer trips to pick a few tickets during a lunch break, or to play Keno at a bar after work. We’ve gotten used to getting our food — whether in grocery or cooked form — delivered. Leaving the house to make purchases isn’t always necessary, as long as you have a smartphone. Nor is it appealing — hence the rise in contactless transactions.
Sweeney noted that consumers will likely continue to favor these cashless, contactless purchases for safety’s sake — one more breach in the Lottery’s hull.
“I do think we face a significant threat of becoming somewhat obsolete, particularly as other gaming opportunities continue to avail themselves of the technology that’s out there, everything from DraftKings to other areas, including casinos,” Sweeney said.
There are opportunities, in both Gov. Charlie Baker’s FY 21 budget and in a bill filed by Goldberg, to take our lottery into the 21st century. If we don’t act now, crucial funding for Massachusetts cities and towns will be lost.
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