With the federal debt growing at an unprecedented rate, Congress might consider legislation that would legalize online gambling, including the sale of lottery tickets as a means to increase tax revenue.
In 2006, two bills sought to prohibit Internet gambling. The Unlawful Internet Gambling Enforcement Act (UIGEA), introduced by Rep. Jim Leach (R-IA), sought to stop certain electronic financial transactions used in online gambling. Rep. Goodlatte (R-VA) also introduced a bill similar to UIGEA, but also included a "safe harbor" for interstate online lotteries, making them legal under his measure. Due to controversies over Goodlatte's bill, the language was later abandoned and Congress passed only UIGEA, which was attached to the SAFE Port Act.
UIGEA allows for several "safe harbors" to the prohibition on Internet gambling, including a safe harbor for horse racing, as well as a safe harbor for intrastate and intratribal transactions. However there is no safe harbor for online lotteries. In other words, online lottery sales were prohibited.
On May 6, 2010, Rep. Barney Frank (R-MA) introduced H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. This legislation grants the Secretary of the Treasury regulatory and enforcement jurisdiction over the Internet Gambling Licensing Program that this bill would establish. The bill would overturn UIGEA and would allow for the online sales of lottery tickets.
Lottery ticket sales generate substantial in-store traffic. The frequent lottery customer purchases additional items when they purchase their lottery tickets. In fact, on 95% of their store visits, lottery customers purchased at least one other merchandise product in addition to lottery.
NACS opposes any attempt to allow purchases of lottery tickets online.
On July 14, 2011, Senators Harry Reid (D-NV) and Jon Kyl (R-AZ) sent a letter to U.S. Attorney General Eric Holder to clarify that current law prohibits the online sales of lottery tickets. NACS is working with staff for both senators to ensure that any future legislation drafted with the intent to legalize online poker carves out the legalization of online lottery sales.
On December 26, 2011, the Department of Justice (DOJ) reversed its long-held position on the Wire Act of 1961, which prohibited online lottery sales. At NACS' request, the House Judiciary Committee sent a letter to the DOJ asking them to show the legal merits behind reversing the long-standing legal opinion.