ALEXANDRIA, VA - NACS blasted the U.S. Department of
Justiceï¿½ï¿½s recent ruling that removes obstacles for state lotteries to offer online lottery tickets.
"The ruling is not only bad for convenience stores and the
communities that they serve, it is potentially bad for the states that are
seeking any means necessary to fill budget gaps," said NACS Director of Government Relations Corey Fitze. "Not to mention that we have
concerns that DOJ actually ignored existing law."
New York and Illinois officials have already indicated that
they intend to move quickly to set up online lottery games, pending federal
NACS is strongly advocating that the ruling be overturned
and is citing several points:
The Department of Justice did not take into account
DOJ did not analyze the Unlawful Internet Gambling
Enforcement Act of 2006 (UIGEA), which blocks payment for any gambling on the
Internet ï¿½" including lotteries. Congressï¿½ï¿½ intent in passing UIGEA was, based on
the Departmentï¿½ï¿½s decades-long positions, to keep any lottery games on the
Internet illegal. The Department also failed to analyze the provisions of the
law separate from the Wire Act (such as 18 U.S.C. 1301) specifically making the
interstate communication of lottery chances illegal.
Neighborhood convenience stores will be hurt.
Convenience stores, of which 62% are small, single-store
businesses, depend upon the foot traffic created by lottery sales to get
customers into their stores. Lottery brings in more than the 5% commission per
ticket; it brings in lottery customers who buy roughly 50% more items than the
This creates problems with gambling addiction.
Customers at brick-and-mortar stores were, and still are,
prohibited from purchasing tickets with a debit or credit card. Yet online
lotteries will rely upon debit and credit card transactions. If the reasons
preventing retailers from accepting credit and debit cards for payment are
still valid, why are they not applied online? Also, sales at brick-and-mortar
retailers provide a face-to-face interaction that could determine age and
sobriety, for example. Online lottery opens a Pandoraï¿½ï¿½s Box of possibilities
for underage sales and problem gamblers.
State income will be far less predictable.
There may be filters in place to prevent state residents
from playing games in other states on desktop computers, this is not the case
with tablets and smart phones ï¿½" and the lotteries wonï¿½ï¿½t be able to stop them
from playing from anywhere. Convenience store retailers see price sensitivity
to gas prices ï¿½" consumers will go somewhere else to get a better "deal" on gas.
We expect the same thing will happen with state lotteries. Lottery players will
go where the best "deal" is, and a few states will attract the bulk of
customers, while the others will likely see significant drops in sales.
States will get less income per sale.
As states compete to offer the best "deal" on lotteries,
states will be forced to sweeten deals and likely reduce the funds that go into
scholarship programs. Further, the new credit and debit card swipe fees that
will be incurred will significantly add to operating costs.
Action needs to be taken to fix this mess.
DOJ needs to work with Congress to
clean up the mess it has created. The first step would be for it to publicly
recognize that Internet lotteries remain illegal under federal law ï¿½" no matter
how it views the Wire Act. The next step would be for it to advocate for new
legislation clarifying that Internet gaming is illegal, just as it has claimed
for decades. Without these actions, there could be serious ramifications for
small neighborhood businesses and the communities that they serve.