Gov. Laura Kelly’s administration is taking another run at bringing online lottery ticket sales to Kansas as part of a bill that would authorize sports wagering.
The Kansas Lottery has tried previously to get the Legislature to roll iLottery into bills with sports wagering.
But it has proven to be a deal breaker for casinos that don’t want games that might seem too similar to the slot machines that they offer to players.
Lawmakers are working toward a new deal on sports wagering, but one that would include provisions for iLotttery with language a bit different than what was proposed previously.
“You would be hard-pressed to find another business that sells its product that you can’t find online,” said Stephen Durrell, executive director of the Kansas Lottery.
Durrell said the lottery has always been interested in limited online games that don’t mimic anything offered by the casinos.
“We want to try to avoid any comparisons if we can,” Durrell said.
Durrell said the lottery wants to offer games in which scratch tickets could be offered electronically where the player could scratch a ticket with their fingers or a mouse.
“It’s literally buying our product online,” Durrell said.
Casino executives have been fearful about an iLottery, concerned that graphics, animation and music in the iLottery app might look too similar to their slot and video machines and effectively draw from their customer base.
While it’s not fully clear just how strongly the casinos would opposed iLottery, the issue was raised by one of the state’s casino in testimony last week.
Bruce Christenson, owner of the Kansas Crossing Casino, cited iLottery as one of the issues he still had concerns about even as he expressed a desire to move ahead with sports wagering.
“We are committed to continuing to work with you to find mutually agreeable solutions so that we can move this bill forward and eventually get a bill on the governor’s desk,” Christenson told lawmakers in written testimony.
The question that may be more important: Will leading lawmakers view iLottery as an expansion of gambling and resist adding it to sports wagering?
“The president is not a strong proponent of the idea of an I-lottery, as it essentially involves putting a casino in every person’s pocket,” said Michael Pirner, spokesman for Senate President Ty Masterson.
The Senate passed a bill last year favored by the casinos that allowed online lottery ticket sales, but Durrell said the language in that bill provides an “unfunctional model.”
The Senate bill, he said, would have restrictions on iLottery that no other state would have had on the books.
For instance, the Senate bill says iLottery games can have no video or audio effects that resemble a slot machine.
The Senate bill said the lottery could not offer a traditional lottery game that operates or appears to operate “with the dress, theme or mechanisms of an electronic gaming machine.”
The House bill says the lottery cannot offer an online game that simulates the play of electronic gaming machines, which are defined in the statute.
Durrell said the language in the Senate bill is overbroad and vague while the House bill is clearer.
“The House language is much better from the standpoint that it’s clearer what is allowed and what is not allowed,” Durrell said.
“The House bill is a lot cleaner,” he said. “It makes sure the lottery does not emulate slot play or electronic gaming machines.”
Three years ago, a group of casino operators in Pennsylvania challenged the state’s interactive games in court, contending that the lottery games too closely resembled what the games the casinos were authorized to offer.
A judge found that the casinos had not shown that they would be hurt financially because of of competition from the iLottery games. The lawsuit was dismissed.
Durrell emphasized that the lottery isn’t trying to compete with the casinos and undercut their ability to generate revenue for the state.
“If you look at what casino business has done in states that have very robust ilotteries programs, there’s been no detriment to them at all,” Durrell said.
The Kelly administration has vigorously pushed for wrapping iLottery together with sports wagering, hoping that it would help boost lottery sales.
At one point, the governor threatened to veto a sports wagering bill if it didn’t contain a provision for iLottery.
Online sales are seen as a way for lotteries to stay relevant and remain tied into their customers. There are now believed to be 12 states with online products.
The Kansas Lottery believes internet lottery games could increase overall ticket sales by an estimated $75 million and increase the transfer to the state by about $11 million.
Michigan started online sales in August 2014, for instance. Sales have continued to grow without eating into other lottery sales, officials there said.
The net revenues from online lottery sales in Michigan grew from about $600,000 in 2014 to about $219 million in 2020.
Meanwhile, the lottery set a record of $4.2 billion in total lottery sales in 2018, up from $2.6 billion in 2014 when online games began.
Georgia had a similar experience. It started selling lottery tickets online in 2012.
Online sales grew from $691,409 in the first year to about $50 million in the last full fiscal year in 2018 – the latest data that was immediately available Monday.
In the current fiscal year ending June 30, Georgia reported $66.4 million in online sales.
Meanwhile, overall lottery sales in Georgia have continued to grow as well.
The state reported about $4.2 billion in total sales in 2018, up from $3.6 billion in the first year the lottery went online.
Commissions paid to Georgia retailers increased to $271.6 million from $233 million in the first year of online sales.
