Massachusetts Lottery Under Significant Threat

Discussing the post-COVID landscape, Executive Director Michael Sweeney of Massachusetts Lottery revealed that the lottery offering of the state faces a ‘significant threat of becoming somewhat obsolete.’

Sweeney cautioned this week that due to the rapid change of business towards online and cashless interactions resulting from the COVID-19 outbreak, the current terrestrial model of the incumbent might not be prepared to cope with the anticipated new online standard.

He went on to explain how if left unchanged this could create problems with municipal funding that other states like the neighbours New Hampshire and Rhode Island tried to avoid by shifting portions or all of their lottery business to online during the COVID shutdowns.

“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.

Prior to the virus landing in Massachusetts the lottery had been on track for a strong year. However, despite a host of convenience stores selling lottery products remaining open during the outbreak, April’s net profit dropped to $71.6 m – $22.5 m lower than in April 2019.

As a result of the recent defeats, this fiscal year ‘s latest lottery results have seen them lag behind the same level in 2019 by more than $195 m.

Since then, Treasurer Deborah Goldberg has urged legislators to allow electronic and cashless lottery operations to reduce losses and raise extra revenue to sustain a strained state budget.

She stated: “Everyone is looking for where we are going to get revenue from? 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 $1m gross, but a $1m net.”

Despite not making any changes regarding online expansion, the Massachusetts Lottery has started to do some things differently, such as making appointments for the in-person processing of prizes in excess of $20,000.

Despite this in mind, Sweeney also maintains that even as market activity begins to restore customer behaviour, it is likely to support practices such as cashless, contactless transactions that avoid the risk of COVID-19.

Concluding: “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.

“We do receive what I would characterise as a significant amount of business from the states that border us, particularly New Hampshire and Rhode Island. It would only make sense that as both of those lotteries go online, there will be some level of decrease (in Massachusetts).”