With Gov. Maura Healey’s signing of the new state budget, Massachusetts became the latest state to legalize an online lottery that legislators project will generate a yearly revenue of $100 million, money that will be funneled into grants for child care providers.
But, for now, an online lottery is still a distant reality and decisions need to be made on how the platform will work. The online lottery is expected to launch at the end of 2025.
With 12 states and Washington, D.C., already running their own online lotteries, Massachusetts officials say they will be looking to those states for ideas.
“We’ve taken notice of what’s been going on in the industry,” said Christian Teja, director of communications at the Mass. Lottery. “With iLottery already having launched in a number of other states, we do have the benefit of being able to observe and hopefully learn from them.”
Some guardrails have already been set by state lawmakers in the budget: No one under the age of 21 will be able to play the lottery online, even though the minimum in-person age is 18. The lottery commission will need to make sure players are based in Massachusetts. And there have to be maximum limits on how much a person can spend in the app. All these restrictions will apply to both the forthcoming iLottery app and website.
Other states’ online lotteries have come up with different tactics to prevent problem gambling. Pennsylvania and New Hampshire let players voluntarily ban themselves for a set period of time, or even permanently. North Carolina’s iLottery platform allows players to set loss limits — a maximum amount of money they can lose in a certain amount of time — as well as play time notifications that remind users of how much time they’re spending in the app.
Massachusetts already has a similar self-exclusion policy that allows players to ban themselves in everything from in-person casinos to online sports wagering, though it doesn’t currently apply to the lottery.
In New Hampshire, there are also in-app limits that keep players from spending more than $3,000 each month to prevent problem gambling in the app. The lottery retains the ability to block players from the app and the website, too.
“The customer service group is trained in responsible gambling and if a player makes certain statements that they are trained to listen for, they may exclude a player for 30 days to enforce a cooling-off period,” said Maura McCann, the director of marketing for New Hampshire’s lottery.
The Granite State’s online lottery prompts new users to provide personal identifying information to ensure that they’re over the age of 18 and that each person can only register one account. It requires users to enable their geolocation settings and locks out users who refuse to, assuming they’re not New Hampshire residents.
New Hampshire’s version has a $10 minimum deposit for e-Instant games and a $5 minimum for draw games, a spending floor that McCann said gives “players the chance to participate at a relatively low buy-in.”
As with sports betting’s outsized returns in Massachusetts, the iLottery has the potential to surpass profit projections. For years, the fear that an online lottery would hurt brick-and-mortar retailers stalled its legalization in Massachusetts.
Peter Brennan, executive director of the New England Convenience Store and Energy Marketers Association, has heard this concern from lottery representatives and store owners time and again. Brennan said he consulted other states to understand the impact their online lotteries have had on brick-and-mortar retailers, but he still reserves doubts about whether Massachusetts can draw apt comparisons with other states’ lotteries, considering Mass. Lottery’s scale and profitability.
Pennsylvania, where the online lottery’s launch was authorized in 2017, has made an effort to ensure that an online lottery won’t siphon revenue from convenience stores, gas stations, grocers and other lottery retailers.
Customers can purchase “WebCash” at retail locations and deposit it in the online platform, and the app regularly hosts cross-promotions that gift online players coupons that can only be redeemed at in-person lottery retailers — a strategy Teja said Mass. Lottery plans on implementing in its iLottery app.
Penn. Lottery press secretary Ewa Swope said, in her state, harms to retailers haven’t materalized.
“Data show the opposite is true,” Swope said. “By selling online, we’re able to build relationships with new players, and that presents opportunities to encourage them to also visit retail stores to play our games there.”
For his part, Brennan thinks the proof isn’t as conclusive as he’d like.
“It seems that most people say, ‘The online lottery hasn’t diminished our sales at all in store,’ but it’s also early days for any online lottery,” Brennan said. “So it’s hard to know if, 10 years down the road, are these protections going to be enough?”
Massachusetts’ lottery is one of the most profitable in the country. Massachusetts residents spent the most money on lottery tickets, according to a 2022 USA Today analysis: $1,037 per adult. It nets over $1 billion in profit for the state each year.
“The Massachusetts Lottery is so uniquely situated — it’s so big, so successful,” Brennan said. “If you look at the revenues that the Massachusetts lottery generates compared to New Hampshire, it’s apples and oranges.”
NECSEMA helped draft protections for Massachusetts retailers that are now enshrined in the law, including a requirement that the iLottery app include a feature that shows users their nearest lottery retailers.
Revenue from the Mass. Lottery is disbursed to all 351 municipalities in Massachusetts as unrestricted local aid, meaning cities and towns have the discretion to utilize those funds for a range of public utilities, from road improvements and snow removal to staffing schools and renovating parks.
Revenue from the online lottery, though, will be given to child care providers across the state through Commonwealth Cares for Children grants, better known as the C3 Program, that can go toward staffing and overhead costs.
