DOJ RULING SNAGS TREASURY PUSH FOR ONLINE LOTTERY
By Colin A. Young
STATE HOUSE NEWS SERVICE
STATE HOUSE, BOSTON, FEB. 12, 2019.....While she is in the nation's capital this week, Treasurer Deborah Goldberg is planning to meet with members of the state's congressional delegation to discuss how a Department of Justice ruling could affect her wish to see the Massachusetts Lottery begin selling products online.
For several years, Goldberg has been pitching the Legislature on the idea of allowing the Lottery to sell its existing products over the internet, arguing that it cannot continue to generate nearly $1 billion a year for local aid unless it is allowed to compete with daily fantasy sports and other online gaming for new and younger customers who prefer to do things online and on mobile devices.
But as she sets out to renew her push with a greater sense of urgency than before, Goldberg's vision for an online lottery could be thwarted by the U.S. Department of Justice. In an opinion reached late last year and released publicly in January, the DOJ reversed a 2011 ruling that gave states legal cover to sell lottery products online.
In 2011, under President Barack Obama, the DOJ's Criminal Division determined that "the prohibitions of the [federal Wire Act of 1961] are limited to sports gambling and thus do not apply to state lotteries at all." But Assistant U.S. Attorney General Steven Engel wrote in a Nov. 2 decision that after reconsidering that 2011 ruling, the Criminal Division now agrees that the Wire Act's prohibitions on the use of a wire for transmitting data related to wagers "are not uniformly limited to sports gambling."
After the DOJ's decision was made public in January, the North American Association of State & Provincial Lotteries said the reinterpretation "creates a substantial detrimental impact on the lottery industry, including traditional retail-based draw and instant lottery games, as well as traditional lottery games offered over the Internet, and the billions of dollars for good causes lotteries provide."
Goldberg, who also serves as 2019 senior vice president for the National Association of State Treasurers, said in a statement, "After reviewing this opinion, I am concerned about the impact it will have on the Massachusetts Lottery and on Lotteries across the country."
Already, the ruling appears to be affecting lotteries in other states where online lottery sales are permitted. In New Hampshire, lottery officials say the ruling puts as much as $8 million in lottery revenue at risk and they are prepared to sue the administration to rectify the situation, the New Hampshire Union Leader reported Friday.
Goldberg said she is working with Attorney General Maura Healey's office and that she will be meeting with members of Congress this week while she is in Washington, D.C., for NAST's Legislative Conference "to address the implications of this opinion" as she continues to lobby state lawmakers to support an online lottery.
"This issue will be part of our discussions with the Legislature as they tackle sports betting and online lottery this session," she said. "We are taking a proactive approach and working with the Attorney General's office and meeting with congressional members during the NAST Legislative Conference to address the implications of this opinion."
The dean of the Massachusetts delegation to the U.S. House, House Ways and Means Chairman Rep. Richard Neal, is scheduled to give the keynote address Tuesday morning at the NAST conference.
In his ruling, Engel wrote that the DOJ "acknowledge[s]" that some states relied on the 2011 opinion as a legal basis for beginning to offer lottery products over the internet. Those states should stop it, he wrote.
"Some States, for example, began selling lottery tickets via the Internet after the issuance of our 2011 Opinion. But in light of our conclusion about the plain language of the statute, we do not believe that such reliance interests are sufficient to justify continued adherence to the 2011 opinion," he wrote. "If Congress finds it appropriate to protect those interests, it retains ultimate authority over the scope of the statute and may amend the statute at any time."
The state Legislature has been cool to Goldberg's plans, even as she warns that Lottery profits will remain stagnant next fiscal year if there is no expansion. Her latest push comes as Gov. Charlie Baker and state lawmakers have expressed an interest in making sports wagering legal in Massachusetts.
"If sports betting is available online, the Lottery must be available online also," Goldberg said last month. "That's the issue moving forward."
The treasurer said that 11 of the 44 states that have a lottery have begun to offer lottery games online and has pointed to neighboring New Hampshire's foray into online lottery -- the Granite State collected more than $1.3 million in net revenue from online sales in its first 12 weeks -- as she calls attention to the possibilities for the Massachusetts Lottery.
"The world has changed with fantasy sports, sports betting, casinos and online lottery in neighboring states," Goldberg said last month during her second inaugural address. "We do not want to go the way of Sears or Toys R Us."
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