Goodwin Gaming
August 16, 2013

As Mass. Yearly Lottery Profits Approach $1 Billion, Concern Over Casino Impact

By Bethany Withers

Massachusetts State Lottery profits topped $952 million in the past fiscal year. Though this represents a slight decline in annual profits from the prior fiscal year, Massachusetts remains one of the most successful states in generating state revenue through the Lottery.

Since the Lottery was founded, it has returned more than $20 billion in net profits to the Commonwealth, and revenues have addressed many local needs, including improving roads and bridges, funding local firefighters and police officers and providing services for seniors.

Despite this success, Treasurer Steven Grossman, who serves as Lottery Chairman, is facing a number of obstacles in sustaining the Lottery’s achievements — primarily, the introduction of casinos to Massachusetts and the potential authorization of online gambling in the Commonwealth. Legislation authorizing the introduction of up to three casinos in Massachusetts was passed in November 2011.

Though the Massachusetts Gaming Commission is still vetting candidates for the casinos, their impending opening has some believing that the Lottery will suffer. Treasurer Grossman is among those worried, believing that individuals may choose to spend their money gambling in the casinos rather than buying Lottery tickets or playing Keno (the Lottery’s most popular game).

Similarly, there has been much debate surrounding the introduction of online gambling to the Commonwealth. A number of state legislators introduced legislation to authorize certain forms of online gambling, and Treasurer Grossman formed the Online Products Task Force, which last year retained Spectrum Gaming Group to analyze the effects of introducing online gambling in Massachusetts. As with land-based casinos, the concern is that legalization of online gambling in Massachusetts will detract from Lottery sales and thereby divert funds from the Commonwealth to the private sector.

While there is no doubt that some individuals may shift from purchasing Lottery tickets to playing in casinos or online (if authorized by the Commonwealth), there are also undoubtedly individuals who enjoy Keno but who have no desire to play a game of poker, in person or online. For those who may be tempted by casino or online offerings, Treasurer Grossman is looking at ways to incorporate online products and new Lottery games into the Lottery’s offerings so that the Commonwealth may compete.

These potential hurdles to the Lottery’s success may in fact provide an opportunity to reevaluate the Lottery and introduce more innovative offerings and, in the long-term, increase the Lottery’s profits.