Online gambling leaving lottery profits at risk
To varying degrees, lotteries impact the budgets of America’s states.
Even if lottery profits are directed primarily toward funding specific programs, like in Pennsylvania, where senior citizen programs benefit, those profits enable states to avoid tapping general fund budgets for that amount of money.
The Pennsylvania Lottery reports that, since its first lottery ticket was sold in 1972, the lottery has contributed more than $29 billion to programs benefiting older Keystone State residents.
The programs include property tax and rent rebates, free and reduced-fare transportation services, the low-cost prescription programs PACE and PACENET, care services and local services provided by the 52 Area Agencies on Aging.
In the 2017-18 fiscal year, more than $1 billion went to support programs benefiting the state’s seniors.
Meanwhile, this state’s lottery, an agency of the state government, points out proudly that it’s the only state lottery that designates all of its proceeds to programs benefiting older residents.
But now there’s a glitch that could reduce significantly the amount of lottery profits Pennsylvania could provide for seniors’ programs.
The U.S. Justice Department has put a handful of states — including Pennsylvania — in danger of losing at least $220 million in net lottery profits annually as a result of a new interpretation of a 1961 law, the continued need for which is open to question.
That law is the Wire Act, the intent of which was to target mob gambling activities by prohibiting wagering across state lines.
In 2011, the Justice Department concluded that online gambling within states that do not involve sporting events would not break the law. However, last November, the department revised its thinking, issuing an opinion that the law applies to any form of gambling that crosses state lines.
A federal judge subsequently gave “justice” until late April to clarify its opinion, but the department said in a court filing on April 25 that it still was reviewing whether the Wire Act applies to state lotteries and their vendors and wouldn’t prosecute any while the review continues.
Legal experts say the multi-state Powerball and Mega Millions games are at risk, depending on how the review plays out.
If those two games and other multi-state lottery games become prohibited, the losses to state lotteries could amount to many billions of dollars; the figure $23 billion has been mentioned.
Currently, seven states sell lottery tickets online, while others offer residents internet-based lottery subscription services.
Many Americans believe that states have become too dependent on lottery profits. That’s true.
Those profits make it easier for lawmakers to avoid tax increases and to otherwise balance their budgets — but also to sometimes make questionable spending decisions that they could not make if lottery profits weren’t available.
But there’s also sentiment that, with the Internet so much a part of people’s lives, the Wire Act, like the blue laws that regulated work, commerce and amusements on Sundays, should be repealed, or at least modified, so as not to damage the lotteries.
Considering all the money at stake, lotteries and the states have good cause to be nervous.