Iowa Lottery officials who believe they’ve “pulled the rabbit out of the hat as many times as we can” to increase sales are now proposing to sell their products online, including over smartphones and apps.
Although the lottery is in a “very strong position” financially, technology modernization is needed if it is to continue to “deliver the proceeds people expect and count on,” lottery Vice President Mary Neubauer told the Iowa Lottery Board on Tuesday. In the most recent year, the Iowa Lottery raised more than $85 million for the state’s general fund.
“I think we’ve reached the breaking point to hold steady or increase,” she said. Given current trends, the lottery expects its proceeds to hold for a few years and then, possibly, decline.
“Quite frankly, a selection of solely paper products won’t stand the test of time,” Neubauer said.
In addition to being able to sell gaming products digitally, the lottery could see expansion through sports betting.
Last May, the U.S. Supreme Court overturned a federal ban on state-sponsored sports betting. Legislators have discussed what sports betting might look like in Iowa, but have not yet passed a bill to allow it.
Still, the lottery is looking forward to being a part of the discussion over changes retail groups are seeking to legalize sports betting in Iowa, Neubauer said.
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“We stand ready to offer our help and perspective on the technical and legal aspects involved, possible time frames for go-live, revenue potentials and what sports lottery products here in Iowa could look and feel like,” she said.
That’s likely to be a “pretty healthy discussion,” Gov. Kim Reynolds said in an interview.
“We’re going to kind of let that process take place … (giving) Iowans a chance to weigh in, to see how they feel about changing the laws when it comes to gaming,” the governor said.
It’s likely to be one of the bigger policy issues for the House State Government Committee, Chairman Bobby Kaufmann, R-Wilton, predicted in an interview. He said he has heard from many of the interested parties and will begin meetings with them, including lottery officials, next week.
He hasn’t heard from the opposition, “but I expect that there will be opponents,” he said.
That opposition may be limited, longtime gambling foe Tom Coates of Des Moines said.
“Nobody has any resources to push back against the gorillas,” Coates said in an interview. “There’s not even a little monkey in the cage.”
The digital “modernization” the lottery is proposing is driven by the fact that consumers are carrying less cash. The trend line is “steep, almost straight down,” Neubauer said.
Studies by US Bank and Capitol One found that in 2015, half the respondents reported carrying cash half the time. Of those who did, 76 percent said they carried less than $50. Today, only 41 percent said they carry cash regularly and nearly half indicated a preferences for cashless transactions.
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So the lottery is proposing to the board that e-tickets be sold through personal devices, online and through “other technological means,” which Neubauer said allows for new payment methods.
Lottery tickets could be purchased with cash, check, money order, debit card, prepaid gift card, non-deferred payments through electronic wallets or mobile applications — but not with credit.
Neubauer told the lottery board there would be security measures for age and geography that would restrict sales to adults physically in the state of Iowa.
Other states have found that creates problems for snowbirds who want to buy lottery products in their home state, but buying lottery tickets across state lines is barred by federal law.
Moving to online sales probably makes sense for the lottery, Coates conceded, because “we have a whole generation that live on their devices.”
He expects, however, Iowa gaming interests to push for sports betting to be available through casinos “to get these people to actually come in and register at the casinos.”
“It’s going to allow them to access a lot of Iowans that heretofore wouldn’t bother to set foot in a casino and aren’t that interested,” he said. “But they are interested in sports and if (casinos) can get that done, they’re going to open up a whole new range of gamblers. A fair number of them will become addicted gamblers and that’s when you have the social fallout increase dramatically.”
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Rod Boshart of The Gazette contributed to this report.