The state of New Jersey offers just about every possible option for iGaming. It was one of the first states to boast online casinos and poker rooms, is a friendly environment for daily fantasy sports, and as of last year’s Supreme Court arguments in Murphy vs. NCAA stands at the forefront of the battle for true internet sports betting.
However, despite considering legislation in recent years, the Garden State appears to have no current prospects to put its successful state lottery online.
Lottery an industry in flux
New Jersey’s lottery has enjoyed continued growth for most of the last decade while many other markets have fought losses in sales and revenues. The state had a seven-year streak of increases, only just last year finally slightly failing to meet projections.
This could be an argument that New Jersey has no need to improve upon a system that is working, however last year’s loss is a point of concern. The missed goals have been attributed by some to a decline in sales for massive multi-state games such as Powerball, which have helped to drive lottery growth in recent years.
If such games are finally passing their peak in popularity, New Jersey may need a new option to further bolster activity. Also, some experts have speculated that lotteries have grown unpopular with the younger generation: even where total ticket sales improve the number of people playing is down, with millennials showing little interest. Online sales may prove to be the missing ingredient that changes that.
Continued growth is even more important now that New Jersey has made changes to how it uses its lottery revenues. Until last year the state mostly bolstered institutions such as its education system, but the new fiscal budget has shifted those funds to instead now prop up the state’s endangered pension fund.
If the lottery revenues should slip further from projections the plan to save those pensions becomes less viable. An iLottery option could be the answer to reinvigorated revenue, as it has proven in other states like Illinois and Michigan.
Complications of an iLotto
The road to a NJ iLotto is not without its hurdles. Right off the bat, it is quite possible that any possible expansion of the lottery onto the internet may require negotiation with Northstar New Jersey, the private company that operates the state lottery. The firm was originally awarded a 15-year contract to market and run the lottery in 2013 (it was the only bidder).
If Northstar is not interested then breaking the arrangement with them may not be impossible, the contract has already had to be renegotiated after repeated failures to meet projected goals, but the company had been credited with a lot of the lottery’s recent successes. It would certainly be easier to launch an iLottery if Northstar themselves are interested and spearhead the development.
Even then, pushback could be expected from competitors. New Jersey’s lottery ticket retailers currently enjoy significant revenues in the form of a percentage of all sales as well as bonuses for winning tickets at their locations. New Jersey’s online casinos may also try to oppose online instant games as they provide a similar experience to online slot machines. There is no evidence yet that internet scratch-offs and slots will fight for the same audience, though any risk of such will be better understood later this year when neighboring Pennsylvania will finally have both online lottery and online casinos up-and-running.
Finally, many states have resisted online lotteries out of concern that the ease of purchasing tickets from home will inspire abuse by people with gambling problems. While New Jersey might have more faith in its citizens in this regard, it is worth noting that all of the licensed online casinos have been required to put many safeguards in place to protect those that suffer from gambling addictions.
As of November, it has been legal in New Jersey for individuals to purchase tickets remotely and have private couriers deliver the tickets to them for a small fee. While some state officials opposed the law change, it makes New Jersey the first state officially legalize lottery couriers. While not quite a true iLottery, the services do offer a somewhat similar experience for draw games to that of other state’s online lotteries, and accept many of the same payment options as major New Jersey online casinos.
This online access to lottery tickets could prove a transitional step to ease the state into iLotto. It does not directly compete with other gaming options, as the actual tickets still need to be purchased. The services are also designed for draw games, and without virtual scratch-offs there won’t be any fear they could cut into traffic for online slot machines. The system may also prove to be popular with the 18-35 demographic that is less interested in tradition retail lottery sales.
It is too soon to know for certain to know if the courier services will improve lottery sales. Even if they do, the success could make it more likely for New Jersey to be inspired to move forward with an iLottery, or possibly less so if such a route now seems unnecessary. In any event, the courier services do allow New Jersey residents a small taste of what Pennsylvania and Michigan will be enjoying: getting their Powerball tickets without having to put pants on and go outside.
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