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Bring State Lottery into the Online Age

June 17, 2018

Too big to fail? That’s what all those Wall Street banks thought about their corporations before the 2008 financial crisis.

More recent history also shows that an industry giant unwilling to adjust to the current business environment won’t survive.

That’s what happened to Toys “R” Us. The once dominant children’s toy retailer filed for Chapter 11 bankruptcy protection in September after years of slipping sales and mounting debt, because it failed to innovate its business model, incorporate technology or adapt to changing consumer behavior.

The massive toy store chain has announced plans to shut down its operations and is now running liquidation sales across its more than 800 locations.

To State Treasurer Deb Goldberg, Toys “R” Us represents the canary in the coal mine that could very well be our state Lottery’s fate if it isn’t allowed to expand its offerings online. It’s something she’s advocated for more than a year, and still the bill that would make that a reality languishes in the Legislature.

She again sounded the Lottery alarm on Wednesday at a Greater Boston Chamber of Commerce Government Affairs Forum. Using Toys “R” Us as an example of moving too slowly with Internet sales, she emphasized that “Going online is critical in continuing to maintain profits, stay relevant -- and when I talk profits, remember it’s local aid.”

Indeed, Lottery profits have been a cash cow for the commonwealth’s cities and towns. Those profits surpassed $1 billion for the first time in fiscal 2017. However, Goldberg told lawmakers in December that the bottom line would likely decrease to $968 million in fiscal 2018 and $965 million in fiscal 2019.

While being one of the most successful in the country, the Massachusetts State Lottery appears to have exhausted further growth as it is currently constituted. That’s because like Toys “R” Us, it hasn’t adapted to changing consumer behavior. Just about every aspect of daily lives now revolves around our smartphones and other digital devices, so why should playing the Lottery be any different?

Further delaying this inevitable online migration puts the Lottery’s viability -- and profitability -- in jeopardy, especially given the bedrock changes in the gambling landscape.

Goldberg pointed to the recent U.S. Supreme Court decision striking down a federal sports betting ban and the anticipated August opening of the state’s first resort casino as potential and real competition for state residents’ legal gambling dollars.

The Legislature’s Economic Development and Emerging Technologies Committee had until Friday to decide how to report on an online lottery bill (S 182). According to the State House News Service, state Rep. Joseph Wagner, the committee’s House chair, said last month he did not think the online lottery proposal “will get a favorable recommendation this year.”

The period for further review is over. Lawmakers have had more than sufficient time to analyze this issue; House members should join the 21st century and give the Lottery the online tools it needs to remain the primary source of local aid.

If not, lawmakers will have a lot of explaining to do back home in those communities feeling the pinch of declining Beacon Hill resources.