The regulatory and competitive landscape for state lotteries has evolved greatly in recent years, with the repeal of PASPA in 2018 ushering in a new era for US gaming in general, all the while customers are becoming more digitally astute.
For lotteries which offer sports betting, the PASPA repeal now means they have some heavy hitting new competitors – FanDuel, DraftKings, BetMGM being the big three, while the likes of bet365 and Fanatics Sportsbook also offer some steady competition.
“In the last seven years, since PASPA, we have had different and more direct competition,” said Andrew Walter, Director of Sports Betting at the Connecticut Lottery Corporation (CLC).
“I think every lottery competes for discretionary numbers right now with online sports betting, online casino, retail sports betting, in a lot of those states. It’s just a completely different playing field. So at least with respect to Connecticut, our thought was ‘we need to be in the 21st century like our competitors are going to be’.”
As it stands, there are 48 US jurisdictions which have a lottery set up – 45 states, plus the District of Columbia, Puerto Rico and the US Virgin Islands. Many of these do offer sports betting as well, but as Walter noted, competition is becoming increasingly fierce.
Over 39 states now have a regulated betting market, with many of these also allowing online casino and online gaming. This has broken the well-established dominance that state lotteries enjoyed for many decades.
These firms are now looking to rise to the challenge, but against the big budgets, commercial skill and technological proficiency of FanDuel, DraftKings, and others, this is not an easy task.
However, the legalisation of sports betting has also provided lotteries an opportunity to further maximise revenues, something the CLC and other state lotteries seem very keen to grasp.
The courier conundrum
An interesting phenomenon in US lotteries, certainly in comparison to the markets in Europe, is the presence of lottery couriers. These apps fill a gap in demand from US lottery consumers, enabling a digital purchase of a physical ticket from a retailer.
The existence of the apps has proven controversial in some cases, however. Lottery couriers featured heavily in the debate around lottery integrity in Texas which culminated in a bill to abolish the Texas Lottery Commission (TLC) passing through the Senate and House.
Also on the rise is iLottery, however. Many lotteries are taking advantage of the engagement opportunities digital channels offer, and this does beg the question – if lotteries start selling more tickets online themselves, where does this leave the couriers?
“I think both iLottery and lottery courier will expand,” said Matt Stemkoski, Primary Executive Official at the Little Traverse Bay Bands of Odawa Indians, a tribal gaming operator.
“I think iLottery and courier will expand faster, just by nature of free market enterprise but I think this is an important topic in that lottery and couriers can operate together. There’s already three states where this is the case, and the reason is, less than 10% of lottery transactions can happen online today.”
Hearing the perspective of the lottery couriers themselves, Tom Metzger, CEO of one of biggest courier apps in the US, Lotto.com, shared his view on the vertical’s future. The biggest selling point, he says, has been and always will be convenience.
Customers are much wealthier and digitally native than previous generations, he said, and ‘don’t care about paying for that convenience’. This is giving couriers confidence that despite any changes in digital lottery technology and offerings, they will continue to play a role in the multi-billion dollar US lottery ecosystem.