Source: USA Online Casinos

By Brandi Peterson  |Apr 19, 2009

Lotteries Frustrated by Online Gambling Laws

Bigger Prizes May Come With Internet LotteriesForty-two states depend on lottery revenues to help fund essential services, so many officials are looking to increased gambling monies to help bridge deficits created by the recession. But lottery operators say outside factors, especially the UIGEA ban against online gambling, is preventing them from generating more revenue for state coffers.

A survey by Frost and Sullivan, a Texas consulting firm, found that lotteries are losing as much as $7 billion to Internet casinos, and that operating lottery sales online may be the best way to increase revenue. But New Hampshire and North Dakota have found that Internet lottery sales can run afoul of the UIGEA ban, despite express exemption granted to state lotteries.

"It's not that we don't know how to make money; it's just that we're constrained in doing it," says Gordon Medenica, director of the New York State lottery. The frustration echoes throughout lottery offices in many states. 

New Hampshire Lottery Director Rick Wisler was told by Visa and Mastercard that they "would review the policy" of blocking his state's online lottery sales as illegal gambling. Meanwhile, Wisler says, state schools continue to lose funding.

Frost and Sullivan recommend in the conclusion to their study that state lottery officials publicly support efforts to remove the UIGEA ban and regulate Internet gaming. The consultants assert that leveling the competitive field with gambling sites already operating online in defiance of the ban would immediately boost lottery income.

Medenica and other lottery directors say they can generate as much as $14 billion in the next two years or so, if they are allowed to take advantage of Internet oppotunities. Otherwise, budget gaps may continue to grow, forcing either higher taxes or a loss of services.