The Ohio Senate passed legislation last week to bring internet lottery to the Buckeye State. But facing opposition from Ohio Lottery retailers, it seems unlikely to make it through the House this year.
The Senate passed SB 269 by a 30-2 vote on June 1. That day, the House recessed for its summer break.
That means the House won’t have the opportunity to address the bill until after it returns Nov. 16 following the elections.
State Rep. Bill Seitz tells PlayOhio that won’t be enough time to pass a contested bill that hasn’t had previous consideration in the House.
“Frankly, I’ll be very surprised if we pass it this year because we’re not supposed to be back until after the election and we’re supposed to be done by the middle of December,” Seitz said. “And my guess is this will take longer than a month to sort out.”
Details of Ohio Lottery bill
The bill authorizes the Ohio Lottery Commission to operate internet lottery games. Sen. Nathan Manning introduced SB 269 in November of last year.
Manning served last year on the Senate Select Committee on Gaming that crafted the Ohio sports betting bill. The Senate did not include iLottery in that bill, but decided to address it separately this year.
Here are some of the key details of the legislation:
- Authorizes an internet-based version of lottery gaming in which lots are drawn to determine a winner by chance among those who have purchased a lottery ticket.
- Specifies that internet lottery gaming does not include video lottery terminals, wagering on horse racing, sports gaming, fantasy contests, or any type of game that represents or simulates a casino game/slot machine.
- Imposes a one-year moratorium on conducting statewide joint lottery games (Mega Millions and Powerball) online.
- Offers a concession to lottery retailers of 3.5% of internet lottery gaming sales paid each quarter. Additionally, lottery sales agents get a base commission rate increase of 0.25% the first year and 0.50% thereafter.
- Revenue goes to the Lottery Profits Education Fund.
“The principal problem is whether the proposal to have an iLottery is going to materially adversely affect traditional lottery partners that sell it in store,” Seitz said. “They seem to say yes, the lottery seems to say no. We’ll have to delve into that in November.”
Ohio iLottery background
The Ohio Lottery Commission (OLC) first proposed offering iLottery games in 2019. By the end of the year, the Commission picked its current lottery vendor, NeoPollard Interactive, to operate its iLottery.
But the Ohio Controlling Board has yet to approve the contract. NeoPollard Interactive claims it can generate $100 million in net profit in the first year of iLottery operations. It runs the successful online lottery in neighboring Michigan.
Under Ohio administrative law, the OLC has the authority to make rules relating to sales via the internet and mobile channels. But the Commission still seeks legislative approval.
Opposition from Ohio lottery retailers
The Statehouse News Bureau reports that some bars, bowling allies, fraternal clubs, truck stops and grocery stores that carry lottery products have come together to form the Ohio Lottery Retailers Association to lobby against the bill.
Greg Beswick, a spokesman for the group, said the brick-and-mortar lottery retailers could go on strike or quit selling lottery products if the bill becomes law.
Seitz seems to think that is an empty threat. “It’s a little bit like cutting off the nose to spite the face,” he said.
Lottery retailers fear that an online offering of lottery tickets would cannibalize their brick-and-mortar lottery sales.
However, speaking last year at the Senate Select Committee on Gaming, NeoPollard Interactive General Manager Liz Siver argued otherwise. She explained that the Michigan Lottery has experienced significant year-over-year growth in retail lottery sales since introducing iLottery.
“We understand the concerns retailers often voice regarding the impact of iLottery on their sales,” Siver said. “However, based on a decade of historical data since the launch of the first iLottery offering in the U.S., there is simply no evidence that iLottery cannibalizes retail sales. Rather, the data shows a proven record of increased performance in retail sales following the introduction of iLottery.”
Eric Schippers of Penn National Gaming, which operates four casinos/racinos in Ohio, told PlayOhio that Ohio casinos are neutral on the online lottery bill as long as the games are essentially an electronic version of a lottery ticket/scratch off.
Ohio Lottery compromise could come in 2023
Seitz thinks there is a compromise to be made to bring iLottery to Ohio. He suggested it could be as easy as upping the percentage of internet lottery gaming sales paid to retailers.
However, he doesn’t think it will happen this year. And he doesn’t think a bill will pass against so much opposition from lottery retailers. All Ohio lawmakers have many such lottery retailers in their districts.
“Lottery retailers are upset, and we have to figure out how to make them less upset if we do it at all,” Seitz said. “Maybe a compromise can be reached, but I don’t think we get that done in ’22 with the very limited number of days left in our session. That would be my prognostication.”