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Pennsylvania turns to lottery for cash

| Monday, April 9, 2012

HARRISBURG — The Corbett administration said in announcing that it wants to hire a private lottery manager that Pennsylvania needs a more profitable lottery.

Online is the new frontier for a more lucrative lottery, industry analysts say. For instance, buying tickets for Mega Millions or Lotto drawings in real-time from a home computer is possible in Illinois, but nowhere else in the country.

Many in the industry talk about online lottery games — think social network games such as Angry Birds or ones in Zynga Inc.'s lineup — that can be played on a home computer, tablet or smartphone. There's even technology to allow a home computer user to buy a scratch ticket online and then use a mouse to scratch it off.

"The growth potential is significant," said Angela Wiczek, a spokeswoman for Providence, R.I.-based GTECH Corp., one of the nation's leading lottery systems providers.

Pursuing such steps does not necessarily require hiring a private manager; theoretically, they could be made with the staff in the Department of Revenue. Efforts to extend the Pennsylvania Lottery's reach to the Internet probably would require the Legislature's approval.

Gov. Tom Corbett said he believes that handing the reins of the Pennsylvania Lottery, which has more than $3 billion in annual sales, to a private company will not only boost innovation, but encourage higher cash flow by linking it to the company's compensation.

The move toward online lottery sales came from a Justice Department opinion, made public in December in response to a query by Illinois and New York about whether federal law prevented them from selling lottery tickets online to adults within their states. The department answered that the Wire Act only prevents players from wagering on sports outcomes — other bets are OK.

It was a gift for cash-strapped states looking at long-term liabilities they don't know how to pay for as well as for a lottery and gambling industry that realizes that 20- and 30-somethings don't care much for picking numbers or standing in line to buy lottery tickets, said I. Nelson Rose, a Whittier Law School professor who runs the website, .

"It opens doors to states doing a very dramatic expansion of online games," Rose said.

Most states, including Pennsylvania, probably would have to change their laws to allow online lottery gambling, and that could get tricky: Lawmakers might not want to be seen expanding gambling, and many states have entrenched commercial casino gambling industries that would oppose such a move, unless they get licenses to operate, say, Internet poker, some say.

But lotteries could have more to offer.

"The next stage is going to be new (online) games, and new games that lotteries are in just as good a position as, and perhaps they're in a better position than, casino operators to invent," said Paul Jason, who produces the online trade journal, Public Gaming Magazine.

The Pennsylvania Lottery could pursue more conventional ways to improve cash flow: introducing keno, which would require legislation, and greatly expanding the number and kinds of lottery retailers. Last fall, for example, Florida became the first state to sell lottery tickets in Wal-Mart stores.

Corbett, a Republican who campaigned on a pledge not to raise taxes, right now isn't saying what kind of expansion, if any, he would support.

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