Indiana to Explore Online Lottery Games for Possible 2020 Launch

Could online lottery games be coming to the Hoosier State next year?

Tucked into IGT Indiana’s latest business plan is a note that the group will explore the idea of online lottery sales beginning in 2020.

Some say that it’s just speculation right now; others say Indiana must keep up with neighboring states that have already entered the online lottery business.

IGT Indiana To Study Online Options

IGT Indiana operates the Hoosier Lottery on behalf of the state and presented its latest business plan to the lottery commission in June. In its business plan, IGT Indiana said it plans to study the technology, finances, marketing commitments, staff and money needed to launch online games for the lottery.

Details on what IGT Indiana has in mind are limited at this time, but we do know other states that have launched online lottery games are already selling tickets to major drawings and offering instant win games for state residents.IGT will also be studying the profit potential of moving to an online lottery model.

The Hoosier Lottery performs exceptionally well and expects to see a revenue increase to a record $1.33 billion by the end of this fiscal year.

Just Speculation at This Point

Indianapolis Business Journal reports it asked Hoosier Lottery Commission spokesman for his comments regarding an online lottery in Indiana. Lottery spokesman Dennis Rosebrough emailed back saying that IBJ should check IGT Indiana’s business plan for clues.

“Given where we are at this point, any discussion would be purely speculative, he said.

It is expected that IGT Indiana will present an action plan to the Hoosier Lottery Commission next year after it has completed its study on the profitability of the issue. It will differ from the May business plan in that it will include much more detail regarding when and how online lottery sales can be implemented. Revenue estimates will also be part of the next presentation.

If the Indiana Lottery Commission chooses to accept the action plan, it will not need legislative approval.

Why Indiana Needs Online Lottery Sales

All around Indiana, its neighbors have implemented (or are in the process of implementing) online lottery sales. If the state doesn’t want to miss out on the fruit of a multi-million dollar industry, it has to move fast towards online lottery sales.

Over 10 states have already adopted online lottery services and analysts believe more will continue at a rate of 2 – 3 each year.  Georgia and Illinois were among the first to do so; followed by other states who offer various services – some more than others.

Those states who have gone online recognize the need to adapt to the ever-changing consumer habits of lottery players.

The Illinois Online Lottery, for example, sells Powerball, Mega Millions and Lotto ticket. The Illinois Lottery communications director, Jason Schaumburg reports that the group is always on the lookout to develop new products and attract new players.

“We had to go where our players were,” he said.

PA Lottery executive Ewa Dworakowski said that one of the biggest motivators for taking the state’s lottery online last year was “to meet its players where they already are, which is online.”  Today, more than 80% of Pennsylvanians who play the lottery online do so on their mobile devices.

In May this year, Indiana became the tenth state to legalize sports betting.

The Success of iLotteries in Other States

Michigan: Launched online in 2014, Michigan’s lottery took in $94 million in sales last year. Players can buy Keno and other instant games, as well as tickets for Mega Millions and Powerball draws.

Kentucky: 2017 was the first full year that the Blue Grass state ran an online lottery platform. Online sales nearly doubled from $5.2 million in 2017 to $10.2 million last year.

New Hampshire: The New Hampshire Lottery believes that online sales are expected to reach $6.3 million this fiscal year. The state’s digital platform went live in September 2018.   A spokesperson for the agency told IBJ.com: “We fully expect those figures to grow as we introduce more games and New Hampshire lottery players become familiar with the offerings.”

Pennsylvania: Pennsylvania launched PAiLottery.com in 2018 and is chugging along at a nice clip despite only offering instant win games and dealing with a lawsuit from the state’s casinos who claim PA iLottery games constitute illegal online slots. According to PennLive, PA iLottery is expected to generate $30 million in revenue this fiscal year.

Will iLottery Affect Indiana’s Retail Stores?

When states consider bringing some of their lottery services online, one of the first questions asked is how this will affect the retail stores that sell lottery tickets.  Retailers usually express fear that they will be negatively impacted because of the easy accessibility of tickets online.

However, when it comes to Indiana, it may be an easier battle than expected.  75% of the state’s lottery tickets are sold by members of the Indiana Fuel and Food Association. The executive director of this group said that although he would need to learn more about the issue before giving a formal opinion, the organization faces bigger concerns these days. The state will most probably be increasing its cigarette tax, which will be a blow to retailers.

In addition, other states with online lotteries often offer their customers incentives to pop into retail stores.

According to Danny Bogus, an expert very active in helping states set up their own digital lottery platforms, “Retailers have been completely unaffected. If anything, the opposite is true.”

Where Does Hoosier Lottery Money Go?

Raking in record revenue thanks in part thanks to big lottery jackpots, the Hoosier Lottery has significant funds to distribute to the state.

After paying for prizes and operating expenses, the lottery uses the extra revenue to bring down car excise taxes and support state pension funds (firefighters, police and State Teachers Retirement funds), among other things.

Last year, $306 million was returned to the state, and the Hoosier Lottery Commission believes that this year will be even higher.

In October last year, Mega Millions ticket sales shot up as players hoped to take home the biggest lottery prize in US history – a massive $1.6 billion.  The Lottery said the jackpot definitely helped contribute to its increased revenues, according to The Herald.

Last year, Indiana IGT earned its first incentive payment (just over $9 million) after it exceeded the $300 million incentive net income threshold.

In 2015, a new contract between the state and the operator was renegotiated in order to set new income targets. The original contract called for the lottery to bring in $410 million by 2018 – a goal that was eventually deemed unattainable.

The executive director of IGT Indiana, Sara Taylor defended these changes at the time, saying: “The marketplace has changed some since the initial agreement was put in place and I think both parties felt that we were two years into a long-term arrangement that we thought had success and potential for even more success.”

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