Minnesota online gambling runs into trouble

Barely a month after it launched internet wagering on instant scratch card tickets, the Minnesota Lottery faces political opposition by lawmakers peeved that they were not asked to pass a law specifically allowing the use of the internet to boost lottery sales.

The Associated Press news agency reports that the Senate leaders of both parties and the chairs of tax committees in both state chambers have reacted by seeking a one-sentence change in state law that will permanently halt the new venture.

The amendment bill will be the subject of an initial hearing in committee next week, and there is a real possibility that it will pass despite efforts by lottery chief Ed Van Petten to head it off at the pass by talking to lawmakers and assuring them that he has continually advised Governor Mark Dayton of developments in the new enterprise.

Van Petten is reportedly taking the new political threat seriously.

Senate Majority Leader Tom Bakk, who is a co-sponsor of the amendment, predicted there are sufficient votes in the full Senate to pass the bill and stop internet wagering in its tracks.

Mainly Republican Party politicians are unhappy with state-sponsored internet gambling, and in addition to moral objections there are fears that it will negatively impact brick and mortar casino business in the state, along with the businesses of retail ticket sellers running convenience stores.

Bakk, a Democrat who has two land casinos in his northern Minnesota district, said gambling should be a physical destination pastime and not an activity accessed spontaneously and easily through a computer or cell phone.

Republican Party Senate Minority Leader David Hann is co-sponsoring the online banning bill and appears to have a personal issue with Van Petten over the move into online sales:

“It really pushes the boundaries of what the law allows,” he told AP. “There needs to be some restraint brought to this. I don’t want to have a guy in the lottery office over there wondering how much more he can get away with.”

Van Petten’s position is that online offerings like “Spicy 7s,” ”Fa$t Buck” and “Double Your Money” (see previous report) enable the lottery to innovate and make games attractive to next-generation players.

He has explained to lawmakers that a range of safeguards has been built in to the online system, including maximum deposit caps, and that technology is in place to ensure users are within the state, along with age verification and precautions against problem gambling.

In dollar terms, the returns have so far been unimpressive, with online sales generating between $1,000 and $3,000 a day, compared with around a million dollars a day through physical outlets.

The Minnesota Indian Gaming Association, which represents nine tribes in the state, fears that internet gaming will reduce profitability at its members’ 14 land casinos.

Executive director John McCarthy was candid in telling Associated Press that he sees every dollar players put into Internet tickets as one that could have been spent in a land casino.

“Our concern is not exactly what they’re doing right now, it’s what they’re planning to do,” McCarthy said. “One thing leads to another.”

Van Petten’s lottery officials maintain that the online scratch cards have the potential to help boost ticket sales at traditional outlets. They cite research in Europe which illustrated that retail store sales boomed following the launch of internet versions of popular games, with online activity helping to build brand  and business awareness.

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