Minnesota lawmakers want to ban online lottery sales

The Minnesota Lottery's instant online games are selling well, but six weeks after their launch, state-sponsored Internet gambling is causing a backlash at the state Capitol.

Some lawmakers want to ban the games, and go beyond that to limit the places where lottery games are sold.

Since Feb. 6, when the lottery began selling the virtual instant scratch off games to gamblers, daily sales have averaged about $2,000 a day, Lottery Director Ed Van Petten said.

That's a tiny fraction of the state's sales of paper scratch games, which generate about $1 million a day, but the online games have helped push the lottery's numbers higher. Van Petten said the state's 3,100 lottery retailers have seen an average sales increase of more than $363 a week for all games.

"The studies done in the other jurisdictions that have this product available show that it does, in fact, increase sales through brand awareness," he said. "And as I've said a number of times, I think this will have way more value to us as a marketing tool."

That's critical for the lottery, which earned the state about $100 million in 2013.

But studies show the games are losing ground with young Minnesotans. A St. Cloud State study found lottery sales among young adults fell by nearly half from 2003 to 2012.

"To me, that sounds like a good thing, and so I'm hesitant to think that we need to reach out and have more of these young folks actually doing gaming than we have currently," said state Sen. Rod Skoe, chairman of the Senate Tax Committee.

Skoe, DFL-Clearbrook, has sponsored a bill that would ban online lottery sales, as well as paper tickets sold from vending machines and gas pumps. It already has been approved by the Senate State and Local Government committee.

"When Minnesotans were contemplating scratch off lottery and pull tabs in the 90s, they weren't thinking that Minnesota was going to be running an online gaming website," he said. "I really don't think that was in their thought, I really don't think that the authority is there."

State Rep. Ann Lenczewski, chair of the House Tax Committee, agrees.

Lenczewski, DFL-Bloomington, has sponsored a companion bill in the House, even though she acknowledged that so far the online games are small change.

"I suppose that they think it'll become a lot more than a tiny amount over time," Lenczewski said. "My concern is that, first of all, did they have the authority to do it, but second of all, is the speed and ease of the play. I mean, we don't want people to go through their savings quickly. I think there's a lot of question marks about it."

Both bills are expected to receive additional committee hearings in the Legislature, where Republicans also aim to curtail gambling.

State Rep. Greg Davids, R-Preston, supports rolling back even long-standing lottery initiatives like selling lotto games at gas pumps.

"I mean, you're going to have underage gaming," Davids said. "You're going to have — the addiction just compounds. I know if you're addicted to gambling, you're going to find a way to do it anyways, but let's not promote that."

That leaves a potential wedge between the Dayton administration, which runs the lottery, and the DFL-controlled legislature. Dayton supported electronic pulltabs to pay for a Vikings stadium, and has supported a Mall of America casino in the past.

But for the moment, at least, online gambling will continue.

"We're going to go forward with it until we're told we can't," said Van Petten, the lottery director.