Questions linger as MN nears end to gas pump, online lottery sales

Minnesota Lottery officials plan to stop selling tickets at gas pumps and ATMs by Aug. 29 and online on Aug. 31, nearly a full month before the deadline set by the Legislature to end those games.

Negotiations are still underway between the lottery and its vendors to suspend contracts, and it's still not clear how much the breakup will cost.

Lottery players have been notified about the pending shutdown, including the dates when specific games and related services will be disabled. The first change came this week, when players could no longer add money to their online wallets.

"Right now, our position is that we're not just going to voluntarily write a check for a large amount of money."

Minnesota Lottery Director Ed Van Petten said he remains disappointed and perplexed by the Legislature's directive to suspend the contracts, but he's carrying it out.

Van Petten said talks with two primary vendors, Scientific Games and Linq3, are focused on how to shut down sales and whether the companies are entitled to any damages, which lottery officials had estimated at a minimum $12 million.

"Right now, our position is that we're not just going to voluntarily write a check for a large amount of money," Van Petten said. "I think both sides are negotiating in good faith to try to get this matter resolved as equitably as possible."

The matter might still trigger a lawsuit, he added.

The Legislature ordered that the online, gas pump and ATM games be shut down even though the lottery had contracts with the outside vendors to run them.

Lawmakers voted overwhelmingly in two consecutive sessions to stop the games. They argued the lottery had overstepped its authority with an expansion that never had their approval. DFL Gov. Mark Dayton veto the bill in 2014, but this year allowed it to become law without his signature.

The games in question represent only a small fraction of the state's overall lottery business. Gas pumps and ATM sales began in October 2012, and have brought in $90,732 to date. The online instant games were launched in February 2014 and have brought in $930,536.

Although the legislation only targeted instant games, the suspension of the Scientific Games contract also means that the lottery will have to stop online draw games, including Powerball and Mega Millions, which have been available online since 2010 and have brought in $5.3 million to date.

Neither Scientific Games nor Linq3 responded to interview requests.

Minnesota Lottery officials recently announced that their sales had topped $500 million for the fifth straight year. The preliminary tally also showed a record amount for retail scratch ticket sales. Van Petten credits some of that increase to the advertising effect of the online sales. He said that why he's interested in finding some other options for the lottery website.

"We're researching various companies that have the ability to have sample games that are free to play on the Internet. We hope perhaps that would generate some interest. But we certainly will be shutting down the ability to purchase on the Internet."

Van Petten said he might ask the Legislature, at some point, for explicit permission to reinstate the online, gas pump and ATM sales. But he said it won't be anytime soon.

Rep. Tim Sanders, R-Blaine, the chief sponsor of the House bill that ended the games, said he has no regrets. Sanders said the action was needed to rein in the lottery and also to protect charitable gambling.

"I would much rather have those dollars being spent at the local level, in the community, infusing those charities, than for the lottery to be going off on their own, expanding really against the wishes of the Legislature without seeking their approval and having those dollars go to the state."

The chief Senate sponsor of the bill is also standing firm on the need to rebuke the lottery.

Sen. Lyle Koenen, DFL-Clara City, said the cost of the contract buyout could prove expensive, especially if it goes to court, but that there's also a good chance for a reasonable settlement.

"I would think that those providers that are providing the service would want to be a little careful about getting too strong handed here if they want to continue doing business with the state in the future," Koenen said.

A future Legislature might be willing to reconsider the suspended games, he said, adding the current group of lawmakers is likely not interested.