19 PUBLIC GAMING INTERNATIONAL • MARCH/APRIL 2023 States have been allowed to enact legislation authorizing iLottery and online games generally (other than sports betting) at least since 2011, when the Department of Justice (“DOJ”) issued its memorandum declaring that the Federal Wire Act1 applied only to sports betting.2 While this opinion was reversed by the DOJ in a 2018 memorandum3, the 2018 memorandum has had little effect on iLottery and other forms of online gaming as a result of litigation in the first federal judicial circuit that declared the 2018 opinion “mistaken” and held the Federal Wire Act applicable only to sports wagering.4 In regard to sports betting, however, states have been allowed to enact legislation authorizing in-person and online sports betting only since 2018. In June of that year, the Supreme Court struck down as unconstitutional the Professional and Amateur Sports Protection Act – the federal law that made it unlawful for states to authorize sports wagering.5 Although states have been allowed to enact sports betting legislation for less than five years, in that short time 23 states have enacted legislation authorizing online sports wagering.6 On the other hand, in the 21 years since states were allowed to authorize iLottery, only 13 states have authorized their lotteries to sell lottery products online.7 This difference in adoption rates cannot be due to the lack of success of iLottery or its ability to generate revenues for states. Considering the 12 states operating iLottery as of November 2022, total gross iLottery sales increased 19% year-over-year, representing approximately 14% of those states’ gross lottery product sales.8 Further, it is estimated that net iLottery sales (wagering less prize payout) increased by 26% year-over-year, “driven by a higher mix of Draw game sales as well as moderately higher hold rates among Draw games versus the prior year.9 Considering actual contributions to state revenues, in Michigan, while sports wagering has contributed approximately $26.4 million in taxes to the state since going live in 2020,10 iLottery contributed $241.8 million in “net win” (ticket sales net of discounts and prize expense) to the Michigan Lottery in fiscal year 2021 alone.11 Similarly, in New Hampshire, sports wagering has contributed approximately $24 million in taxes to the state in the 12 months ending June 30, 2022,12 and iLottery contributed $29.9 million in “net win” (ticket sales net of discounts and prize expenses) to the New Hampshire Lottery in that same period.13 In Pennsylvania, sports wagering contributed A Growing Body of Evidence Demonstrates Why State Legislators Should Consider iLottery: a White-Paper Explanation By Mark Hichar, Shareholder of Greenberg Traurig, LLP, Boston office hicharm@gtlaw.com | www.gtlaw.com 118 U.S.C. §§ 1081, 1084. 2Whether Proposals by Illinois and New York to Use the Internet and Out-of-State Transaction Processors to Sell Lottery Tickets to In-State Adults Violate the Wire Act, dated September 20, 2011 (issued December 23, 2011), 35 Op. O.L.C. (2011) (the “2011 Opinion”). 3Reconsidering Whether the Wire Act Applies to Non-Sports Gambling, dated November 2, 2019 (Memorandum Opinion (Slip Opinion) issued January 14, 2019), 42 Op. O.L.C. (2018). 4See N.H. Lottery Comm’n v. Barr, 386 F. Supp. 132 (D. N.H. 2019), affirmed in part and vacated in part by N.H. Lotter Comm’n v. Rosen, 986 F.3d 38 (1st Cir. 2021). See also Int’l Game Tech. PLC v. Garland, 2022 U.S. Dist. LEXIS 166590 (D. R.I. 2022). 5Murphy v. NCAA, 138 S. Ct. 1461, 200 L. Ed. 854 (2018). 6Eilers & Krejcik Gaming U.S. Online Gaming Report (March 2022), which shows 22 states have authorized online sports wagering. Massachusetts has been added as legislation authorizing online sports wagering was enacted in August, 2022. This report is available at https://mvbbanking.com/ wp-content/uploads/2022/03/MVB_Online_Gaming_Report___March_2022.pdf (last accessed on February 19, 2023). 7Eilers & Krejcik Gaming, U.S. iLottery Tracker – 3Q22 (November 17, 2022), noting that Connecticut was not yet operational. Eilers & Krejcik define iLottery “as a lottery product for which account funding and game play can be managed online.” See id., p. 4. 8Id., p. 6. 9Id. 10In Michigan, retail sportsbooks went live in March 2020, and online sports books went live in January 2021 and sports wagering has contributed approximately $26.44 million in revenue to the state in the aggregate since going live. See Legal Sports Report at https://www.legalsportsreport.com/michigan/#:~:text=Michigan%20officially%20legalized%20sports%20betting,over%20 %24100%20million%20in%20wagers and https://www.legalsportsreport.com/sports-betting/ revenue/ (last accessed February 19, 2023). (The second document is referred to as the “LSR US Sports Betting Report”). 11Michigan Bureau of State Lottery Annual Comprehensive Financial Report for the Years Ended September 30, 2021 & 2020, p. 43, available at https://assets.ctfassets.net/d6o62jwe1jlr/1FMFKX ch3le2hR9Tz4Fqwu/484c038cae9ac62381399b2f474bbcdc/FINAL_PDF_2021.pdf (last accessed February 19, 2023). 12See https://www.sportsbettingdime.com/new-hampshire/sports-betting-revenue/ (last accessed February 19, 2023). 13New Hampshire Lottery Commission Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022, p. 47, available at https://www.nhlottery.com/Files/PDFs/FinancialReports/2022/NHLC_ACFR_2021-2022_Final (last accessed February 19, 2023).
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