Future Drop In Lottery Revenues

Posted on January 28th, 2009

In many states the Lottery provides needed funding for various essential services and education. In some states the annual education budget is based on lotto revenues. Because of today’s economy many are cutting back on what they perceive as unnecessary expenses with a resulting lottery revenues drop.

For those who buy lottery tickets with a credit card another roadblock has been placed in their path. Thanks to a Federal law passed in 2006, credit card transactions for lottery ticket purchases have been unnecessarily blocked by the credit card companies. Many lottery experts say this could cost states millions in lost lottery revenue and cause education funding to suffer as a result.

Since credit card companies are unable to determine which transactions are legal and which are not they are simply blocking all gambling related transactions. Many gaming experts predict that when horse racing season begins many tracks will lose millions due to blocked credit card transactions despite the fact that horse racing is perfectly legal under the Federal law.

The problem first surfaced in New Hampshire when those who sought to buy lottery tickets found their credit card transactions blocked. The problem is expected to spread to other state lotteries. Said Gambling911 senior editor Payton O’Brien, “What is New Hampshire’s problem today will likely be New York’s problem tomorrow, Texas and Florida’s problem next week, and so on.” Predictions say that the Florida Lottery and the Texas lottery will in all likelihood face the same problems.

In an interview with an unnamed visa executive it was revealed that, “The transactions are coded electronically and pass through the data centre with a generic source coding range of numbers. There is a specific range of codes that identifies it as coming from a gambling entity. The receiving institution has a filter set up to automatically bounce these back to the requesting merchants.” The executive also stated that the problem is only going to get worse unless changes are made in the law.

The original law was not well thought out and has caused unintended consequences. It is hoped that these problems will be addressed promptly so those wishing to buy lottery tickets online with a credit card will not have their transaction declined.
Once the problems caused by UIGEA are resolved state lotteries could easily allow the sale of online lottery tickets. In Europe where the sale of online lottery tickets is legal lotteries reported an increase in sales once the sale of online lottery tickets was implemented. States that are serious about boosting sales should consider offering players online lottery tickets.