WDAY: The News Leader

Published January 31, 2012, 04:33 PM

ND could explore Internet lotto sales

North Dakota's lottery may pursue using the Internet to sell tickets directly to buyers, a move touted as the "wave of the future" that some retailers fear will cost them business.

BISMARCK, N.D. (AP) — North Dakota's lottery may pursue using the Internet to sell tickets directly to buyers, a move touted as the "wave of the future" that some retailers fear will cost them business.

Attorney General Wayne Stenehjem said any move would be explored gingerly and the Legislature would have to approve it.

"I certainly want to be careful that we're not interfering with the good relationship we've developed with the retailers in North Dakota," Stenehjem said. "We want to make sure we're not cutting them out of the process."

The concept isn't popular with the lottery's network of about 400 retailers, which sell most of the tickets for Powerball, Mega Millions and three smaller multistate games.

If North Dakota allows Internet lottery ticket sales, there is little point to keeping the lottery's existing network of convenience stores, grocers and other outlets that now market the tickets, said Mike Rud, president of the North Dakota Retail Association. He said stores could use space taken up by lottery equipment for other things.

"If (Internet sales are) what we want to do, let's do it full bore. Take away the machines, let's do it all online," Rud said. "We kind of view it as an all-or-nothing proposition."

State lotteries across the country have been looking into Internet ticket sales after a U.S. Department of Justice legal opinion, made public last month, declared that state lotteries could use their websites to sell individual tickets to their states' residents, said David Gale, director of the North American Association of State and Provincial Lotteries.

The opinion came at the request of officials in Illinois and New York state. The Justice Department had previously asserted that federal law barred Internet gambling, a position that lottery advocates had vigorously disputed.

"It's the wave of the future. That's very obvious," Gale said of Internet sales. "It's a key element in attracting the emerging market that's out there."

Michael Jones, superintendent of the Illinois Lottery, said the agency hopes to begin marketing tickets for its Powerball and Lotto games on its website by early April.

Jones hopes to add Mega Millions to the sales lineup as well. Both Powerball and Mega Millions are played in 42 states, the District of Columbia and the U.S. Virgin Islands.

When jackpots for either game rise above $100 million, 300,000 to 500,000 additional players are drawn in, he said. Market research indicates that Internet sales would not hurt lottery ticket demand at traditional retailers, Jones said.

"Illinois and New York have kind of led the way, but I think everybody is looking at it now," Jones said.

The Illinois Legislature has already authorized a trial run to test the system's ability to ensure that players younger than 18 and those outside Illinois are blocked from buying tickets. In any case, ineligible players who won large prizes would not be paid, Jones said.

"Our lottery, and most lotteries, have not had any mechanism for many years to create new demand among people who don't play the lottery now," Jones said. "The lottery's been concentrating on selling more tickets to the same people, as opposed to selling tickets to a lot of people."

The North Dakota Lottery already sells ticket subscriptions in 13-, 26- and 52-week increments, which can be bought online using a credit card. Subscriptions make up only about 2 percent of the lottery's ticket sales, lottery director Randy Miller said Tuesday. During its last budget year, the lottery sold $23 million worth of tickets.

North Dakota players cannot buy individual tickets on the Internet, which prevents them from using the lottery website to jump in when jackpots exceed $100 million.

Stenehjem said any lottery's reliance on the Justice Department opinion to begin Internet lottery ticket sales carries its own risk. The opinion does not have the weight of a court ruling, and it could be trumped if Congress decides to change existing federal law, he said.

"This is an interpretation that is new," Stenehjem said. "It could just as easily switch back ... If the (presidential) administration changes, perhaps the interpretation will change, too."