Is online sports betting really taking a bite out of lottery sales?

Lottery commissions throughout the US are bracing for what they assume will be an attack on their bottom lines. They fear that the exploding popularity of online sports gambling will hurt their businesses. Are their fears justified? Or is there something else at play?

Leading the call for action is Massachusetts Lottery Director Mark William Bracken. For the second year in a row, Bracken used a March lottery commissioners’ meeting to sound the alarm against maintaining the status quo in the face of increasing online sports gambling. He pointed to the 6.8% reduction in lottery sales his state recorded from February 2023 to February 2024. He also noted the lottery’s year-to-date net profit was $28.4m (£20.6m/€24.2m) less than during the same period last year.

But is Bracken’s logic sound? Is online sports betting cutting into lottery sales?

A study conducted by the universities of Alabama and Nevada suggests online wagering revenue is positively associated with lottery revenue. “The Effects of Sports Betting on Casino Gambling and Lottery,” published in December 2023, determined that “… each dollar of online sports betting is associated with a $0.21 ($0.26) increase in lottery revenue on average.” (The two different figures reflect data without and with the March 2020-April 2021 peak Covid period included).

Critical mass

If this study is accurate and online wagering is a boon to lottery sales, what accounts for Massachusetts’ sluggish sales?

“The Massachusetts Lottery story sounds like an excuse for other problems with their scratch-offs,” said Gene Johnson, executive vice-president of Victor-Strategies, a gaming industry consulting firm.

“If you look at Ohio, their scratch sales have increased substantially since the legalisation of sports betting. Kentucky also grew lottery sales through the introduction of OSB with their highest growth area being ilottery – something Massachusetts does not have.”

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