NC’s online lottery action worries some retailers

pgannon@ncinsider.comDecember 4, 2013 

LOTTERY07.NE.051713.CCS

Lottery players line up to buy tickets from cashier Karen Leach, right, at C Mini Mart on Poole Rd. in Raleigh, NC on May 17, 2013.

CHRIS SEWARD — cseward@newsobserver.com Buy Photo

— As he stood in line for lottery tickets Wednesday at C-Mini Mart #3 on Poole Road, David Auther said store patrons and workers know him by his lucky Pick 3 number.

“Hey Warren, what’s my number?” he asked store owner Warren Liles, who stood behind the counter.

“315,” Liles replied.

Auther, who plays the lottery every day, said he won’t be logging onto a computer to buy tickets as the N.C. Education Lottery launches an online subscription service Thursday. He enjoys the “personal attention” he gets at the convenience store and the camaraderie with others there.

“Online, it’s boring,” he said. “There’s nothing to it.”

But other hopeful gamblers are sure to oblige as the state lottery on Thursday expands its reach to the Internet, where players can buy tickets only for three jackpot games – Powerball, Mega Millions and Carolina Cash 5.

State lottery officials say the online service is geared toward attracting new players, not taking business from retailers, who get 7 percent of each ticket sold. Nonetheless, some retailers, including Liles, are concerned about potential effects on in-store sales.

Limits to help retailers

The state lottery is joining at least 11 other lotteries, including Virginia and Georgia, that provide some type of subscription service to players.

A subscription to at least two weeks of drawings for one of the three games is required for any online purchase, so players won’t be able to use the service to buy a single draw ticket or scratch-off tickets.

Alice Garland, lottery executive director, said she recently met with lottery retailers across the state to try to allay fears that online sales would cut into business and that most came away feeling OK about the change. She said a weekly $70 limit on online purchases and the requirement to subscribe to at least two weeks of drawings would limit the online service.

But Andy Ellen, president and general counsel of the N.C. Retail Merchants Association, said concerns persist about online sales competing with stores, which are prohibited from selling tickets online. Ellen also said the people who buy tickets online are the merchants’ potential customers.

“So those people aren’t coming in and buying a Coke or a soft drink or chips or whatever it may be,” he said.

Targeting new players

Zack Carlton, chairman of the lottery’s Retail Advisory Board and owner of Carlton’s Styers Ferry Grocery in Lewisville, said he doesn’t think the hit will be enough for retailers to notice. He said he believes the lottery is targeting younger players in their 20s to 40s for the online purchases, while older players – who are more likely to play the three jackpot games available online – won’t want to play online. He added that younger players are more interested in scratch-offs and will still have to come into stores to buy those.

Van Denton, a lottery spokesman, said the lottery isn’t focusing on any particular age group but rather trying to reach people who have never tried their luck with the lottery.

“We believe that this will bring in new lottery players, and it will be people who are comfortable buying things online, but that could be a 25-year-old, or it could be a 65-year-old person,” he said.

At C-Mini Mart, Liles, the store owner, said he views the online sales as competition and fears that the number of games sold online would increase over time. Garland said there wouldn’t be any immediate changes to the lottery’s online offerings.

Lottery officials said they expect the subscription service will increase revenue from the three games by 1-2 percent, or roughly $3 million to $6 million a year.

Revenue up

The new way of playing comes as the lottery already is experiencing increased revenue from its games. Numbers disclosed at the Lottery Commission’s meeting Tuesday showed that sales for the first four months of the 2014 fiscal year totaled $596 million, up about 17 percent, or $86 million, from the same months a year earlier. Purchases of instant tickets were up 21 percent over that time, while Powerball sales were up more than 17 percent.

Garland said she believed sales increased because of a two-year effort to sell more instant tickets, including the introduction of many new games, as well as some sizable Powerball jackpots, among other factors.

To play online, players must go to a section of the lottery’s player’s club website, Lucke-Zone, to set up an account. They will receive email alerts if their numbers are drawn.

Players won’t immediately be able to play their numbers on Thursday because they first will have to move money into their online “wallet” through an electronic funds transfer that can take a few days depending on the bank.

“I’m told sometimes it can be the next day, but sometimes it can be five days,” Garland said.

Players won’t be able to use debit cards from the onset, but lottery officials said they would be accepted in the future. Credit cards won’t be allowed.

Garland said the service includes safeguards to ensure no tickets are sold to anyone not physically in North Carolina or anyone under 18, the legal age for playing the lottery.

Gannon: 919-836-2801; Gannon writes for the NCInsider.com, a government news service owned by The News & Observer. For more information, visit www.ncinsider.com.

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