Blurring the lines: the interplay between lotteries and gaming
Over the past year, several North American lotteries have expressed an interest in expanding their products to include offering sports wagering and games of chance that rely on the outcome of sporting events. Given the inconsistent regulatory standards between lotteries and traditional commercial gaming jurisdictions, such a move raises a wide range of potential concerns including whether the Bank Secrecy Act and Title 31 apply and if so, how lotteries can comply if they attempt to sell sports wagering products at retail locations like liquor and convenience stores.
Phil Sicuso, Chair of the Economic Development Department, Bingham Greenebaum Doll
Phil Sicuso serves as Bingham Greenebaum Doll's Chair of the Economic Development Department, where he focuses his practice on helping government and private sector entities work together to create economic growth.
Ali Bartlett Miranda, Associate, Bingham Greenebaum Doll
Ali is an attorney in the Firm's Economic Development Department where she concentrates her practice on legislative lobbying, municipal law, government procurement and regulatory work. She also works in policy and regulatory compliance matters within the casino gaming and state lottery industries.
In states where both traditional casino gaming and a state lottery have been thriving for years, complacency with the status quo may become second nature because, well, what we have works. However, the broader gaming industry, along with professionals that work in it every day, have begun to see the value in extending beyond the traditional and seeking ways to integrate two successful concepts (namely, lottery-style games of chance and skill-based / more entertaining elements of traditional commercial gaming).
While we’ve seen a natural movement toward the merger of these industries, and, arguably, the combination can and will be beneficial for both, there are several larger regulatory and functional hurdles that must be considered as this type of integration occurs. One of the first considerations important to practical and successful integration of lottery and commercial gambling concepts is whether the emergence of necessary technology can and will keep up with this effort. In the past several years, gaming technology companies from around the world have made tangible strides toward development and implementation of technology to ease integration, including slot machines that double as lottery terminals. However, with each technological (and other) step forward, regulatory considerations must be taken into account – this type of technology has the ability to functionally transform a brick and mortar casino into a lottery retailer. In states with
separate regulatory oversight bodies, administrative rules and procedures, and enforcement arms, this type of assimilation will create some blurred lines.
Other potential overlap could come in the form of traditional lottery retailers acting as an extension of a traditional casino (and vice versa, as described above) through cross-marketing and incentive options, such as maximization of self-service kiosks in each of the lottery retailer and casino environments, and lotteries gaining the ability to offer casino-related prizes (i.g. free play or overnight stays). Additionally, these types of partnerships could allow for the development and sharing of existing IP and property rights, including the use of popular slot machine themes for scratch tickets, and vice versa.
While actual integration of the lottery and commercial gaming industries certainly presents regulatory, technological, and practical challenges, it also opens the door to endless opportunities for partnerships, product development, and advancement in regulatory collaboration. Especially with the emergence and growth of the sports wagering industry in the United States, the opportunity for lotteries and traditional commercial gaming operators, both brick and mortar and online / mobile, to collaborate on product design and game style will allow for players to experience new types of hybrid games and technology that would not
otherwise be available to them.
Of course at the center of all of this opportunity lies the responsibility of each regulator to be able to implement the necessary oversight considerations. While the integration of the two industries is exciting and expansive, regulators will have to consider whether and how to integrate the vast background and licensing processes associated with casino gaming into the lottery environment, which tends to rely more heavily on individual retailer registration and compliance. Tese types of considerations should include how certain surveillance and security measures common to casinos could or should be integrated into the vast lottery retailer network, as well as whether lotteries are prepared to (or would need to) comply with federal anti-money laundering practices if they were to produce, sell, and / or market casino- style products.
While there are several regulatory and compliance considerations to be made as the integration between the lottery and traditional commercial gaming industries begins to occur, these can and should be viewed less as hurdles to advancement, and more as opportunities for forward thinking progress to be made. Te combination of these industries opens the door to opportunities for product and technological advancement and will present the chance to provide game options that will continue to evolve and improve.
NEWSWIRE / INTERACTIVE / MARKET DATA P61
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