Despite Concerns, Massachusetts Lottery Not Hurt by Casinos

Tuesday February 4th 2020

Massachusetts Lottery ticket sales grew last year despite fears about the impact the three casinos that have opened in the state since 2015 could have on lottery revenues.

Since Massachusetts legalized casinos in 2011, there have been concerns they would negatively affect the lottery, which produces a major share of the state government's funding.

The new Encore Boston Harbor casino, which opened last year in Everett, worried many lottery retailers in the area, who earn a commission on the tickets they sell. Retailers feared that customers would visit the casino to play table games and slot machines instead of buying lottery tickets.

"Everybody was talking bad about it," says Rajesh Keshar, the owner of Elm Street Market, which is about 2.5 miles from the huge casino. However, Keshar remained confident. "I was thinking positive. Because I knew more people would come. More crowds."

So far, his optimism appears to have been borne out. Lottery ticket sales at his store grew by around 15 percent in 2019 compared with the previous year. Keshar also owns Broadway Liquors, a store that's even closer to the casino, and he says more visitors to the casino have also meant more customers for him.

In the areas surrounding the state's other two casinos, Plainridge Park in Plainville and MGM Springfield, lottery tickets sales also appear to have been unaffected.

Michael R. Sweeney, executive directory of the Massachusetts Lottery Commission, points out that under state law, casinos must sell lottery tickets - which they do in large numbers - but he hasn't seen any figures suggesting that other retailers are being affected. "I don't think it's had any marginal impact, either negatively or positively," he says.

The 1990s saw an upsurge in casino growth across the country, but prior to the data from Massachusetts, there had been little research about how lotteries and casinos affect each other. "I can't even point out a study to you that would come close to replicating what we're trying to do here in Massachusetts," said Mark Vander Linden, the Commission's research director.

The fact that casinos haven't cannibalized lottery ticket sales in the state could suggest "that not all gamblers are identical," said Victor A. Matheson, a professor at College of the Holy Cross who studies gambling and lotteries, "and therefore by offering different products to different people, you can expand your revenue."

The effects of expanded gambling on both public funds and public health in Massachusetts will be watched with interest by academics and policymakers. The 2011 law that allowed casino gambling also tasked the Massachusetts Gaming Commission to study its economic and social effects, looking at questions ranging from casinos' effect on lottery retailers to whether they could be a risk for problem gambling.

The Commission has worked with scientists to look at sales figures from lottery retailers near the Plainridge Park casino in Plainville, which offers slots and lottery tickets. It was the first casino to launch in Massachusetts, opening its doors in 2015.

Lottery sales around Plainville increased by 25 percent in the casino's first year in business, but that was mostly the result of ticket sales at the casino itself.

So far, the study has not found that the casino has had a significant impact on retailers' lottery sales. Researchers did not find an "obvious pattern between lottery sales growth and proximity to the casino," although the study did note that areas around Plainville had not had the sales growth that the rest of the state had seen.

Early data on Plainridge's effect on public health also shows the casino has not led to an increase in problem gambling.

Research on any effect on the lottery from the state's other two casinos, MGM Springfield, which opened in 2018, and Encore, which opened in June 2019, has not been published yet. But preliminary data released so far indicates no substantial impact.

The Massachusetts Lottery's 2019 sales were $5.4 billion, growing a modest 0.4 percent from $19 million in 2018. Everett, home of the Encore casino, had sales of $50.3 million, reflecting growth of about 3 percent from its $48.8 million 2018 sales. The casino itself accounted for about $535,000 in lottery sales from June through September.

However, as was the case in areas around Plainville, surrounding municipalities did not fare as well as Everett. Charlestown, Everett, Malden, Medford and Somerville saw a collective lottery sales decrease of around 1 percent.

Lottery sales were $134.6 million in 2019 in Springfield and West Springfield, the areas around the MGM casino. Those figures reflect an approximately 5 percent decline from $142.3 million in 2018.

"Even if somebody might be inclined to go to a casino, if somebody's buying a couple lottery tickets a week, they still are going to buy a couple of lottery tickets a week," said Patrick Kelly, a Providence College professor who studies casino gaming.

However, the lottery's real competition may not be casinos, but sports betting, which would probably include a mobile component if it becomes legal in Massachusetts. Sweeney, the Massachusetts Lottery's executive director, believes that the ease of betting on sports with a phone or tablet could present a big challenge to lottery revenues.

Sweeney believes the lottery has to modernize to stay competitive. He wants the lottery to be permitted to offer online games, as well as cashless payments at retailers. Right now, customers must pay cash for lottery tickets. "We're increasingly becoming out of step with the retail environment," Sweeney said. "And that's not good for us. It's not good for our retail partners."

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