Sports Betting’s Effect on State Lotteries Investigated

By Jessica Whitehouse,
Editor at online-gambling.com

Jessica Whitehouse Editor at online-gambling.com

Jessica Whitehouse is a content expert and editor from Santa Monica, California. At online-gambling.com, she focuses on roulette, blackjack reviews, lottery, and casino payments. Whitehouse is also our leading go-to expert in online gambling in South Africa. In addition, she provides the photo materials for most articles on the site.

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Last updated: June 5, 2024

With sports betting gaining federal legalization and, slowly but surely, state by state recognizing its validity, there have been murmurs from various other betting verticals about a threat to their financial prospects.

Is there enough space for lottery and sports betting in today’s industry?

Similar to the fears present in the brick-and-mortar casino industry regarding online casino gaming, sports betting has seemed like a threat to some other parts of the gaming industry.

In particular, state lotteries have girded themselves against the possibility that sports betting will take away a substantial portion of the revenue — but why are state lotteries so worried in particular?

The lottery monopoly

Part of the reason may be that many states enjoy a lottery system, the profits and tax on which directly benefit public projects. Since the lottery is sometimes the only form of gaming widely available and legal in a state, it has maintained a kind of monopoly and also garnered huge popularity.

Sports betting, however, is also seen as a viable contender given how the industry has grown and is projected to grow in the future.

Eyes on Massachusetts

More specifically, the director of the Massachusetts Lottery, Mark William Bracken, has warned about the possible effects of sports betting on the state’s lotto business. In March, he spoke at a lottery commissioners’ meeting to warn about adverse effects, again.

Bracken’s evidence includes lottery profits in Massachusetts from 2023 to 2024. He stated that the year-on-year profits were $28.4 million less at that point in time. Which shows an opposite trend compared to the global growth of the lottery industry.

Could sports betting be profitable for lotteries?

Meanwhile, the Universities of Alabama and Nevada have conducted a study together to assess whether the fears of those like Bracken are justified.

Their study, which was released last December under the title, “The Effects of Sports Betting on Casino Gambling and Lottery”, actually showed a positive connection between sports betting legalization and lottery play. In fact, they reported that for every dollar spent with online sports betting, there is an increase of 21 to 26 cents in lotto revenue.

This obviously gives the industry much to consider. It also suggests that the legalization of more gambling verticals is positive for the industry as a whole, and that sports betting and lotto complement one another rather than drawing from the same limited pool of bettors and funds.

There are further suggestions that sports betting is not the death knell for lottery that Bracken believes it to be. For example, Gene Johnson of Victor-Strategies points out that two state lotteries have seen considerable growth since sports betting became legal: Ohio and Kentucky.

He’s pointed out iLottery as a reason for this in Kentucky, and Ohio’s success with scratch tickets. Johnson’s view of the issues in Massachusetts is that the state simply has not addressed new betting trends enough.

However, Bracken has in fact been lobbying his state to make online lottery legal, a move that many seem to agree would bring renewed interest into the lottery and make it more competitive overall.