C-Stores Want Online Poker Bill to Pass

State lottery officials want to kill bill that would ban all online gambling except poker

WASHINGTON -- Legislation to legalize online poker has driven a wedge between lottery providers and the convenience stores that have long been the primary seller of their tickets, reported The Hill. Senate Majority Leader Harry Reid's (D-Nev.) push to ban all forms of online gambling except for poker has led to a split between the two major trade associations for each industry. Lotteries want to bury the bill, while c-stores are pushing for passage, said the report.

Both sides have upped their lobbying in Washington and say the future of their business is at stake.

Next week, about a half-dozen state lottery officials are flying to Washington on a trip organized by the North American Association of State & Provincial Lotteries (NASPL). They will meet with lawmakers to lobby against Reid's legislation, which could come up for a vote during the final weeks of the lame-duck session.

"There is a sense of urgency. If this attached to legislation, this can have a negative impact on state lotteries and how their funds are raised for public benefit," Arch Gleason, president and CEO of the Kentucky Lottery Corp., told the news outlet.

In letters to lawmakers obtained by The Hill, senior lottery officials such as Gleason and others from Iowa, Massachusetts and Michigan have voiced their opposition to the poker bill.

NACS, meanwhile, is trying to round up support in Washington, the report said. In October, the group's board voted unanimously to support the online poker bill, Lyle Beckwith, NACS's senior vice president of government relations, told the news outlet.

Beckwith said lottery officials have tried to sway c-stores to their side, but to no avail.

"The lotteries have tried to come to us on numerous occasions saying that this wouldn't hurt us. They just want to expand their base of customers to people who don't play these games already," Beckwith said. "From our perspective, this could hurt our business."

Without the restrictions of Reid's bill, c-stores believe fewer people will come to buy scratchoff cards and other lottery products and opt instead to gamble online, said the report.

"They just don't buy lottery tickets when they're in a store. They buy a cup of coffee. They fill up their tank," Beckwith said. "I would prefer that they ban everything but this bill is far, far better than nothing being banned. If Reid's bill doesn't pass, the lotteries will try to put a casino in everyone's living room."

C-stores have warned lawmakers that their sales could fall if the poker bill doesn't pass. The average c-store customer who comes to buy a lottery ticket spends $10.35 in the store, compared to $6.29 for those who don't, according to NACS.

More than 2,000 NACS members have sent letters to lawmakers saying, "The legislation NACS is advocating sets guard rails that are essential to ensure that the convenience store industry is not cut out of the lottery business."

Gleason disagrees, and said business would grow for stores. He noted that when lottery tickets were first sold online in the United Kingdom, sales continued to go up in stores.

"They have been able to increase their revenues in their traditional brick-and-mortar locations," Gleason told The Hill. "It begins modestly, measured at 2%to 5% of the total business, and then it begins to grow over a number of years."

The push on online gaming comes after a Justice Department ruling last year found that the Wire Act only prohibits online gambling on sports, the report said. Since then, several states have either legalized or introduced legislation to legalize Internet gambling.

"What they did is really open up what I think will be the largest expansion of gambling in the United States ever unless Congress acts," Frank Fahrenkopf, president and CEO of the American Gaming Association, told the news outlet.

NACS joins the gaming trade group, which represents the country's biggest casinos, in support of the online poker bill. Fahrenkopf said the c-stores were a welcome partner, calling them "very active, very knowledgeable and very smart."

The lotteries have their own allies in the National Governors Association and the National Conference of State Legislatures, which both argue that Reid's bill would infringe on states' rights, The Hill said.

The online poker bill has a tough road ahead, said the report. Reid has been working with Sen. Jon Kyl (R-Ariz.) on the legislation but needs more GOP votes.

"Only Senators Dean Heller [R-Nev.] and Kyl have indicated their support for the bill," a Senate Democratic aide told The Hill.

Kyl is retiring from the Senate, and with more states expected to move into online gambling, Washington may be too late to the game by next year.

"The best chance would be clearly the lame-duck," Fahrenkopf said. "If nothing happens, we will have to regroup and prepare for the next Congress, but we are hopeful something will get done now."