Lottery subscription criticized by panel

Sep. 18, 2013 @ 06:44 PM

RALEIGH — North Carolina lottery leaders on Wednesday defended a new program to let people purchase some tickets by subscription. Meanwhile, a retailers' group worried about lost store traffic and lawmakers said they were unaware until recently about coming web sales.

The N.C. Education Lottery announced last week that starting in November certain people could register to purchase a minimum of two weeks' worth of tickets for up to three jackpot games — the twice-weekly multistate Powerball and Mega Millions and daily Carolina Cash 5.

Third-party vendors would operate the program and collect personal and banking data to ensure players are buying in North Carolina and are old enough to play, and to complete transactions.

Alice Garland, the lottery's executive director, told the legislature's Lottery Oversight Committee that subscriptions are used in 11 other lottery states and will help fulfill the lottery's purpose of maximizing revenues for education. The lottery generated more than $478 million in net profits in the past fiscal year.

The North Carolina Retail Merchants Association says its members are worried that the ability to buy tickets online will reduce sales at their brick-and-mortar stores not only for tickets but for other products they sell. That could lead to the loss of jobs and sales tax revenues, association president Andy Ellen wrote in a letter to committee members.

About 6,900 retail outlets sell tickets, receiving a 7 percent commission.

"This program seems to encourage long-term and ongoing purchases," association lobbyist Elizabeth Dalton Robinson told the committee. "Now they can just sit on the couch in their PJ's and forego that trip to the store."

Garland said there have not been reports from other states of ticket sale declines at retail stores as a result of subscription programs. She said the program focuses on a certain kind of customer — those who prefer to play the same numbers for every drawing, not those that play the lottery when jackpots soar. On Wednesday night, Powerball had an estimated $400 million jackpot — the nation's fifth-largest ever. Subscribers will be limited to spending no more than $70 per week.

New lottery commission Chairman Keith Ballentine, an executive with a Rocky Mount company that owns convenience stores, said he's comfortable with the service, which lottery officials hope will increase sales for the three games by 1 to 2 percent.

"Once you understand what the subscriptions are, you realize that it is not that everyday player," Ballentine said.

Committee member Rep. Pat Hurley, R-Randolph, told Garland she wished that lottery officials had told them before she read about it in a local newspaper.

"I am concerned that this wasn't brought to our attention," said Rep. John Blust, R-Guilford, the panel's co-chairman.

Garland said commission members had discussed the idea on several occasions at public meetings dating back to December 2011. Garland said lottery officials consulted with legislative leaders or their staff before moving ahead.

The committee can only recommend changes to the full legislature — not pass laws — but could have placed pressure on lottery officials to delay implementation of the subscription service.

Blust said that while he's concerned about the lottery's ability to prevent people under 18 from buying tickets online, he said the scope of the program is narrower that he had initially believed. He said he was willing to wait and see the results of the new services before making any recommendation.