Following in the footsteps of New Jersey — as it did with casinos, online gaming, and sports betting — Pennsylvania has joined in a legal bid to clarify that lotteries are not threatened by a Department of Justice declaration in January 2019 that The Federal Wire Act of 1961 extends beyond a prohibition on interstate sports betting.
On Friday, attorneys representing Pennsylvania informed the U.S. First Circuit Court of Appeals that it was imperative that those judges uphold a U.S. District Court ruling that sided with the New Hampshire Lottery. That lottery’s position was that the new declaration — reversing a 2011 DOJ Opinion that seemed to have settled the matter — was fatally flawed.
“The devastating impact that this change by USDOJ would have on the Commonwealth of Pennsylvania’s budget cannot be overstated,” the attorneys wrote.
“All Pennsylvania Lottery net proceeds are utilized for the benefit of older Pennsylvanians, through programs such as property tax relief, rent rebates, reduced fare transit, and prescription drug benefits. Since its inception in 1971, the Pennsylvania Lottery has contributed over $30 billion to benefit programs for older Pennsylvanians.
“For the 2019 Fiscal Year (July 1, 2018 – June 30, 2019), the Pennsylvania Lottery recorded sales of more than $4.5 billion, from which more than $2.9 billion in prizes was paid — and more than $1 billion went to support programs benefiting older Pennsylvanians.
“Given the use of wire transmissions for Pennsylvania Lottery games, the broadest interpretation of the 2019 Opinion, which the USDOJ has refused to renounce, could result in the suspension of most, if not all, state lottery sales, leading to an immediate annual loss of over $1 billion in lottery proceeds that benefit older Pennsylvanians, as well as additional expenses that would be incurred in complying with the 2018 Opinion. It would also jeopardize the jobs and livelihoods of countless Pennsylvania citizens.”
Where the lottery money goes
The Pennsylvania Lottery projects that profits in the ongoing fiscal year will climb to $1.22 billion. Pennsylvania is the only state that directs all net lottery profits to benefit programs that support older citizens. Its lottery supplies “more than two percent of the Commonwealth’s general operating budget.”
“Last year,” the attorneys wrote, “older Pennsylvanians received 24,400 meals and 101,000 free and reduced rides each day, as well as long-term care services, low-cost prescription medications, and property-tax rebates.”
Pennsylvania launched its iLottery program in spring 2018, just months before the new DOJ opinion that appears to undercut the entire program with what the Pennsylvania attorneys described as “an about-face.” The still-developing iLottery has yielded more than $31 million of revenue.
“The Pennsylvania Lottery offers this brief to demonstrate to the Court the disastrous impact that the USDOJ’s abrupt change in position will have on the Commonwealth of Pennsylvania and its citizens, particularly given the Commonwealth’s reliance on the USDOJ’s prior — and correct — position,” the attorneys wrote.
The new status quo may impact not just multi-state games like Powerball and Mega Millions or the state’s iLottery, but even traditional retail-store lottery sales, too. That’s because like other states, Pennsylvania uses a “central gaming system” with a duplicate system located in Georgia and with data administration facilities in Nevada, “to create sufficient geographic diversity to continue operations in case of a natural disaster.”
“The Commonwealth of Pennsylvania respectfully requests that the Court grant it five minutes of oral argument,” the attorneys continued. “This litigation involves crucial questions of law, and it is likely to impact state-run lotteries across the nation. In particular, the result of this case will substantially impact the Commonwealth’s budget and its benefit programs supporting older Pennsylvanians.”
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