DOJ ruling could affect Michigan lottery revenue

“Like nearly every state lottery in this country, Michigan’s Lottery generates hundreds of millions of dollars every year to fund education,” Michigan Attorney General Dana Nessel said.  “Billions of dollars are generated annually across this country for critical governmental services including schools, senior citizens programs, first responders and infrastructure programs. This new interpretation of the law could have a dire effect on these programs by threatening their funding source.”

WASHINGTON — A pending Department of Justice ruling could alter lottery operations in Michigan.

In November 2018, the DOJ changed its 2011 interpretation of the Wire Act of 1961 to interpret that online lottery games would be illegal. The Wire Act was originally enacted to combat mob tampering by banning wagering across state lines.

Following a lawsuit against the DOJ by the New Hampshire Lottery Commission, a federal judge gave them until the end of April to decide officially whether or not online lottery games violated the act. On Thursday, April 25, DOJ officials said they were still weighing their options.

Now, Michigan and six other states that sell lottery tickets online could be facing a major loss of revenue. The Associated Press estimates that the states would lose at least a combined $220 million in annual revenue.

The same federal judge said he expects the case to go all the way to the U.S. Supreme Court.

Michigan uses part of the money generated by its lottery to bolster public education. Per the Michigan Lottery website, $941 million was given to schools in 2018; 26 cents of every lottery dollar went to Michigan’s School Aid Fund.

The Michigan Lottery currently has dozens of online games, with prizes reaching up to $500,000. Tickets for Power Ball and the Mega Millions drawing can also be purchased online.

The DOJ’s ruling comes at a time when online lottery games are becoming a point a emphasis for the Michigan Bureau of State Lottery. In its 2018 Financial Report, the bureau said it wanted to increase online wagers by 9 percent and add 27 new games in 2019.

According to the report, “iLottery Games” resulted in $93.7 million in revenue for the Michigan Lottery, although that does not specify whether or not “iLottery” refers to online-only. A 9 percent increase would push that figure over $100 million.

“Like nearly every state lottery in this country, Michigan’s Lottery generates hundreds of millions of dollars every year to fund education,” Michigan Attorney General Dana Nessel said in a March statement after filing a brief which supported New Hampshire’s lawsuit.

“Billions of dollars are generated annually across this country for critical governmental services including schools, senior citizens programs, first responders and infrastructure programs. This new interpretation of the law could have a dire effect on these programs by threatening their funding source.”

A spokesperson from the Michigan Lottery could not be reached for comment.

The Wire Act’s original aim to curb mob tampering across state lines. Currently, the Michigan Lottery requires online users to provide their location to verify that they are within the state’s borders. The DOJ is expected to provide a final clarification before the end of April.

https://www.hollandsentinel.com/news/20190428/doj-ruling-could-affect-michigan-lottery-revenue