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Despite predictions, state lottery ticket sales have not been hurt by casinos

At the Elm Street Market in Everett, lottery ticket sales have actually ticked up since the Encore Boston Harbor casino has opened, but has seen a uptick in  lottery sales. JONATHAN WIGGS/GLOBE STAFF
At the Elm Street Market in Everett, lottery ticket sales have actually ticked up since the Encore Boston Harbor casino has opened, but has seen a uptick in lottery sales. JONATHAN WIGGS/GLOBE STAFFThe Boston Globe

For years, Rajesh Keshar heard the concerns of his fellow owners of corner stores in Everett about what the Encore Boston Harbor casino might do to their lottery sales. They worried that some customers would shift their spending from scratch tickets and numbers games to slot machines and gaming tables.

“Everybody was talking bad about it,” said Keshar, who runs Elm Street Market, about 2.5 miles from the massive casino, which opened in June. “I was thinking positive. Because I knew more people would come [to town]. More crowds.”

So far, Keshar’s confidence has been well-founded. Sales of lottery products at Elm Street Market increased by about 15 percent last year, compared with 2018 sales. At Broadway Liquors, another store he owns that’s even closer to the casino, Keshar has seen similar results. He said the increased activity around the casino has brought more people through his doors.

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When Massachusetts lawmakers were considering legalizing casino gambling a decade ago, opponents argued that the industry could take a big bite out of the lottery program, which generates a huge share of the state government’s revenue. But with three casinos now open, the lottery appears to be chugging along as if nothing has changed.

Statewide, lottery sales were up slightly in 2019, when Encore became the third casino to open in Massachusetts. As in Everett, sales in the cities and towns surrounding the MGM Springfield casino and Plainridge Park in Plainville have been relatively flat since the gambling complexes opened.

“I don’t think it’s had any marginal impact, either negatively or positively,” said Michael R. Sweeney, executive director of the Massachusetts Lottery Commission. He noted that state law requires casinos to sell lottery tickets — and they have become major sellers — but he hasn’t seen evidence that it’s significantly affecting retail sales elsewhere.

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The figures coming out of Massachusetts may help answer a question that has puzzled researchers and policy makers since a wave of US casino expansion began in the 1990s. Victor A. Matheson, a College of the Holy Cross professor who studies gambling and lotteries, said there has been relatively little academic research about how lotteries and casinos relate to each another.

That can have implications not just for public revenues, but for public health, Matheson said. The fact that lottery and casino industries are coexisting here may mean “that not all gamblers are identical," he said, "and therefore by offering different products to different people, you can expand your revenue.”

But there’s a potential risk in that, too, he added. “If there are new people that like new products, you have to worry that new people liking new products means more problem gaming issues, as well,” Matheson said.

The state may provide some of the most detailed information yet about how these dynamics are playing out. The 2011law that legalized casino gambling here directed the Massachusetts Gaming Commission to study the social and economic effects of expanding gambling — including its effect on the lottery.

While it’s easy enough to look at top-line data about how the lottery has performed overall, it’s more difficult to grasp the mechanics behind the numbers.

Commission researchers are looking into questions that include whether the casinos are having an effect on individual retailers and whether people who play both lottery and casino games might be at greater risk for problem gambling.

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“I can’t even point out a study to you that would come close to replicating what we’re trying to do here in Massachusetts,” said Mark Vander Linden, the commission’s research director.

Along with scientists at the University of Massachusetts Amherst and elsewhere, the commission has been looking at detailed sales data from retailers near Plainridge Park, the Plainville slots-only facility that in 2015 became the first Massachusetts casino to open. So far, it has not found that Plainridge has made much of a difference in retailers’ lottery business.

Research released by the commission in 2018 found that lottery sales near Plainville grew by about 25 percent during the casino’s first year of operation. But that was primarily due to lottery sales at the casino itself. The study did not find an “obvious pattern between lottery sales growth and proximity to the casino,” though it did find that sales in surrounding municipalities had not matched gains in the rest of the state.

Early commission research on gambling and public health around Plainridge found no significant changes in the number of regular gamblers reporting that the activity has led to problems such as bankruptcy or divorce.

The commission has not yet published research into how the lottery has fared in the area around MGM Springfield, a casino that opened in 2018, and Encore, which began operations in June.

But data released to the Globe by the lottery commission indicate that the effects have not been extreme so far.

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Overall, the lottery reported $5.4 billion in sales last year, up about $19 million from 2018, or just 0.4 percent. In Everett, sales reached $50.3 million, an increase of about 3 percent from $48.8 million in 2018. The casino sold about $535,000 worth of lottery products from its June opening through September.

There were some decreases in surrounding areas, however. Together, Charlestown, Everett, Malden, Medford, and Somerville saw a decline of about 1 percent in lottery sales.

In the region around the Springfield casino, including its home city and nearby West Springfield, sales were $134.6 million last year — down about 5 percent from $142.3 million in 2018. (The casino opened in late August of that year.) The casino told regulators it sold about $1.2 million worth of lottery products during the first nine months of 2019.

Last year’s lottery sales were held in check by another factor: big declines in ticket-buying for big multistate games. A year earlier, a series of huge jackpots had boosted interest in those games. According to data released this week, sales of Mega Millions tickets fell by nearly 62 percent in the second half of 2019, compared with the same period of 2018.

What’s happening in Massachusetts could indicate that popping into a store for a lottery ticket is fundamentally different than visiting a casino to play slot machines or table games, something that may seem obvious but had not been backed up by data here.

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“Even if somebody might be inclined to go to a casino, if somebody’s buying a couple lottery tickets a week, they still are going to buy a couple of lottery tickets a week,” said Patrick Kelly, a Providence College professor who researches casino gambling.

While the lottery is not feeling the heat from competition with the casinos, Sweeney, its executive director, said other changes in the gambling industry could represent a bigger threat.

The Legislature is considering legalizing sports betting, and many of the proposals to do that include mobile gaming components. The convenience of betting on games through a phone or tablet computer could be a big drag on the lottery. To compete, Sweeney said, the lottery should also be allowed to offer online games.

He said the debate over mobile sports betting should be an occasion to consider the future of the lottery. Among his other priorities is implementing cashless payments at retailers. Currently, customers must pay cash for lottery products.

“We’re increasingly becoming out of step with the retail environment,” Sweeney said. “And that’s not good for us. It’s not good for our retail partners.”

Curt Woodward of the Globe staff contributed to this report.



Andy Rosen can be reached at andrew.rosen@globe.com. Follow him on Twitter @andyrosen.