Business

MassLottery to retire familiar but obsolete terminals

Aging lottery machine system to be replaced

Lottery employee Mike Kelly worked on a machine at MassLottery headquarters, where workers cannibalize broken lottery terminals for parts to repair other terminals.
David L. Ryan/Globe Staff
Lottery employee Mike Kelly worked on a machine at MassLottery headquarters, where workers cannibalize broken lottery terminals for parts to repair other terminals.

For 18 years, an unremarkable blue machine has been a fixture at corner convenience stores, its tired keys accepting millions of bets from players hoping a lucky string of numbers — a kid’s birthday, an old address — will just this once bend the rules of probability and change everything.

But, with casino gambling coming to Massachusetts, the state lottery is looking to replace the 8,500 aging blue terminals and the massive computer system that processes nearly $5 billion in bets a year. Lottery officials hope the sophisticated technology in newer terminals will help them hang onto loyal customers tempted by glitzy slot machines and table games.

“Nobody is still using their personal computer from 18 years ago, or even five years ago — except us,” said Beth Bresnahan, the lottery’s executive director. “The fact that we’ve been able to stretch the life of these machines for so long is, frankly, amazing.”

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Indeed, outside of Massachusetts, only the South American nation of Colombia still uses the 1990s-era lottery terminals. To keep its machines in service, the lottery cannibalizes broken ones for parts. There’s even a place at Massachusetts State Lottery headquarters in Braintree that repair technicians refer to as “the MacGyver room.”

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The machines are called the GTech ISYS, the ubiquitous but woefully obsolete lottery terminal that is finally set to be retired after dutifully spooling out 79 miles of tickets and receipts since 1997.

The terminals have not hampered sales at one of the nation’s most successful lotteries. Massachusetts residents spent $736 per capita on lottery games last year, far more than residents in any other state, according to La Fleur’s Magazine, a trade journal. In 2014 the lottery distributed $974 million in local aid to towns and cities.

But the stash of spare parts is running critically low. More important, the advent of casino gambling in Massachusetts has presented the lottery with direct competition for the first time.

Newly elected Treasurer Deborah Goldberg, whose office oversees the lottery, said she is determined to preserve lottery profits and local aid — and believes new terminals will be a vital tool in that effort.

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“We’ve managed to do very well with these machines, but it’s no longer economically viable to maintain them,” Goldberg said. “With casinos coming in, we cannot be complacent.”

The lottery is soliciting bids for new terminals that will be easier to reprogram remotely, so it can quickly push out new games and promotions. Modern computers will also allow officials to better monitor how different games are selling in different areas — spotting, for example, a drop-off in sales near a new casino.

And the lottery wants to introduce a loyalty card system for frequent players, something that is impossible on the current terminals.

New terminals may even allow players to submit their lucky numbers using a smartphone application. The technology for such mobile gambling already exists and is popular in Europe. Here in Massachusetts, the app could only be used inside a store with a lottery terminal, as state law prohibits gambling from home.

“We’re seeing more and more states testing online and mobile games,” said Terry Rich, director of the Iowa lottery and president of the North American Association of State and Provincial Lotteries. “It’s less expensive than the terminal on the counter, and it’s the way Millennials shop.”

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Rich suspects mobile gambling could one day make the countertop lottery terminal itself obsolete. That, however, means lotteries will have to design systems that, for example, verify users’ ages or set spending limits to control addictive gambling.

But Rich said lotteries are effectively businesses competing for consumers’ money and must evolve or risk “ending up like the post office.”

When casino gambling was introduced in Iowa in 1991, lottery profits dipped by about 12 percent, then tumbled again in 1996 and 1997 after slots at racetracks were legalized. Each time, Rich said, the Iowa lottery clawed back within several years, which he attributes in part to new products and additional marketing.

“You’ve got to innovate and keep it fresh so people don’t get bored,” Rich said. “There’s no doubt casinos and lotteries both go after the same discretionary dollars. Now, [Massachusetts] is going to have to market a little harder, work a little harder.”

The lottery is also soliciting a second contract to replace the computer systems that power the network of blue terminals and run the betting operations.

Officials hope the costs of both jobs will come in under $65.5 million and expect bids from the industry’s three largest companies: GTech S.p.A., an Italian company with its US headquarters in Rhode Island; Las Vegas-based Scientific Games; and Greek firm Intra-lot SA.

Gtech and Scientific Games declined to comment, citing the open bid process; Intralot did not respond to a request for comment.

Old as they are, the Gtech terminals inspire some affection. Harish Chopra, owner of VIP Convenience in Cambridge, said nearly 50 percent of his revenue comes from lottery sales processed through the machine. He can work the keys almost without looking, his fingers guided by a decade of muscle memory.

Still, Chopra understands why the state wants to replace it. On recent drives to Connecticut and New Hampshire, he couldn’t help noticing how newer terminals in those states use thermal printing instead of the ancient dot matrix technology in the ISYS terminal.

“It’s like everyone else got iPhones and we still have flip phones,” Chopra said.

What to do with the old ISYS terminals when they are replaced? Chopra has a suggestion.

“I’ll keep it as a souvenir,” he said. “Maybe I’ll give it to my kids and they can sell it in 50 years as an antique.”

 The old blue lottery machines have been around since the 1990s.
BILL POLO/GLOBE STAFF/FILE
The old blue lottery machines have been around since the 1990s.

Dan Adams can be reached at dadams@globe.com. Follow him on Twitter @DanielAdams86.