In an increasingly cashless society, where consumers make purchases with the swipe of a credit card or the tap of a mobile app, lottery tickets have remained a lonely holdout — nearly always a cash-only transaction in Massachusetts and many other states.
Now, with lottery revenue stagnating, pressure is building on lottery officials around the nation to make it easier to buy a ticket with a credit card or mobile device — but a top Massachusetts official is worried the move would encourage players to run up debt.
Treasurer Deborah Goldberg, who oversees the lottery, said she fears that allowing credit card purchases would make it too easy for customers to fall into debt chasing dreams of riches. But as retail of all types moves online, she is pushing to expand lottery gambling into the digital realm.
“I hope we are not going down the slippery slope of a cashless society in which more people are living on credit cards and getting into greater debt,” she said in an interview this week.
Goldberg recently filed legislation that would allow online lottery gambling but limits payments to gift and debit cards, bucking a national trend that has seen some states make it easier to buy tickets.
“Whatever other states do is irrelevant,” Goldberg said. “I don’t want to overreact to every shift in the wind.”
Lotteries have long been cash cows for state governments, ranking as one of their largest sources of revenue outside of taxes.
But the Albany, N.Y.-based Rockefeller Institute of Government recently found lottery revenue has stagnated. In Massachusetts, which prohibits the use of credit cards to buy lottery tickets, the Rockefeller Institute study found that lottery revenue dropped by 16 percent between 2008 and 2015, accounting for inflation.
Fewer than half of state lotteries allow customers to buy tickets with credit cards, which problem-gambling specialists consider an open invitation to abuse. But as customers carry less cash, some lottery officials are setting aside their concerns about allowing digital transactions.
“If lotteries do not adapt, I would argue they will continue to lose market share,” Michael Sweeney, executive director of the Massachusetts State Lottery, said at a recent forum on lotteries at the Rockefeller Institute. An estimated 90 percent of lottery tickets in Massachusetts are paid for in cash, he said.
In Michigan, the lottery is offering retailers an additional 1 percent commission if they accept credit cards and meet sales goals, and the Pennsylvania lottery is experimenting with even higher premiums to spur retailers to accept credit cards. A number of other states are considering adding online lottery games with credit card use.
Nationally, the shift away from cash toward mobile payment apps — for all kinds of transactions —
“For an improved customer experience, it is going to become increasingly necessary for businesses to accept other forms of payment beyond cash,” the Gallup report stated. “Americans say they are using less cash than they were five years ago, and with enhanced technology, this trend is likely to continue.”
In his remarks at the Rockefeller Institute, Sweeney cited a 2014 survey that found that almost 80 percent of respondents generally carried less than $50, and nearly half carried less than $20. The number of consumers using the electronic payment system PayPal more than doubled between 2010 and 2016, he said.
By remaining almost wholly cash-dependent, lotteries are falling behind the times, he said.
“Lotteries across the country, maybe not surprisingly, have been slow to adapt to not only the changes in technology but also to the revolution that is being led by average men and women on the street, regardless of their demographic background and specifics of shopping through e-commerce and engaging in a cashless society,” he said.
The Massachusetts lottery has long been considered among the nation’s most successful, based on strong sales and high return to the state. But the decline in revenue has spurred a push to legalize online games.
Goldberg, who once strongly opposed the idea of an “iLottery,” said the lottery must change with the changing times. But allowing people to buy scratch tickets on credit is too risky, she said.
“The numbers tell the story,” she said citing the marked increase in consumer preferences for online purchases. “But credit cards? That’s going too far.”
State Senator Jennifer Flanagan, a Leominster Democrat, has sponsored bills for online lottery games the past two sessions. Earlier this year, the Senate passed the measure, but the House declined to take it up for a vote.
Flanagan said she will resume her efforts when the Legislature reconvenes next month.
With the state facing a budget deficit, “it’s more important than ever to maintain lottery receipts,” she said.
Flanagan opposes the use of credit cards, either at retail outlets or online, unless measures are built into the system to protect problem gamblers.
Mark Gottlieb, executive director of Northeastern University School of Law’s Public Health Advocacy Institute, said credit cards would be a mistake, no matter what the payment trends.
“Accepting credit cards would leave vulnerable players increasingly at the mercy of predatory lenders that tend to have high interest rates and steep penalties,” he said. “Any player that relies on credit to play the lottery is probably someone who ought not play at all.”
In Michigan, online lottery players can set a weekly limit on their spending, which they can lower at any time. Raising it requires a two-day “cooling off” period, said Jeff Holyfield, spokesman for the Michigan lottery. Players can also ask to be excluded from playing the lottery online, he said.
Most merchants won’t accept debit cards for lottery tickets because the processing charge all but offsets the profit. But in Hingham, liquor store owner Joseph Ierardi said he wants to give customers as many payment options as possible. After all, a cashless society is coming, he said.
“It’s about customer service,” he said. “You want happy customers.”