Georgia Lawmakers Consider Internet Lottery Purchases

25 March 2005

On March 10th a bill that would allow the Georgia State Lottery to begin selling tickets over the Internet passed through the state's House of Representatives by a vote of 98-48. Supporters believe the bill could increase the lottery's revenue by targeting a new kind of customer, but opponents fear not only that it could increase the amount of problem gambling but that it might also violate the federal Wire Act.

If House Bill 346 were to become law, Georgia residents would be able to set up electronic accounts from which money could be used to participate in lottery games. As is the case with a similar bill working its way through the Illinois state legislature, supporters believe that online ticket sales would open the games up to new players who embrace the ease and convenience of making purchases over the Internet. Georgia's lottery could definitely use such a boost; sales dropped $4.1 million during the first half of the last fiscal year.

The bill's main sponsor, Rep. Terry Barnard, R-Glennville, says the main purpose of his bill is to rejuvenate the educational programs that receive 35 percent of the lottery's revenue, including the state's HOPE scholarship fund. "It's all about HOPE," said Barnard. "The bill will generate new interest in the Georgia Lottery, which will bring in new revenue, which will bring new scholarships."

Barnard attempted to pass a similar bill last year. It too passed the House of Representatives, but it never received a vote from the Senate. Lottery retailers opposed last year's bill because they feared it would take away some of their profits. To alleviate their fears, Bernard altered this year's bill to provide a clause that requires customers who wish to play online to apply for an account at a lottery retail agency. Besides verifying that players are of legal age to participate in the lottery, requiring customers to register for an account at a retail agency would also enable the lottery to track which players originated from which agencies so that a portion of the profits could still be distributed to the agencies. Jim Tudor, a lobbyist for the Georgia Association of Convenience Stores, says that the state's lottery agencies are now neutral on the bill since the new clause has been introduced.

Georgia Lottery officials opposed last year's bill because they were unsure of its legality, but unlike the retailers they continue to oppose the bill this year. "While the idea of purchasing lottery tickets on the Internet is not necessarily new, there's some uncertainty in regard to federal law," said Georgia Lottery spokesman J.B. Landroche.

The federal law about which Landroche and others are uncertain is the Wire Act, which was enacted in 1961 in order to enforce a prohibition on unlicensed gambling by making it illegal to transmit betting information over wire communications. The U.S. Department of Justice has written letters to the state of Nevada, the U.S. Virgin Islands, the National Association of Broadcasters, and most recently the state of North Dakota to inform them that it believes the Wire Act prohibits online gambling over the Internet.

However, most industry lawyers are adamant that the language of the Wire Act only applies to sports betting, and that casino gaming, poker, and lotteries over the Internet are therefore legal.

The DOJ sent a letter to North Dakota's lawmakers only two weeks ago, a matter of a few days before the state's Senate was scheduled to vote on a bill that would make the state a licensing jurisdiction for Internet poker operations. That bill inevitably failed by a vote of 44-3 that was largely influenced by the DOJ's stance.

The DOJ has not yet made a specific statement as to whether or not it believes the Wire Act is applicable to the purchase of lottery tickets over the Internet, and it has not issued a letter to the state of Georgia.

Georgia's House Bill 346 was first read before the Senate and referred to committee on March 11th. On March 21st it was favorably reported by the committee and then received another reading before the Senate on March 22nd.

The Illinois Bill that would authorize the sale of lottery tickets over the Internet passed through a Senate committee on February 17th, but has not yet received a vote before the full Senate.

Click here to view H.B. 346.

Bradley Vallerius

Articles by Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials. Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

Bradley Vallerius Website