Members of a special legislative committee harshly criticized the Minnesota State Lottery’s expansion into online ticket sales Tuesday, and appear willing to end the Internet venture.

“I know it’s a difficult issue, a controversial issue, people have money in it,” said Sen. Roger Chamberlain, R-Lino Lakes. But the lottery director “entered into a bad deal" with online vendors.

A bipartisan coalition of legislators oppose the lottery’s expansion into online scratch-off lottery ticket sales, saying lottery officials did so without authorization. They are also critical of the lottery for embarking on a new initiative to sell lottery tickets at high-tech gas pumps.

Lottery director Ed Van Petten said they are merely selling the same games they always have, only now through the Internet and gas pumps. He insists they do not need legislative permission to do so.

The lottery's online expansion has drawn the attention of charitable gambling advocates, tribal casinos and convenience store owners fearing that the online sales will cut into their businesses.

Van Petten told the committee that prohibiting online sales will make it harder to reach younger customers, a computer savvy group that has shown less interest in traditional lottery tickets.

“We have found simply that the lottery is not on the minds of young adults,” he said. “We just feel like the added brand awareness, that the Internet presence will bring, will educate our players and bring new players into the retail environment.”

Lottery tickets sales are declining, but profits have remained strong as record lottery payouts have spurred existing customers to spend even more.

Halting online sales could cost the state millions, both from breaking contracts with online vendors and in lower profits for the state. Lottery profits are specifically earmarked to go into the state general fund and for a list of environmental and conservation efforts.

Since February, the new online games account for just $235,000 compared to $145 million in conventional paper ticket sales.

Van Petten praised the state’s charitable gambling industry and said does not aim to compete with them. “It’s a great system and I have no intention in trying to harm them,” he said.

Rep. Leon Lillie, DFL- North St. Paul, criticized Van Petten for not being more available to legislators with questions and concerns in the last month.

“I feel like we are being held hostage” by the lottery’s contract with online vendors, Lillie said. “I am greatly disappointed in so many different areas.”

In an interview after the hearing, Van Petten said he has attempted to provide information whenever legislators asked for it.

“I am not a lobbyist, I am an administrator and I have an agency to run,” he said. “I didn’t see the need for a continual presence.”

The full Legislature could vote to block the lottery’s online gambling initiative this week.

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