Minnesota's fledgling online lottery operation has been thrown into jeopardy as the state Senate passed a measure Friday banning Internet lottery ticket sales.
The move came as legislators have blasted Minnesota Lottery director Ed Van Petten in recent days for embarking on online lottery ticket sales without legislative approval.
“I am not saying the lottery director overstepped his bounds,” said Senate President Sandra Pappas, DFL-St. Paul. “But it is a reasonable request to ask the lottery to slow down.”
The proposal was tacked into another gambling-related measure that passed 55-2, with strong bipartisan support.
Lottery officials insist they do have authority to branch off into online ticket sales.
“They are making a huge mistake,” Van Patten said Friday.
Van Petten said he presented legislators with data showing the benefits of online sales and that it does not hurt convenience stores that sell traditional lottery tickets.
“They didn’t even read it,” he said of legislators. “There are forces greater than me pushing this.”
Operators of the state’s 18 tribal casinos – who are significant contributors to both parties -- have watched the measure closely. They do not believe that lottery officials have authority to sell tickets online.
Nationally, the recession-racked casino industry has fought hard against new online gambling as casino owners look to prevent further erosion of their business.
It is not clear whether the House will take up the measure, but there is strong support among its members on both sides of the aisle.
DFL Gov. Mark Dayton, who appointed Van Petten, has urged caution.
“The governor wants to know whether these exclusions are benefiting the people of Minnesota, or the vested economic interests that make money off the status quo,” said Matt Swenson, a Dayton spokesman. “He has said we need to separate clearly what is in the public interest, and what is in the moneyed interest.”
Minnesota Lottery officials have been trying to find new ways to reach customers as sale of traditional paper tickets have languished.
Van Petten views the online sales a marketing tool to reach younger consumers who are more comfortable making purchases online. They say research shows online sales actually help retailers.
So far, about 8,500 Minnesotans actively buy lottery tickets online, a tiny fraction of the 1.2 million who regularly buy conventional tickets from retailers.
Lottery proceeds go to the state budget and to environmental and conservation causes.
State legislators will make up lost revenue by pulling money from the state budget.
“I think lottery officials are wrong and they shouldn’t do it,” said Senate Minority Leader David Hann, R-Eden Prairie. “If it requires legislation to make that clear, then we ought to pass it.”