Kentucky Lottery to offer keno, online sales of lottery games

March 22, 2013 | | Comments 0

By Beth Musgrave

FRANKFORT — Kentuckians could be playing keno, a continuous bingo-style lottery game, as early as January 2014 and buying other lottery games on their computers or mobile phones in 2015.

The Kentucky Lottery Board voted unanimously Friday to allow the sale of lottery games online and to offer keno, which is played in 13 states.

In keno, players pick 1 to 10 numbers and try to match those numbers to 20 numbers drawn by the lottery from a field of 80. The numbers are refreshed every four to five minutes. Players can win anywhere from $1 to $100,000 on a $1 play.

Kentucky Lottery officials said keno could be offered in as many as 450 locations — restaurants, bars, bowling alleys or other hospitality venues. Combined annual revenue for the state from the two new ventures could top more than $85 million within 10 years, lottery officials estimate.

But the two new ventures may face a court challenge from conservative groups who have opposed any expansion of gambling in Kentucky.

Martin Cothran, a spokesman for the Family Foundation, said the group is reviewing its options to determine if they can fight the expansion. Cothran noted that the lottery board voted on the expansion in the waning days of this year’s legislative session, where keno and online games have been discussed as a way to help fund that state’s ailing public pension system.

The Democrat-led House approved a bill earlier this legislative session that relied on expanded lottery games and instant racing — a slots-style game that allows players to bet on past horse races — to generate more than $100 million for the pension system in three to five years. The Republican-led Senate never considered the measure.

The two sides are now at an impasse on how to fix the pension system, which has only half the money it needs to fund benefits for current and future retirees. The legislature will return on Monday for the final two days of the legislative session.

Gov. Steve Beshear and Senate President Robert Stivers, R-Manchester, said Friday that the two sides are still discussing an overall fix to the pension system and possible funding options. Both said those discussions will continue through the weekend.

Beshear said House and Senate leaders want to avoid a special legislative session, which would cost taxpayers upwards of $60,000 a day. They have until Tuesday at midnight to broker a deal.

The Kentucky Lottery Board’s vote to allow keno and online lottery sales was not a signal that lawmakers have agreed to fund pensions with an expanded lottery, state officials said Friday.

The legislature would still have to pass a bill that would earmark revenues from those expanded games for pensions, said Arch Gleason, CEO of the Kentucky Lottery. Currently, the vast majority of lottery proceeds are used to fund merit-based college scholarships.

“We did not have anything to do with the board’s decision, but as the lottery’s original sponsor, I have long argued that I think the board has the authority to take the action it did today,” said House Speaker Greg Stumbo, D-Prestonsburg.

Stivers said Friday that he was not sure the lottery board has the authority to expand online or allow keno.

Stivers said he was not in favor of either new venture, but would have to look at the lottery’s enabling legislation before forming an opinion about the legality of Friday’s vote.

“It doesn’t matter what I believe,” Stivers said. “It matter what the courts believe.”

Two states — Illinois and Georgia — have already approved online lottery sales after a 2011 U.S. Department of Justice legal opinion clarified that Internet wagering within the borders of a state is not prohibited under federal law, as long as it is legal within the state and the wager is not on a sporting event.

“I anticipate we will start slowly and deliberately down this path, with draw games such as Powerball and Mega Millions,” said Gleason. “We would then gradually move to include simulated scratch and instant win games.”

Gleason said there is no prohibition in the Kentucky Lottery’s enabling legislation against offering online games or keno. The lottery has been operating since 1989 after Kentucky voters approved a constitutional amendment to allow it.

Gleason said other countries that offer online lottery games have not seen a decline in traditional lottery games sold at retailers. He said keno players typically do not play other lottery games.

In its first year, keno is expected to generate about $15 million in state revenue, the lottery estimates. Online lottery sales are expected to generate $4.5 million in their first year.

Those figures would likely inch up to $31 million for each game by 2020, lottery estimates show. By 2024, projections show total revenue hitting $85 million a year.

Filed Under: KY General AssemblyState Government

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