GPWA Times - Issue 21 - May 2012

tery products would only be available to customers within each of the states. This was a problem because if data crosses state lines, then the federal government’s power over interstate commerce is in- voked, which means that the prohibitive provisions of the Wire Act would apply and consequently make the Illinois and New York plans illegal. In short, the legal opinion determined that Illinois and New York may legally use out-of-state processors and may route data across state lines. According to the DOJ’s Office of Legal Counsel, the proper interpretation of the Wire Act is that “ interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act.” Legal Counsel further noted that it is not necessary to reconcile the Wire Act with UIGEA because the Wire Act does not ap- ply to Illinois and New York’s plans since they do not entail wagering on sports. Illinois and New York can, therefore, le- gally sell lottery products on the Internet. And this is what Illinois has done. At the end of March 2012, and coinciding with the record MegaMillions jackpot, the Illinois lottery launched online lottery sales. In the first five days the lottery had sold more than $425,000 worth of tickets online. Other state lot- teries are watching with interest to see how Illinois progresses. As other gambling categories – such as poker and casino – become more com- petitive for affiliates, lotteries could pro- vide an opportunity to diversify. But it will not necessarily be straightforward. State lotteries already use an extensive network of affiliates in the form of the retailers and convenience stores that sell their games. These retailers receive a commission for the sales they make. But in some instances it is these retail- ers that are influencing efforts to launch Internet sales. The retailers are con- cerned that Internet lottery sales will decimate retail lottery sales, and hence their commission. “Globally, lotteries account for 28 percent of all gambling revenues. But in the interactive sector – Internet and mobile – state lotteries account for less than 10 percent of revenues.” 41 Lotteries offer winning ticket