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Over the past year, two successful efforts to legalize internet lottery sales have flown under the radar as stalled efforts to legalize online slots and table games in a handful of U.S. states garner legislative attention.

But lottery directors and suppliers warn that iLottery expansion could be difficult as tensions remain between lotteries and some gaming companies who argue that online lottery games are too similar to iGaming products.

James Schultz, executive vice president for global legal and public policy at Scientific Games, believes the two industries should work more closely together on legalization efforts.

In 2024, both the Kansas Lottery Commission and Massachusetts Governor Maura Healey, a Democrat, legalized online lottery ticket sales. The Massachusetts Lottery expects to launch online sales by April 2026, while the Kansas Lottery rolled out its digital platform in February.

“From a legislative point of view, it’s getting tougher and tougher to get either done,” Schultz said of efforts to legalize iLottery and iGaming. 

Currently, there are 11 states with legal or operating iLottery platforms, including Illinois, Kansas, North Carolina, Georgia, Kentucky, Michigan, New Hampshire, Massachusetts, Pennsylvania, Rhode Island and Virginia, as well as Washington, D.C.

Full iGaming is regulated in seven states: Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island and West Virginia, while iGaming is limited to online poker in Nevada.

“They are very similar,” said Khalid Reede Jones, executive director of the Virginia Lottery. “We have iLottery in Virginia; we don’t have iGaming.”

Jones said there was an iGaming bill introduced during the 2025 legislative session, but it was pulled in committee. He expected an iGaming bill “will come around again”. He said it is important that lottery regulators understand “what is, what isn’t iGaming.”

“Because what’s going to happen if you don’t do that is you’ll find yourself in the courts and they’re going to sort that out for you,” Jones said.

What lotteries and their vendors have not done well, according to Schultz, is motivate teacher unions to back online sales, which generally benefits state education programs, as well as garner support from retailers who have generally opposed efforts to move online, arguing it would reduce retail sales.

“We have to show strength where we are getting the strongest pushback in jurisdictions where iLottery is appropriate,” Schultz said. He was speaking last week at a discussion on state-by-state expansion of iLottery and iGaming at the East Coast Gaming Congress at the Hard Rock Hotel & Casino in Atlantic City.

“But also get everybody to the table, because in all of these [legislative] sessions it ends up being leveraged on both sides,” Schultz said. “The gaming industry has its interests, lottery has its interests, and lottery needs to do a better job stepping up to the plate and pushing back on casinos a little harder.”

Schultz was asked by moderator James Carey, executive director of the New Jersey Lottery, why most lotteries seem so reluctant to mobilize their beneficiaries to support iLottery, as their business is an important part of a state’s finances.

“Because these lotteries are creatures of government, it becomes more and more difficult for them to get engaged and sometimes are prohibited in some states … for advocating on behalf of themselves,” Schultz said.

Regulatory Acceptance for Lottery Couriers

Lottery couriers have gained a foothold in the U.S., operating in about 17 states and the District of Columbia, even though only New Jersey and New York regulate companies such as DraftKings-owned Jackpocket and Lotto.com. These services are third-party companies that enable consumers to purchase digital lottery tickets through mobile accounts or applications.

Couriers fulfil ticket orders on behalf of their customers from licensed state lottery retailers, which are typically independent from the couriers.

Carey said lottery couriers have been “great partners in New Jersey, although there have been some issues in Texas with the state lottery and couriers recently.”

The Texas Lottery Commission is scheduled to approve a ban on lottery couriers at its next meeting on Tuesday (April 29). The lottery has been criticized for allowing courier services to operate in the state, and a $95m jackpot in 2023 was won by a single group buying out almost every possible ticket combination.

Lawmakers are also considering shutting down the agency by eliminating all its funding, basically removing about $2bn in annual revenue for the state’s public school fund.

Jones said in states where couriers are not legally allowed to operate, iLottery “can be very beneficial” to filling that online or mobile vacuum.

The companies describe themselves as the “Uber Eats for lottery tickets,” with the couriers being the delivery service, Schultz explained to conference attendees.

“States know what is important to them and you’re seeing it play out across the country, either embracing [lottery couriers] or banning it,” he said. 

Carey was curious about how regulators balance the need for strict regulatory requirements with the push for innovation and modernization.

“It’s another fine line,” said Helene Keeley, executive director of the Delaware Lottery. “There are lots of ways to do it, but communication is the number one thing you need to have with whatever you’re writing. It’s addressing the most significant risks without imposing unnecessary regulation.”

Keeley also expressed support for creating a “sandbox” allowing for testing and exploring how potential regulations might work on a temporary basis. She noted that changing any regulation in Delaware is a difficult process, but that her agency is one of the few that regulates both commercial gaming and a state lottery.

“History has shown that those who have failed to embrace innovation have been left behind,” Jones said. “When people come to us and say there are new ideas they want to try ... the first question is not necessarily what regulation does it fit into … [but] does this help the player or hurt the player?”

“If it is something that could possibly help the player, help the business, then let’s figure out where it goes,” he added.