With New York State facing a $15 billion shortfall, Governor Andrew Cuomo and other lawmakers are looking to mobile gambling as a way to fill up the coffers. While convenience stores used to be the go-to places for purchasing lottery tickets and scratch-off cards, there are now lottery apps that allow people to play on their phones. Could convenience stores lose patrons to something that's even more convenient?
Mobile gambling attracts younger generations
The computerized bugle that heralds a winning lottery ticket or scratch-off card is a common sound in convenience stores and other official lottery retailers. But it might be heard less now that gambling apps like Jackpocket make it possible to buy digital tickets for Mega Millions and Powerball right on their phones. Soon, players will also be able to get scratch-off cards delivered to their homes.
Proponents of mobile gaming see it as a safe, contactless way of playing. The developers behind Jackpocket are hoping to tap into the younger, tech-savvy generation of players for whom convenience is everything. But retailers are concerned -- and rightly so -- about losing the foot traffic and transactions that come with in-store lottery ticket purchases.
What does mobile gaming mean for stores?
Since 1967, convenience stores have been instrumental in creating what is now a $10 billion per year business for the New York lottery. To be clear, no convenience store owner is getting rich on lottery ticket sales. Retailers only get 6% of each ticket sale -- a percentage that hasn't changed since the lottery started in 1967.
In its current form, the lottery is a cash-only business that requires an in-person transaction. With an app like Jackpocket, a player can place a ticket order at home with a credit card (a 9% fee applies to fund a player's account). The order is fulfilled by an official retailer, and players will get a digital ticket on their phone. They will also soon be able to get scratch-off cards delivered to their home. In addition to New York, the app currently allows for play in Arkansas, Colorado, Minnesota, New Hampshire, New Jersey, Ohio, Oregon, Texas, and Washington, D.C.
If getting their lottery fix was the only reason for people to head to their local convenience stores, retailers could be in trouble. That includes liquor store owners who also serve as official lottery retailers. However, online gaming isn't the only game in town; combine it with delivery services like Drizly, and in-store purchases could take a hit.
There is some good news for store owners: While players will be able to get any wins under $600 credited back to their accounts on the app, scratch-off card players still need to go into stores to claim their winnings. That's an opportunity to get customers in the store to buy liquor and grocery items and, yes, more lottery tickets.
Of course, die-hard lottery players for whom tickets and scratch-off cards are something of a ritual -- along with a cup of coffee and the daily newspaper -- might not be swayed by the new technology. But at a time when foot traffic is down for retailers across the board, anything that encourages patrons to purchase online instead of in stores can be worrisome.
The bottom line
Convenience stores live up to their names with their quick and easy purchases, be it a carton of milk, a pack of cigarettes, or a lottery ticket. But what happens when something comes along that's even more convenient? Between delivery services like Instacart and now lottery apps, convenience stores might see an even greater decline in foot traffic.