Lotteries a threat to federal Web poker bill?

In the battle for online gambling in cyberspace, Nevada casinos and multiple state lotteries could be close to a showdown — one that will shape the U.S. gaming industry forever.

The lottery, referred to as “the most popular form of gambling in the world” by Illinois Lottery Superintendent Michael Jones, just months ago broke ground on the Web. Jones, who was speaking on a panel at G2E held Monday in Las Vegas, has so far seen about 100,000 people in his state use the Internet to buy tickets.

Lotteries are powerful entities, gaining acceptance from the residents of a state because a large chunk of the money they lose goes to “good causes,” as lottery directors say.

In order to generate even greater revenues, lotteries are also eying casino gambling. Some in Illinois want it under the control and supervision of the lotto. In Delaware, which has legalized web gambling, a synergy will be formed between the lotto and the three local casinos. The District of Columbia once had online poker approved under the control of its lotto, but the law was reversed under a cloud of controversy.

On the other side of the aisle are Nevada and California, who have strong casino interests vying for control of the U.S. web poker market. Despite legalizing it for intrastate business, gaming executives in the Silver State want a federal bill. Not surprisingly, Nevada Sen. Harry Reid is behind efforts on Capitol Hill, and he’s trying to exclude the lotteries from the game.

In response, the lotteries have talked about lobbying together against a federal bill, according to Scarlet Robinson, an Internet gaming consultant and owner of Rungood Gaming LLC. The lotteries also don’t want any legislation to limit games to only poker.

However, unlike the casino giants located in the U.S. pushing for such authorization, state lotteries don’t have the lobbying money to oppose a Reid bill with equal force, according to Rick Weil, president of Scientific Games, a maker of lotto systems.

The lotteries’ motivation stems from the fear of an aging customer base. The era of Facebook’s “social” gaming, as well as a once healthy, but illegal, U.S. web poker industry, has created a fear that younger generations just don’t have an interest the lotto.

In an effort to further protect its future, the Illinois lotto will soon launch on mobile devices. The goal is “seductive” front-ends that will one day help replace the baby boomers.

A Nevada casino and a state lotto are now on the cusp of offering similar products.

“The notion that lotteries and casinos are separate industries is outdated,” Michael Pollock, managing director of Spectrum Gaming Group, said at the G2E conference.

Once separated by the types of brick-and-mortar joints where the gambling occurred, both will tap into the Internet to appeal to the same demographic.

While lotteries shun web poker run by the feds, some are busy with their own battles on a more local level. In Maryland, the convenient store chain 7-Eleven has “drawn a line in the sand” against Internet lottery tickets, said Stephen Martino, the leader of the state’s gambling industry.

According to Martino, Maryland doesn’t have a “firm stance” on current federal online gaming efforts, but it wants “states rights” to be preserved. The state recently flirted with the idea of legalizing web casino games for itself.

“States want max profit and more control,” Robinson said. “They don’t want the feds in gaming.”

Nevada, which doesn’t have a lottery, also wants power in how it regulates web gambling but only so that its casinos can leverage their exclusive right to intrastate Internet poker by making southern Nevada the hub of a nationwide network. Nevada-based companies also have longstanding relationships with gambling in California and New Jersey.

With widespread Internet lottery sales likely to help escalate jackpots to unprecedented heights, brands will only grow stronger with time. Jones said he envisions a purse reaching $1 billion in the future, which could even attract casino gamblers who wouldn’t typically play the lotto.