Lottery officials say court challenge and market competition threaten online revenue; scratch-off sales showing early recovery

Deputy Director of the Pennsylvania Lottery (speaker 10) told the House Appropriations Committee that the lottery is pursuing several strategies to grow revenue for programs that benefit older Pennsylvanians, but litigation and market competition pose risks.

The deputy director said the lottery is optimizing its game portfolio, expanding distribution points and modernizing online services. She said iLottery generated about $80 million in profit last year but remains at risk because casinos sued after online sales began in 2018 and a Commonwealth Court decision forced removal of two longstanding games in January, with the casinos’ appeal pending before the state Supreme Court.

"This is putting at risk the money that we generate from online," the deputy director said, and asked the legislature for clarity in Act 42 of 2017 around language that distinguishes iLottery games from iGaming.

Lawmakers pressed on scratch-off trends and retail presence. Representative Rigby cited comparative figures showing scratch-off sales had declined, while the lottery noted that last year’s profit margin relief allowed increased payouts that produced early signs of growth in scratch-off categories. The lottery reported nearly 10,000 retail locations and said it plans to expand retail distribution to CVS and Walgreens, and that the governor’s budget requests 10 additional lottery positions to support retail expansion.

The deputy director said the lottery expects to meet original sales projections by the fiscal year’s end and that retailer expansion and new product launches — including Gus‑the‑groundhog themed promotions — are part of that strategy.

The committee had no formal vote on the lottery’s staffing request; members said they would continue oversight as the budget process proceeds.