March 14, 2012 | Posted in Arkansas Lottery | By

There’s been a lot of talk about the Arkansas Lottery changing the way it sells lottery tickets. Most recently, the new lottery director has been kicking around the idea of letting people purchase lottery tickets via debit card, which he told KTHV is “essentially electronic cash.” So why is that a big deal? Well, let me explain.

Arkansas law currently states that lottery tickets may only be sold for cash—no “deferred” payment, like check or credit cards. Here’s the problem: That little clause in the law is the only thing standing between the lottery and online ticket sales.

When the enabling legislation for the lottery was passed in 2009, we lobbied the legislature to specifically address Internet gambling and online lottery sales, asking them not to allow things like that. Lottery proponents responded that federal law prohibits online gambling. Lawmakers took them at their word, and chose not to address the issue in the enabling legislation.

But just a few weeks ago, the U.S. Justice Department issued a new opinion on federal laws governing online gambling, saying that it is perfectly legal for a state lottery to sell lottery tickets online to its residents.

That drastic change in the law sparked Illinois’ decision to sell lottery tickets online. When asked whether Arkansas would follow suit, lottery officials assured members of the press they had no intention of selling lottery tickets online, because state law requires they accept cash only. Obviously, cash isn’t used in online transactions.

But guess what is: Debit cards. A debit card can be used online just like a credit card. If the Arkansas Lottery starts accepting debit cards, they can start selling lottery tickets online. It’s that simple.

Here’s another fact: While merchants can distinguish between credit cards and debit cards at the checkout stand or the gas pump, it’s practically impossible for an online store to draw a distinction, because debit cards rely on credit card companies, like Visa or MasterCard, for processing.

Internet merchants can accept debit cards just like credit cards, but because of how they’re processed, they cannot tell the difference between the two—if they could, financial talk show host Dave Ramsey, who practically believes credit cards should be illegal, would not have this disclaimer on his website about purchasing from his online store (read the last paragraph on the page).

So why is that a problem? Well, if the Arkansas Lottery starts accepting debit cards, it can start selling lottery tickets online. But if it does that, it cannot guarantee a credit card won’t slip by on its website. It can tell people all day long, “Please use only a debit card,” or “We accept only debit cards,” but it really has no control over which card a person uses. At that point, the Arkansas Lottery is in a pretty gray area, legally.

The bottom line is this: If the Arkansas Lottery wants to accept debit cards, they need to petition the Arkansas Legislature to change the law governing “cash only” ticket sales. And the Arkansas Legislature needs to completely close the loophole in the law that would allow online ticket sales.

Lawmakers recognized three years ago that internet gambling poses a real threat to Arkansans–for reasons ranging from gambling addiction to increased instances of fraud. That threat has not changed.

If the Arkansas Lottery chooses to accept debit cards without lobbying for a change in the law, they could be headed into some pretty shady territory. And if there’s one thing Arkansans have had enough of from their lottery, it’s shady business.

Jerry is the founder and president of Family Council. He began Family Council in 1989 after a successful effort to amend the Arkansas Constitution to prevent the use of public funds for abortions. He and his wife reside in Little Rock. They have four sons.