BOSTON - With Las Vegas-style gambling coming to Massachusetts, state Lottery officials are preparing to fight for every dollar amid concerns that casinos will drain a much-needed source of money for cities and towns.
To lessen the blow of increased competition, state Treasurer Deborah Goldberg wants to ramp up advertising to attract and retain players for the Lottery, which reported $4.9 billion in sales last year.
Goldberg, who took office Jan. 21, has asked lawmakers to boost the Lottery’s advertising budget to $10 million -- a $2 million increase.
“In a competitive environment, there's only a certain amount of money to spend on gambling and entertainment," said Goldberg, a Brookline Democrat. "We want to own the market, and the best way to do that is through advertising and innovation.”
The Lottery's current $8 million advertising budget is lowest among states with comparable lotteries, Goldberg said, and increasing ad spending will boost annual revenues.
"The last thing you want to do when you're trying to increase revenue is cut advertising," she said. "And especially not when new competition is moving into your backyard."
Goldberg said Lottery officials will also update their "outdated and inefficient" terminals and operating system. Bids for the upgrade, paid for by a bond bill approved last year by the Legislature, are scheduled to go out next week.
Other states with lotteries spend much more on advertising. New York, which also has casino gambling, spends $92.2 million while California spends $65 million and Florida $37.5 million, according to figures from gaming officials in each state.
Goldberg said a recent campaign for the Lottery's season ticket program -- which allows people to buy the same lottery number for an entire year -- is a good example of the return on advertising investments. The state spent $1.9 million on a television spot, including $413,139 on production costs, and generated more than $972 million in season ticket sales, a 6.5 percent increase from the previous year.
Lottery officials fear those revenues will evaporate as gamblers put their money into slots and gaming tables.
A 2011 law allowed for three casinos and a slots parlor to be built in the Bay State. Two licenses have been awarded for casinos in Springfield and Everett and a slots parlor at a racetrack in Plainfield. All are expected to be operational in the next two years.
A third casino location, slated for the southeastern corner of the state, is expected to be announced over the summer.
The state's casino law survived a ballot box challenge in November from opponents who say casinos will bring crime and traffic, and seldom deliver on promised money for communities. Supporters say casinos will create good jobs and provide needed tax revenue.
Massachusetts will take 49 percent of gambling revenues from the slots parlor and 25 percent from the casinos in taxes when the projects open.
The Lottery -- which drummed up $974 million in profits in fiscal year 2014 -- is a vital source of funding for schools and local governments.
Last year, the anti-casino gambling group Repeal the Casino Deal released a study suggesting that Las Vegas-style gambling will cost the state's 351 communities more than $100 million a year in lost Lottery sales.
The study projected that the state's Lottery will take a 21.9 percent hit in the first year of operation for all four new casinos, offsetting the local share of state gaming taxes collected from the casinos.
North Shore and Merrimack Valley cities and towns could forfeit more than $10 million in local aid, according to the report.
Casino supporters argued that revenue from gambling will be a windfall for the state's communities.
Under the state's casino law, each operator must pay an $85 million licensing fee and 25 percent in taxes on annual revenue. A slots parlor will be required to pay a $25 million license fee and 49 percent in taxes.
In the long run, casino revenue could generate $300 to $400 million a year, according to the state Gaming Commission. That money would go toward education, municipalities and other budget items, officials say.
Sara Rayme, senior vice president of public affairs for the American Gaming Association, said casinos will mean millions of dollars for state coffers and suggested that the relationship with the Lottery wouldn't be adversarial.
“In states around the country, lottery sales have increased — and set new records — following the introduction of casino gaming. In Massachusetts, casinos will partner with the Lottery and serve as an effective sales outlet," she said.
Goldberg wouldn’t speculate on how big a hit the Lottery could take from the increased competition.
"Whatever it is, whether it’s one penny or $100 million, it's too much,” she said. “The Lottery is critical to every city and town in the state and we don’t want to give up any ground."