WPMA has been alerted that a bill is being drafted to allow the Wyoming Lottery to accept debit cards and sell scratch games. The Wyoming Board of Trustees revisited its policy position of opposing debit cards unless commissions are increased to compensate for debit card fees and its outright opposition to scratch instant gratification games. The Board policy as stated did not change. In preparation for the bill's release, the below email will be sent to the Travel, Recreation, Wildlife and Cultural Resources Committee immediately upon introduction.
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Hello Travel, Recreation, Wildlife and Cultural Resources Committee,
The proposed bill, [bill # once introduced], seeks to amend the Wyoming Lottery Corporation statutes to allow the acceptance of debit cards as "cash" and to develop and deploy instant gratification scratch ticket games. The Wyoming Petroleum Marketers Association and Convenience Store Association strongly objects to this bill. Below are the reasons stated by the WMPA Board of Trustees. Instant gratification games only lead to addiction and financial ruin for many Wyoming households.This is why the legislature originally prohibited instant gratification games in 2013 when the lottery was approved. Scratch games pose a significant burden on convenience stores not supported by the commissions currently paid. Also, debit cards are cash and can lead to mounting debit. The discussion belows explains how debit cards are NOT the same as cash.
Thank you for your time and attention. Should you have any questions, please just let me know.
Mark Larson
Wyoming Petroleum Marketers Association
and Convenience Store Association
(303) 941-7830 mobile
Reasons WPMA Opposes the Use of Debit Cards to Purchase Lottery Products:
- Wyoming Lottery commissions are 6%. Debit card fees vary widely. The combination of interchange fees and transaction fees means the retailer will pay $.12 and up on a $5 lottery purchase. The retailer receives $.30 commission for that same $5 purchase. The retailers net commission then is 3.6%. Further, credit card processors fees may also be tacked on. Smaller retailers may be assessed much higher fees than large retailers, meaning that well over half of the commission could be eaten up on debit card lottery purchases. Retailers should NOT be required to pay these credit card fees without compensation on gambling products. Depending on what percentage of lottery product sales become debit card sales, perhaps a commission increase to reflect that anticipated utilization would assuage retailers' concerns. Without increased commissions or the lottery reimbursing for debit card fees, the 6% commission is simply insufficient.
- Importantly, the utilization of debit cards is counter to the legislature's desire to assure that debt cannot be incurred by excessive or addictive gambling behavior. Debit cards can indeed incur debt though programs banks promote for overdraft accounts and converting overdraft into interest bearing loans. The issue of fraud is also escalated and will impact retailers. Legislators should not be fooled into believing that debit cards are the same as cash. They are not. The statutes prohibit any form of deferred payment. These debit programs offer deferred payment options that creates debt.
- Credit cards and debit cards are sometimes hard to differentiate. What happens if a retailer runs a credit card believing it was a debit card? Credit card terminals face the customer, not the cashier for security reasons. Some POS systems can be programmed to block credit cards for lottery purchases but many lottery retailers do not have that capability. It is unavoidable that credit cards might accidentally be accepted by retailers, thus placing them in violation of the law and their lottery agreements.
- Allowing retailers to "opt out" of accepting debit cards for lottery purchases means a retailer will have to determine if their opting out will harm their business since most large retailers will opt in. Small retailers will in essence be coerced into accepting debit cards to remain competitive. WPMA questions if the state should be forcing small retailers to make that decision when large retailers already have economies of scale advantages. The solution is to compensate retailers for debit card fees by a higher commission or other program.
- A point of clarification is needed here. Retailers cannot set a “minimum purchase” on debit cards. While it is not “illegal” by any federal or state laws, retailer agreements with Visa and MasterCard prohibit the establishment of minimum purchases on debit card sales. Minimum purchases are allowed on credit card sales up to $10. Retailers are also not allowed to “surcharge” debit card fees to consumers like they can on credit cards. Accordingly, due to these restrictions by agreement, the retailer has no option on debit card acceptance to help mitigate the fees associated with debit card use implementation. This would include the "bundling" allowance some states have authorized. State's should not be codifying provisions that knowingly place retailers in conflict with national agreements.
- Financially, the stores receive notice of credit card reimbursement payments daily however, that credit has to move from the oil company processor to the distributor, then to the small C-store, and is rarely a cash payment. WIth small retailers, the credit card credits are often applied to the store's fuel bill leaving the store to come up with the cash for the lottery deposit. This is a growing concern considering more and more people don't carry cash as witnessed by one distributor’s average daily cash deposit for one of their stores of $500, out of over $6000 in daily sales. Cash flow will be an increased problem for small retailers.
- Finally, while WPMA realizes that the current COVID-19 pandemic will be proffered as a reason to force debit card use on retailers for lottery product purchases, a few months from now, that will no longer be an issue. The legislature will then have forced additional costs and diminished commissions on retailers for reasons no longer cogent. WPMA believes that, at this point with vaccinations widespread, that the pandemic mitigation will be unnecessary by the time a bill would become law.
- Scratch tickets are instant gratification games that promote sale/scratch/redeem/repeat-
sale cycles that substantially harm cashier productivity. In state's that have scratch tickets, retailers routinely deal with clogged cashier lanes with scratch ticket players. - Instant gratification games contribute exponentially to gambling addiction. Should the state really be promoting instant gratification gambling that frequently leads to addition?
- Unlike jackpot games that are not instant gratification and machine-generated at the time of purchase, scratch tickets require maintaining inventories of multiple games that expose retailers to constant theft and control problems. And like the topic below, counter space (above or below) is extremely limited in many Wyoming retail locations. Many states have upward to 20 scratch games operating at a time.
- Lotteries offer "scratch stands" or "tables" to retailers in an attempt to move the scratch players away from the cashier desk. What lotteries fail to consider is the square footage on the retail floor has incredible value where "donating" that space to already low-commission lottery purchasers simply does not make good business sense. Kiosks where lottery products are sold via vending machines have the same square footage undervaluation condition. Additionally, the age restriction regulations preclude kiosks in non age restricted retail locations. Only age restricted businesses will be able to utilize kiosks. Floor space premium does not support providing free space for scratch stands or tables.
- Allowing a retailer to opt out of offering scratch games creates the same competitive constraints as the debit card opt out consideration above. This forces small retailers to accept scratch games because large retailers have economies-of-scale advantages. Forcing small retailers into accepting scratch tickets only exacerbates the low commission realities.
- Since debit card sales are being promoted as a COVID-19 mitigation solution, scratch ticket implementation would be devastating given the hand-to-hand exchange cycle (sale/scratch/redeem/repeat sale) inherent with scratch games. Until COVID is effectively mitigated, scratch games would expose employees and customers to the disease.
