Cash only no more: Tennessee Lottery's quiet digital revolution

In a significant shift from tradition, the Tennessee Education Lottery Corporation (TELC) has stepped into the digital age by launching online lottery ticket sales. This move, initiated on January 6, 2025, marks a strategic response to declining revenues and changing consumer habits.

A new digital chapter

The lottery's new Anytime Powerball app, available in the Apple App Store, allows Tennessee residents to purchase Powerball tickets directly through their phones. TELC spokesperson Kym Gerlock confirms that while the app currently limits purchases to Powerball tickets via ACH payments, this digital expansion represents a broader strategy to boost sales.

Behind the launch lies an interesting legal interpretation. Despite no recent changes to Tennessee laws explicitly authorizing iLottery, TELC maintains that existing legislation permits the corporation itself to sell tickets and accept various payment forms, even as retailers remain restricted to cash transactions.

Responding to market pressures

This digital pivot comes at a crucial time. During a November 2024 budget hearing, TELC officials reported a $65 million decrease in instant ticket sales for the previous fiscal year. Rebecca Paul, TELC's President and CEO, acknowledged the need to explore new avenues for growth, particularly in light of competition from legal sports betting in Tennessee.

The app's low-key launch has raised questions about retailer competition. Jeff Lenard from the National Association of Convenience Stores expresses concern about creating "a second set of rules" that could disadvantage traditional retailers who helped build the lottery's presence.

Technical implementation and regional context

The move aligns Tennessee with neighboring states like Kentucky, Virginia, Georgia, and North Carolina, which already offer iLottery options.

Meanwhile, a separate initiative could affect lottery operations. Representative Kelly Keisling introduced HB 0051 in January, proposing a 5% tax on lottery ticket sales at retail locations. The tax proceeds would support school funding, similar to county property tax allocations.

Current retailers earn a 6.5% commission on lottery sales across approximately 5,000 locations statewide. The relationship of the proposed tax to the new iLottery initiative remains unclear.

Looking ahead

Tennessee joins a growing list of states embracing digital lottery sales, including Georgia, Illinois, Kentucky, Michigan, New Hampshire, North Carolina, North Dakota, Pennsylvania, Virginia, and Washington, D.C. As TELC navigates this digital transition, the impact on traditional retailers and state revenue will be closely watched.