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Lottery says use of debit cards legal

SANTA FE – Lottery players have always been allowed to use debit cards in convenience stores, so no change in law is required for them to use debit cards at gas pumps, the New Mexico Lottery Authority told legislators on Friday.

The Lottery Authority made the argument in a letter to members of the state House Ways and Means Committee who questioned this week whether the new “Play at the Pump” pilot program is legal.

The lottery is testing the program at about 100 gas pumps at 13 gas stations in the Albuquerque area, offering motorists who pay with debit cards the option of buying Powerball and Mega Millions tickets.

Ways and Means Committee members objected that the law says lottery tickets may be bought only with cash or checks, and that the lottery’s previous efforts to expand that were rejected by the Legislature.

But the Lottery Authority provided a memorandum from its legal counsel saying lottery retailers “have always been legally permitted to accept debit cards for all lottery purposes.”

The law expressly prohibits only the use of credit cards, and the New Mexico Court of Appeals – in a case dealing with a bank’s overdraft fees – said that the use of a debit card is comparable to writing a check, the lottery lawyers said.

And although a Senate-passed bill two years ago specifically authorizing debit card use died in the House, the language wasn’t required for debit cards to be used to buy lottery products, according to the memo.

Ways and Means Chairman Rep. Jason Harper, R-Rio Rancho, said he wasn’t persuaded by the arguments.

“Just because lottery has been allowing debit card purchases inside the gas stations doesn’t mean it’s legal; it just means it hasn’t been challenged yet. … I don’t think the law as it is written right now says you can use debit cards at all,” he said in an interview.

He said the memo was a “very legalistic response” that failed to address other problems the committee brought up, such as whether there are adequate safeguards to prevent underage lottery purchases and whether expanding to gas pumps could jeopardize the state’s gambling compacts with Indian tribes.

The lottery memo noted that there are limitations on purchases at the pump. Players must buy fuel, only one lottery purchase can be made per gas buy, daily spending is limited to $20 per debit card, and there’s a weekly purchase limit of $75.

No similar restrictions exist for using debit cards inside stores.

“There is no controversy here,” lottery lawyer Justine Fox-Young, a former member of the state House, told the Journal. “The lottery has a clear mandate to maximize the dollars available for students’ lottery scholarships. This initiative is intended to do just that, and New Mexico law is very clear that individuals may purchase lottery tickets using debit cards, whether inside or at the pump.”

The memo also said the lottery went “above and beyond” what the law requires to provide public notice about the new program.

But Harper said the elected Legislature, not a board appointed by the governor, should be making such policy decisions.