DEFICIT STATES HANKER ON LOTTERY WINNINGS
Increasing state deficit budgets around the nation could be terrible news for several state agencies but not the lotteries. With budget deficits from the current fiscal year all through 2011 projected to add up to more than $ 350 billion, lottery officials believe they could help in bridging the gap by close to $ 14 billion by going after bigger audiences, increasing the percentage of amount paid to jackpot owners, spending more on promotion and advertising and finding new places to sell the tickets, including internet. For the fiscal year 2008, the national figures are projected to reach close to $ 37 billion based on a survey conducted by San Antonio consulting company Frost & Sullivan on behalf of several state lottery programs.
Gordon Medenica, New York State lottery director says, “It’s not that we don’t know how to make money, it is just that we are bound by constraints in doing it.” Annually, the state lends nearly $ 2.5 billion by way of funding to New York State schools, nearly 12 % of what the state spends on its education.
This, of course, drives anti-lottery camp to distraction. Nearly 42 states, including the District of Columbia have lotteries. In addition, consumer advocates state that they don’t amount to anything more than regressive tax on disadvantaged.
Nearly twenty percent of lottery players play frequently, while nearly 5 % of players purchase 51 % of lottery products, say spokesman for national advocacy group “Stop Predatory Gambling” Tom Grey. On an average, these high-frequency players spend $ 3875 each year on lottery products, deviating more towards lower end of household-income scale. Grey says, “You need to juice the product to keep the needle in the addict.”
In a recession, it is a tough sell, especially when states scramble to raise funds. For instance, in California, the government faces a budget gap of $ 16 billion which requires reduced expenditure on education and more taxes, besides other services. It also counts amongst the bottom five states measured by how much the state lottery pays to the scratch-ticket winners of jackpot - amounting to 58 % of sales. In areas such as New York, the payout for scratch ticket lies from 75 % to 65 % of sales. They are amongst the most popular available games. The payout restriction in California is by stature. The state legislature granted authority to state lottery to increase payout as of July 1 in case voters approved it in special statewide May election.
There are other states which work to make lotteries more flexible than what they offer. The largest U.S. State lottery having $ 7.7 billion in annual sales in New York, is currently working to bring 32-state Power Ball lottery in state to compete with other multi-state lottery - the Mega Millions.
California’s payout restriction is by statute. The legislature granted the state lottery the authority to increase payout as of July 1 if voters approved it in special statewide election in May. The estimated benefit from increasing this payout: $1 billion for California public schools in first four years.
Other states are working to make lotteries more flexible in what they are offering. New York - the largest U.S. state lottery with $7.7 billion in annual sales, and seventh largest lottery in the world, is working to bring 32-state Power Ball lottery in state to compete with other multi-state lottery, Mega Millions.
Power Ball and Mega Millions are the ones that draw huge jackpots and appearances, but until now, New Yorkers wanting to play Power Ball have been forced to go to Connecticut or Pennsylvania to buy tickets. The state legislature recently voted to allow Power Ball, and the state lottery is now working to finalize the move.
The New York lottery is also trying to open more retail locations, but the bad economic conditions have tripped up those plans. Of the hoped-for 1,000 new retail locations planned last year, only 300 to 400 have been opened. Lottery sales were strong for the first three quarters last year, Medenica says, but stalled in the fiscal fourth quarter, ending in March.
The Georgia Lottery Corp., with $3.5 billion in annual sales, had wild success with two lottery retailing stations it set up in baggage claim area of Atlanta airport. The two locations have become two biggest lottery retailers in state, with $ 1,66,000 in sales each week.
Lottery foes have more radical plan. The lure of lottery is akin to that of savings bank, according to study conducted last year by Institute for American Values. They offer convenient location for people to “invest” small increments of money on regular basis, with security of government backing and promise of economic security down the road.
Stop Predatory Gambling and other anti-lottery types are pushing for lotteries to offer savings tickets alongside scratch off and other lottery games, giving consumers more choice in how to “invest” those discretionary dollars. As a government “you shouldn’t make losers of your own citizens,” Grey says.
Related posts:
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- A lottery in every state?
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