January 13, 2009 in Business

Many states see lottery sales rising during tough economy

By JUANITA COUSINS Associated Press
 
Associated Press photo

Albert Atwood, of Antioch, Tenn., looks over the selection of lottery tickets in a convenience store in Nashville.
(Full-size photo)

NASHVILLE, Tenn. – Even in these tough economic times, many people are feeling lucky.

More than half of all states with lotteries have reported rising sales over the past six months, and some researchers say financial insecurity might be driving people to risk more of their money than usual on $1 and $5 instant scratch-offs and other daily games in hopes of a big payoff.

“Someday somebody is going to win and I hope it is me,” said Albert Atwood, of the Nashville area, who spends $100 weekly playing the Pick 5 and Lotto Plus. “I imagine that I would be a heap better off if I saved this money, but everybody has dreams.”

Driven by regulars like Atwood and a growing number of occasional players, 25 of 42 states with lotteries have experienced higher sales of scratch-off and daily lottery games since July, according to Scientific Games, a maker of scratch-offs.

•Lottery spending in fiscal year 2008 was up 5.7 percent in Washington state and up 4.8 percent in Idaho over the previous year.

•In Washington, D.C., instant sales reached a record of $45 million in the 2008 fiscal year, representing an 11 percent year-over-year increase.

•In Tennessee, sales of instant lottery games were up $8 million during the fiscal first quarter ending in October.

•The Massachusetts lottery reached a record of $4.7 billion in sales during the last fiscal year, up from $4.4 billion in the previous year.

Nationwide, instant and daily lottery revenues have been on the rise since 2004, according to U.S. Census Bureau data.

States’ revenues from multistate lotteries, such as MegaMillions and Powerball, have dropped. But industry officials say sales of those tickets tend to fluctuate as the value of their jackpots rise and fall. If there is no winner one week, the size of these jackpots increases the following week.

Some experts say economic hardships prompt people to justify small-stakes gambles even as they cut back on nonessential goods and services. Others pin the increased lottery activity on creative marketing by scratch-off makers and state governments, which cannot afford to lose this revenue stream at a time of extremely tight budgets.

Scientific Games CEO Lorne Weil said states are doing whatever they can to keep sales from falling. “They are consciously working with us to launch new programs, offer tickets at new price points and increase the number of retail outlets,” he said.

Some researchers see a correlation between economic difficulties and the popularity of lotteries.

“When people feel like they are behind compared to where they were yesterday, they want to make up for that,” said Emily Haisley, a postdoctoral associate at the Yale School of Management who published a research paper on lotteries in the Journal of Behavioral Decision Making in July. “They become risk-seeking in order to catch up and the small hope of winning becomes more attractive.”

John L. Mikesell, a professor at Indiana University, published a study in 1994 illustrating lottery sales rise with unemployment rates. “When times are tough, the prospect of spending $1 on a remote chance to potentially change your life is appealing,” he said.

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