Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, July 28, 1990 TAG: 9007310312
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
SOURCE: KENNETH W. THORSON
DATELINE: LENGTH: Medium
Virginia's "sophomore slump" in sales is not unique. Nearly half the other lottery states have seen a decline in second-year sales.
Moreover, my recent mention of this phenomenon is not an after-the-fact apology. I am on public record in two June 1989 appearances before the House Appropriations and Senate Finance committees, warning of the impending slump and pledging my expectations that we would see no more revenue in fiscal year 1990 than in fiscal year 1989.
The lottery has more than fulfilled that pledge. Nonetheless, I acknowledge that I am responsible for the more optimistic predictions of my staff and allowing those predictions to be used.
Although sales in Virginia slowed, preliminary figures show that Virginia will end the fiscal year with sales of $474 million - a 16 percent increase over the previous fiscal year of $409 milion. (However, fiscal year '89 figures reflect only nine months of sales: September 1988-June 30, 1989.) Perhaps a better measure is a comparison of Virginia's second-year per-capita sales of $79, which is nearly double that of second-year sales in surrounding states and states with populations similar to Virginia.
While the lottery may spend more dollars on advertising and promotion in the coming year, we will not be increasing the percentage of the budget for that. In both fiscal years 1991 and 1990, 3.44 percent of gross sales will be spent on advertising. Other new lottery states spend 4 to 5 percent of sales on advertising.
I was surprised at your assertion that the state "must use this money to encourage more of its citizens to gamble, and to gamble more." As you know, the Virginia lottery operates under an advertising restriction that states "no money shall be used for the primary purpose of inducing persons to participate in the lottery."
Indeed, budget cutbacks this past fiscal year resulted in no television advertising for Lotto or Pick 3 for most of the last six months. Thus, the strong on-line ticket sales during the past six months have had little advertising support. Next year's increase is primarily a reflection of our return to normal advertising levels, not a desperate attempt to drive sales as you have suggested.
The lottery staff works diligently to create advertising that is informative, tasteful and entertaining, while complying with the law. Although not required by the lottery statute, every television, radio and newspaper advertisement is first approved by the office of the attorney general for compliance with the law. That has been true since September 1988, when the first advertisements aired.
Unlike most other states, Virginia's lottery advertising includes a clear identification of the odds, makes no promise that "playing the lottery could change your life," and balances winners and losers. Virginia's unique advertising limitations prompted two Duke University professors, Charles T. Clotfelter and Philip J. Cook, in their book "Selling Hope, State Lotteries in America," to describe Virginia as the "genteel lottery." That is a label of which we are proud.
You are correct that it is not only people at the lower end of the economic ladder who dream of getting a bundle from the lottery. In fact, numerous studies over the last two years show that a small percentage of low-income people play the lottery, and those who do, play responsibly.
A survey of 700 Virginians in March showed that only 17 percent of Lotto players earn less than $15,000 a year, while 27 percent of the population falls into that category. In addition, in all three games, players with the lowest incomes spend the least amount of money. For example, players earning less than $15,000 spend an average of $4.20 a week on the Pick 3 game; players with a $15,000 to $25,000 income spend $5.95 a week; and players who earn $25,000 to $35,000 spend $14.65 a week.
No one ever promised that lottery revenues would be stable. Realizing this, lawmakers voted not to designate lottery funds to a specific program, but rather to put lottery funds in the state's general fund. This gives lawmakers the flexibility to use lottery revenues where they are most needed.
Although not even two years old, Virginia's success and innovation has received national and international attention. Virginia lottery advertising has received numerous state and national awards. We have hosted visitors from as far away as Japan and as close as Kentucky, who want to learn more about the way the commonwealth operates its lottery. Indeed, I believe all Virginians, whether or not they choose to participate, can be proud of their "genteel" lottery.
by CNB