Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, May 24, 1993 TAG: 9305240117
SECTION: VIRGINIA PAGE: C-3 EDITION: METRO
SOURCE: BONNIE V. WINSTON STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium
Lottery sales, which began modestly with instant, scratch-off ticket games, and soared with the advent of "on-line" games of bouncing balls, computerized picks and nightly televised drawings, have flattened out.
Double-digit sales increases - ranging from 15 percent with the May 22, 1989 start of Pick 3 to 66 percent after the 1990 introduction of Lotto - have given way to meager annual sales boosts of less than 3 percent.
The trend isn't expected to change during the decade, state lottery officials say.
That's not especially good news for a state that has become increasingly dependent on lottery revenues to balance its budget. The lottery already is threatened by potential competition from neighboring North Carolina, where state-sponsored gambling is being debated in the legislature, and by national forecasts that gaming is in for a crash.
"What we're seeing is that Lotto is the chief engine driving the revenue," said Kenneth Thorson, Virginia's lottery director.
Despite odds of 1 in 7.1 million, Lotto's million-dollar jackpots traditionally have lured players.
But as Lotto once gave the lottery its biggest boost, it is now providing the biggest drag. Through March, Lotto sales for the fiscal year that began July 1 were down 13 percent from the same period a year earlier.
Thorson attributes the drop to low interest rates and the good luck of Lotto players, which has produced an unusually high number of winners in recent months. He said there's no indication that Virginians have tired of the games or become more wary of the long odds.
"We've had more jackpots won so far this year than all of 1992," he said. "While that's great for players, it hasn't been good for revenue."
Each time a jackpot isn't claimed, the money rolls over to produce an even higher jackpot for the next drawing. With so many winners, the jackpot hasn't reached the $10 million mark since last November, Thorson said. He noted that many players hold their money until the jackpot grows to $5 million or $10 million.
From July 1991 to June 1992, there were 10 jackpots of at least $10 million. Since July 1992, only four jackpots have reached or exceeded that mark.
In addition, interest rates have dropped on the 20-year annuities the Lottery Department purchases to pay the jackpots. When tickets are sold, the Lottery takes the state's profit and its operating expenses out of the pot immediately, investing the balance. The less generated by the annuities, the lower the jackpot, Thorson explained.
Other state lotteries experiencing similar downturns have responded with high-pitched advertising and more exotic games, such as Keno and video poker, to attract more players. Virginia's lottery is hampered - by law and the department's desire to maintain a restrained image - from following suit.
"We see other states that, on the first sign of a decrease [in sales], rush out with a big ad campaign," Thorson said. Maryland recently started bar-based Keno games, with drawings every five minutes, to boost sales.
Virginia law prohibits advertising intended to lure people to gamble. Thorson said the lottery also is prevented from setting up video lottery machines, which are electronic versions of casino gambling.
In addition to being against the law, it would be "very un-Virginian," he said.
Thorson insisted the department is not trusting to luck to reverse the trends. The Lottery is trying to add new outlets in Northern Virginia, which has lagged behind other regions in providing places for players to purchase tickets.
Lottery officials also are looking to the growing use of vending machines for instant tickets and self-service terminals for "on-line" games to make playing easier.
And Thorson said the lottery plans to step up the introduction of new scratch-off instant games.
Pick 3, which celebrates its fourth birthday today, has been the lottery's staple through the years. The Monday-through-Saturday game generates about $4 million weekly in sales, and about 30 percent of all lottery sales annually, statistics show.
"It was our first game, it has the best odds [1 in 1,000] and it has a loyal following," Thorson said. "The best thing we can do for it is to leave it alone."
by CNB