State Lotteries Take a Loss

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State Lotteries Take a Loss

DULUTH, Minn. -- The bad economy hit a source of government financing once widely regarded as recession-proof—state lotteries.

Lottery sales nationwide fell by about $215 million, nearly 2 percent, in the third quarter compared to last year, according to a report by KBJR-TV, citing La Fleur's magazine, which tracks the lottery business.

The phenomenon is unusual, since experts contend lotteries usually grow more appealing to players when the economy takes a turn for the worse.

In a recent report, Reuters contacted all 42 state lotteries. Of the 27 that responded, 14 said sales were down from last year, nine said sales were steady and four reported an increase.

"It's been kind of an industry notion that lotteries are recession-proof, but I think what we're experiencing right now is a little bit harsher than slow economies in the past," said Chuck Baumann of the Oregon Lottery, where sales are down some 2 percent from last year. "People are just counting their dollars and cents."

Sales have fallen as much as 10 percent in some states—a reflection of the economic downturn and lack of a big jackpot in the two main games, Powerball and Mega Millions.

"What we have found with lotto tickets is that they are heavily dependent on the jackpots offered," said Mike Mueller of the South Dakota Lottery, where sales are down 6 percent.

By this time last year, jackpots of several hundred million dollars were already won in Mega Millions, played in 12 states, and Powerball, played in 31 states. The biggest Powerball win was $365 million in 2006, while Mega Millions paid out a record $390 million jackpot in 2007, according to the Reuters report.

In Kansas, lottery ticket sales are down about 4 percent in the last few months, spokeswoman Sally Lunsford said. One reason is many convenience stores have gone out of business, meaning fewer places selling lottery tickets, she explained.

Pennsylvania lottery spokeswoman Stephanie Weyant said economic uncertainty was holding many players back. "In general, our players have told us that they are spending less on tickets because they are concerned about the economy," she said.