Although some people might be feeling poorer and more desperate to win money, sales of scratch and lottery tickets are falling.
The lackluster economy is having a mixed effect on Virginia Lottery sales. Although some people might be feeling poorer and more desperate to win money, sales of scratch and lottery tickets are falling.
So far this fiscal year, which began in July, lottery sales are down about 2 percent.
“Our biggest impact we had was this summer having prolonged high gasoline prices. People who were traditionally buying tickets at convenience stores that were connected to gas pumps may have changed their habits back then,” said Paula Otto, director of the Virginia Lottery.The Virginia Lottery is a billion-dollar-a-year business, with about a third of its sales going to support public schools. Lottery proceeds account for about 6 percent of the state’s education budget.
Otto said about half of state and regional lotteries across the country are experiencing flat or declining sales.
Consumers are being more cautious when it comes to playing games of chance, Otto said, adding: “If you look at other areas of consumer spending, I think we are faring pretty well.”
A major sales boost last summer might make this year’s figures look like more of a downturn that would otherwise have occurred. When the Mega Millions jackpot reached $330 million in August 2007, players purchased 33.7 million tickets at $1 apiece over the course of the prize cycle. The Mega Millions game is a multi-state lottery. The surge put sales for computerized games (Mega Millions, Pick 4, Pick 3, etc.) this August down 19 percent in comparison. Instant scratch tickets were down 3 percent.
There wasn’t a comparable size jackpot to attract casual players this fiscal year until this month, when the Mega Millions jackpot maxed out at $207 million. The 27.4 million tickets purchased during the course of that cycle could help turn around sales after December’s numbers are tallied. The lottery has grown an average of 4.3 percent for the past 10 years. Total sales for its first fiscal year in 1989 were $409.1 million; last year’s sales reached $1.38 billion, putting the lottery on par with the state’s top 20 companies.
The Virginia Lottery faced a new competitor when North Carolina entered the gambling game in 2006. Before then, border-crossing Carolinians accounted for 10 percent of sales. That share has dropped to 5 percent.
Despite a battered economy, ticket sales might be starting to slowly turn around while other segments of discretionary spending continue to fall. Sales of lottery products totaled $316.55 million in September, October and November, up less than half a percent over the same three-month period last year. Computerized games increased 5 percent in November as the Mega Millions jackpot swelled. Scratch games increased by 1 percent in September and October.
The lottery is pushing sales of holiday-themed scratch tickets, which Otto expects to sell out of. It is also trying to boost sales of their New Year’s Raffle game, which will award four $1 million prizes on Dec. 31. This is the second year the lottery has run a year-end raffle, and sales for the $20 dollar tickets have been slow. The first two weeks of sales were about $1 million behind last year.
“Our raffle game has been a little disappointing in sales so far,” Otto said. “With that kind of game, people wait to the last minute to purchase. But even factoring in those sales, we are not on track.”
Otto said the lottery has recently increased the incentives offered to retailers to up-sell the raffle tickets. The lottery is holding a daily drawing for $5,000 for retailers who sell more than 10 raffle tickets a day. As of 5 p.m. yesterday, the lottery has 324,032 tickets out of 440,000 remaining. If the tickets don’t sell out as hoped, Otto said, those who did buy would have an even better chance of winning.
One thing that could be keeping lottery sales from falling as much as other sectors of the economy is psychology. A study conducted this year by Carnegie Mellon University Professor George Loewenstein concluded that people are more likely to play the lottery if they feel poor. Researchers paid passengers at a Pittsburgh bus station $5 each to complete an opinion survey about the city that included a question about income.
One version of the survey asked subjects to identify whether their income was less than $100,000 or more than a $100,000, placing the majority of subjects in the lower income tier. The second version asked subjects to identify their income level within $10,000 increments, placing most subjects in the middle tiers. After getting paid, subjects were offered the chance to buy instant lottery tickets. Those who received the first version of the survey were meant to feel relatively poor by placing themselves in the lower income tier, and they bought twice as many tickets on average than members of the other group.