Missouri Lottery faces downturn in sales
Posted: 3/22/2005 8:42:00 AM
The Missouri Lottery faces a $3.5 million budget cut that could force layoffs of a fourth of the agency's workers plus another General Assembly-ordered retreat from advertising.
This will be the fourth year in a row we're taking a significant budget cut, director Jim Scroggins told Lottery Commission members last week.
We are struggling to understand that and to understand how we are expected to grow business and increase sales.
Despite more than $6 million in advertising cuts the past three years, Scroggins acknowledges that lottery sales and revenues have grown.
But danger signs are beginning to emerge.
At the current pace, Scroggins said sales for the fiscal year that ends June 30 are projected to fall 3 percent from last year's record level of $791.1 million. It would be only the fourth time since 1986 that annual sales have fallen.
We're losing momentum in the public eye, said Scroggins. We're starting to feel the accumulated effects of the budget cuts we've taken.
If we take another $1.1 million from advertising, that'll be an 87 percent cut since mid-2002, he said, when lawmakers began paring the ad budget from $8.2 million that year to $2.1 million this year.
Gambling foes argue that Powerball, scratch-off tickets and other lottery games basically sell themselves at convenience and grocery stores and that the money is better spent elsewhere in the state budget.
You can't rely on retail alone, said Scroggins of point-of-purchase advertising. You need to do some broadcast advertising to promote the games and frequent marketing gimmicks.
This year's budget-cutting axe is wielded by O'Fallon Republican Cynthia Davis, vice chair of the House Administration Committee, which has recommended the latest cuts to the Budget Committee.
In tough budgetary times it is critical that we reprioritize with state taxpayers' money, Davis said in an interview.
How can anybody think the lottery is more worthy than justice or the paving of roads? The money we remove is all going into education, she said. To me that is a wise decision.
Davis does not appear concerned by the latest lottery sales trends. We've spent less on advertising and still sold more tickets in recent years, she said.
Scroggins won't get into a shouting match. But he does preach to anyone who will listen that the General Assembly's anti-advertising chickens are headed home to roost.
The growth curves are going in the wrong direction, he said. Sales grew 15 percent in 2002, 21 percent in 2003 and 12 percent last year.
Scroggins argues that growth those years was due in large part to new products like Club Keno, $10 scratchers, and last year's unusual run of seven $100 million-plus Powerball jackpots that all hyped sales.
Now, said Scroggins, the lottery's lucky streak may have worn thin. With less money for advertising and new product development, and the threat of fewer workers ranging from customer service clerks to warehouse security officers, I don't think there's any more rabbits in the hat, he said.
Since it began in 1986 the lottery has pumped $2.4 billion into Missouri schools and other programs while paying out $4.4 billion in prize money. Earlier this month a Republic, Mo., man became the lottery's 200th millionaire winner.
Source: Kansas City Star
