Welcome Guest
Log In | Register )
The time is now 2:57 pm
You last visited August 27, 2014, 2:56 pm
All times shown are
Eastern Time (GMT-5:00)

Pennsylvania Lottery to drive profits by boosting payouts

Pennsylvania LotteryPennsylvania Lottery: Pennsylvania Lottery to drive profits by boosting payouts

HARRISBURG, Pa. — The state House on Tuesday approved a change to the Pennsylvania Lottery that the Corbett administration says will allow it to maximize profits for senior programs by meeting consumer demand for high-payout instant tickets.

State law requires the lottery to dedicate no less than 27 percent of revenue from ticket sales to funding programs for seniors. But most of the lottery's sales growth is from scratch-off tickets, which return less money to the state than do terminal-based games such as the Daily Number and Cash 5, driving down the state's percentage take of revenue from ticket sales.

For the state to meet the 27 percent limit — itself a temporary reduction that is scheduled to return to 30 percent in July 2015 — it would have to limit its sales of scratch-off tickets, in turn suppressing overall lottery revenues.

So the state Department of Revenue has asked legislators to allow the lottery to return only 25 percent of ticket revenue to programs, arguing, in effect, that narrowing the state's slice of the pie could allow the pie to grow and by enough that it would result in a larger slice.

Planning for a 30 percent return last year — instead of the 27 percent rate that was in effect — would have required the lottery to sacrifice nearly $200 million of its $1.1 billion profit, according to the Department of Revenue.

And so the House on Tuesday voted 197-0 for a bill lowering the required rate of return to 25 percent. At a hearing in January, the top Republican and Democrat on the Senate Finance Committee said they agreed with allowing the lottery to lower the rate, and a spokesman for Senate Republicans said Tuesday that the idea has support in the majority caucus.

Sales of instant games account for 62.3 percent of total revenues, up from 55.3 percent in 2008 and 24 percent in 1998, according to the Pennsylvania Lottery. In the 1990s, states began offering higher-priced instant tickets, which now contribute to the majority of instant-lottery game revenue, according to a 2011 paper from the Federal Reserve Bank of St. Louis. Pennsylvania offers scratch-off tickets that cost $5, $10 and $20.

"Although state lottery agencies receive a lower percentage return from each higher-priced instant game on average, the absolute dollar amount the lottery agency receives from each higher-priced instant game is greater," the paper explained.

House Democrats on Monday fell short in an attempt to add an amendment that would have restricted lottery funds from being used to hire a private manager. Democrats had objected to Gov. Tom Corbett's attempt to hire Camelot Global Services, which operates the United Kingdom's lottery, to manage the Pennsylvania Lottery.

Camelot had committed to bringing in more than $34 billion in profits over the life of the 20-year agreement, in part by introducing online ticket sales and keno. The governor described the commitment as a way to ensure funding for programs, as property tax rebates and discounts on prescription drugs, available to seniors.

But state Attorney General Kathleen Kane announced in February 2013 that her office had found the contract would violate state law, in part, she said, because it would infringe on the authority of the General Assembly to make policy.

Revenue Secretary Dan Meuser has said the administration believes existing state law and regulations allow the lottery to introduce keno. Elizabeth Brassell, a spokeswoman for the Department of Revenue, said Tuesday that keno is still being considered but that there has been little movement toward implementing it.

Pittsburgh Post-Gazette

We'd love to see your comments here!  Register for a FREE membership — it takes just a few moments — and you'll be able to post comments here and on any of our forums. If you're already a member, you can Log In to post a comment.

26 comments. Last comment 4 months ago by Artist77.
Page 1 of 2
Marilyn222's avatar - 1975203 678005355574080_1381926342_n.jpg
Denver
United States
Member #117688
October 12, 2011
410 Posts
Offline
Posted: April 30, 2014, 10:01 am - IP Logged

The state House on Tuesday approved a change to the Pennsylvania Lottery that the Corbett administration says will allow it to maximize profits for senior programs by meeting consumer demand for high-payout instant tickets.

State law requires the lottery to dedicate no less than 27 percent of revenue from ticket sales to funding programs for seniors. But most of the lottery's sales growth is from scratch-off tickets, which return less money to the state than do terminal-based games such as the Daily Number and Cash 5, driving down the state's percentage take of revenue from ticket sales.

For the state to meet the 27 percent limit — itself a temporary reduction that is scheduled to return to 30 percent in July 2015 — it would have to limit its sales of scratch-off tickets, in turn suppressing overall lottery revenues.

So the state Department of Revenue has asked legislators to allow the lottery to return only 25 percent of ticket revenue to programs, arguing, in effect, that narrowing the state's slice of the pie could allow the pie to grow and by enough that it would result in a larger slice.

Planning for a 30 percent return last year — instead of the 27 percent rate that was in effect — would have required the lottery to sacrifice nearly $200 million of its $1.1 billion profit, according to the Department of Revenue.

And so the House on Tuesday voted 197-0 for a bill lowering the required rate of return to 25 percent. At a hearing in January, the top Republican and Democrat on the Senate Finance Committee said they agreed with allowing the lottery to lower the rate, and a spokesman for Senate Republicans said Tuesday that the idea has support in the majority caucus.

Sales of instant games account for 62.3 percent of total revenues, up from 55.3 percent in 2008 and 24 percent in 1998, according to the Pennsylvania Lottery. In the 1990s, states began offering higher-priced instant tickets, which now contribute to the majority of instant-lottery game revenue, according to a 2011 paper from the Federal Reserve Bank of St. Louis. Pennsylvania offers scratch-off tickets that cost $5, $10 and $20.

"Although state lottery agencies receive a lower percentage return from each higher-priced instant game on average, the absolute dollar amount the lottery agency receives from each higher-priced instant game is greater," the paper explained.

House Democrats on Monday fell short in an attempt to add an amendment that would have restricted lottery funds from being used to hire a private manager. Democrats had objected to Gov. Tom Corbett's attempt to hire Camelot Global Services, which operates the United Kingdom's lottery, to manage the Pennsylvania Lottery.

Camelot had committed to bringing in more than $34 billion in profits over the life of the 20-year agreement, in part by introducing online ticket sales and keno. The governor described the commitment as a way to ensure funding for programs, as property tax rebates and discounts on prescription drugs, available to seniors.

But state Attorney General Kathleen Kane announced in February 2013 that her office had found the contract would violate state law, in part, she said, because it would infringe on the authority of the General Assembly to make policy.

Revenue Secretary Dan Meuser has said the administration believes existing state law and regulations allow the lottery to introduce keno. Elizabeth Brassell, a spokeswoman for the Department of Revenue, said Tuesday that keno is still being considered but that there has been little movement toward implementing it.

Gosh! That's no difference in putting the burden to people. Stealing the ppl blind! Huh? Give the money to the aging that has earned so much already, the majority of them? Lol...no offense, but it's just like giving more money to Warren Buffet!

    Jon D's avatar - calotterylogo
    Los Angeles, California
    United States
    Member #103816
    January 5, 2011
    1530 Posts
    Offline
    Posted: April 30, 2014, 10:17 am - IP Logged

    So, PA is going after MA which has the highest payouts in the nation. Great! Cheers

    But let's hope the greedy bastids don't just chase after scratch games, and boost the daily number games from 50% to 60% payout, and introduce higher payouts for draw games as well. Thumbs Up

      Marilyn222's avatar - 1975203 678005355574080_1381926342_n.jpg
      Denver
      United States
      Member #117688
      October 12, 2011
      410 Posts
      Offline
      Posted: April 30, 2014, 10:38 am - IP Logged

      So, PA is going after MA which has the highest payouts in the nation. Great! Cheers

      But let's hope the greedy bastids don't just chase after scratch games, and boost the daily number games from 50% to 60% payout, and introduce higher payouts for draw games as well. Thumbs Up

      I wonder how much would be the payout ratio?

        dr65's avatar - black panther.jpg
        Pennsylvania
        United States
        Member #74096
        May 2, 2009
        16214 Posts
        Offline
        Posted: April 30, 2014, 10:56 am - IP Logged

        Boosting payouts? That's a hot one.

        369 209

        1741 1781

          Chris$'s avatar - Lottery-063.jpg
          givinpalottoabeatdown
          United States
          Member #117335
          October 3, 2011
          4115 Posts
          Offline
          Posted: April 30, 2014, 11:24 am - IP Logged

          Its a crock. Pa.will only be boosting their revenue.

          Its been years since we have had decent payouts. Corbett put a stop to that.

          2111, 1222, 6667, 1818, 3553

            Avatar
            New York, NY
            United States
            Member #120654
            December 24, 2011
            59 Posts
            Offline
            Posted: April 30, 2014, 1:23 pm - IP Logged

            So, PA is going after MA which has the highest payouts in the nation. Great! Cheers

            But let's hope the greedy bastids don't just chase after scratch games, and boost the daily number games from 50% to 60% payout, and introduce higher payouts for draw games as well. Thumbs Up

            I would love for all pick 3 and pick 4 games to permanently pay back 60%. NY only does it during certain promotions like once every three months. Which is pretty much the only times I bother to play those games. I do admit though that if my lottery budget was bigger I would play those games at least twice a week. After scratch offs, they offer the next highest return.

              LottoMetro's avatar - get money.jpg
              Happyland
              United States
              Member #146350
              September 1, 2013
              555 Posts
              Offline
              Posted: April 30, 2014, 1:57 pm - IP Logged

              It was somewhat humurous at the Smart-Tech conference earlier this month when the other lottery directors were asking the Massachusetts director how her lottery has done so well. She just simply said "higher payouts....returning more money to players," and they kept prying as if there were some other secret like more advertising, higher priced games or whatnot. When players win more, they play more. Imagine that!

              Good for Pennsylvania for taking this approach. Wish my state would get the picture and stop scalping players. Their FB page is littered with comments to the point that every other one is from a losing player. The lottery is starting to get greedier at the higher price points.

              If the chances of winning the jackpot are so slim, why play when the jackpot is so small? Your chances never change, but the payoff does.

              If a crystal ball showed you the future of the rest of your life, and in that future you will never win a jackpot, would you still play?

              2013: -35.14% (158 tickets) || 2014: +56.92% (12 tickets)

                maringoman's avatar - kobold
                Massachusetts
                United States
                Member #37433
                April 14, 2006
                1977 Posts
                Offline
                Posted: April 30, 2014, 5:45 pm - IP Logged

                I will be in PA in late May so I will be buying their Millionaire Raffle tickets. I hope PA Lottery finds success in increasing its profits.

                It's a futile effort.

                  Jon D's avatar - calotterylogo
                  Los Angeles, California
                  United States
                  Member #103816
                  January 5, 2011
                  1530 Posts
                  Offline
                  Posted: April 30, 2014, 6:19 pm - IP Logged

                  It was somewhat humurous at the Smart-Tech conference earlier this month when the other lottery directors were asking the Massachusetts director how her lottery has done so well. She just simply said "higher payouts....returning more money to players," and they kept prying as if there were some other secret like more advertising, higher priced games or whatnot. When players win more, they play more. Imagine that!

                  Good for Pennsylvania for taking this approach. Wish my state would get the picture and stop scalping players. Their FB page is littered with comments to the point that every other one is from a losing player. The lottery is starting to get greedier at the higher price points.

                  Oh my word, that was humorous old chap. That Beth is always such a hoot! Green laugh

                  So, in what capacity did you attend this lottery industry conference LottoMetro?

                  And which state is your state?

                    LottoMetro's avatar - get money.jpg
                    Happyland
                    United States
                    Member #146350
                    September 1, 2013
                    555 Posts
                    Offline
                    Posted: April 30, 2014, 6:57 pm - IP Logged

                    I did not attend in person; however, the conference was broadcast for anyone who could not participate. Most of it was quite boring, actually. I only sat through MUSL's presentation and one of the panel discussions from start-to-finish. I watched a couple other discussions but not in entirety. A large portion of the conference is comprised of vendors pitching products/services.

                    My state is the one where I am located.

                    If the chances of winning the jackpot are so slim, why play when the jackpot is so small? Your chances never change, but the payoff does.

                    If a crystal ball showed you the future of the rest of your life, and in that future you will never win a jackpot, would you still play?

                    2013: -35.14% (158 tickets) || 2014: +56.92% (12 tickets)

                      noise-gate's avatar - images q=tbn:ANd9GcR91HDs4UJhjxO7cmeMQWZ5lB_FOcMLOGicau4V74R45tDgPWrr
                      Bay Area/ California
                      United States
                      Member #136482
                      December 12, 2012
                      1992 Posts
                      Online
                      Posted: April 30, 2014, 7:09 pm - IP Logged

                      I think that LottoMetro is from Los Angeles. This of course is my gut feeling. I may not be right,  but I'm never wrong.

                        Jon D's avatar - calotterylogo
                        Los Angeles, California
                        United States
                        Member #103816
                        January 5, 2011
                        1530 Posts
                        Offline
                        Posted: April 30, 2014, 7:17 pm - IP Logged

                        I did not attend in person; however, the conference was broadcast for anyone who could not participate. Most of it was quite boring, actually. I only sat through MUSL's presentation and one of the panel discussions from start-to-finish. I watched a couple other discussions but not in entirety. A large portion of the conference is comprised of vendors pitching products/services.

                        My state is the one where I am located.

                        Look LottoMetro, Beth is an accomplished executive, so there's no need for you to refer to her using some derogatory sexual term to diminish her accomplishments. But that's beside the point. [edit: I see that you later removed the derogatory statement...]

                        You testified in a previous post that you were in fact NOT breaking forum rules by putting in "a false location designed to mislead others about where you are from" and so Happyland is your actual location.

                        So I notice that Happyland CT is very close to GTECH headquarters in Providence RI, just a short commute from Happyland. Is this your connection to the lottery industry LottoMetro?

                          TheGameGrl's avatar - p42a
                          Pennsylvania
                          United States
                          Member #17084
                          June 10, 2005
                          3111 Posts
                          Offline
                          Posted: April 30, 2014, 7:21 pm - IP Logged

                          Wish PA Lottery would get honest. The senior programs are tighter and tighter for those that need the  services. I feel sorry for the misleading advertisng. If you are a senior and can prove you are 125% below poverty you might get a bus ticket or maybe a free meals on wheel coupon! Wow!

                          As to the payouts, they are already lowering the grand prize payouts .....they are playing the shell game and folks are lining up. Its silly.

                          ________________________________

                          Signature quote-If I'd agree with you , we'd both be wrong.

                            veganlife125's avatar - Lottery-061.jpg

                            United States
                            Member #142782
                            May 18, 2013
                            207 Posts
                            Offline
                            Posted: April 30, 2014, 10:09 pm - IP Logged

                            Everyone missed the most important part of this article when the politicians voted 197-0 to return only 25 percent of ticket revenue to programs, arguing, in effect, "that narrowing the state's slice of the pie could allow the pie to grow and by enough that it would result in a larger slice."

                            Thats what President Reagan argued for and got in the 1980's when he cut marginal tax rates and got alot more revenue coming in to Uncle Sugar Sam! 

                            They only went along with this legislation because they would lose over 200 million next year if they didn't.  This kind of thing would help our economy now but no way can the Washington politicians give up the retoric of forcing higher income earners to pay "more" & "at a higher rate" in order to collect that......."fair share!" LOL  It gets votes!

                            Of course im over getting mad at politicians and you should be too.  After all the character of the politicians is just a reflection of the character of the voters.

                            Great article Todd.

                            $1 Quick Pick > 1 Winner > 1 Billion+ > 1 Press Conference > MegaMillions #1!

                            Don't forget to visit the Lottery Post Gift Shop!