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Tennessee lottery sales lower than other first-year sales

Tennessee LotteryTennessee Lottery: Tennessee lottery sales lower than other first-year sales

Tennessee's lottery had a ho-hum first year in sales when measuring its results against lotteries in other states.

Its sales were in the middle when compared with other lotteries last year in the nation. And its revenues lagged behind sales during lottery startup years in Florida and Georgia, both states in which Tennessee Lottery President Rebecca Paul presided over the games.

Tennesseans spent about $147 per capita on lottery games in the past 12 months, based on total revenue figures announced yesterday by Paul on the birthday of the state's lottery system.

That compares with Florida's $223 per person sales in its first year, and Georgia's $208 per person, when those figures are adjusted for inflation.

The per person sales figure is just one industry measure of success of a state's lottery, showing how much lottery organizers were able to put together and market a product that people want to buy.

Nationwide last year, state lotteries took in an average $183 per person, or $161 per person when excluding states that have the video lottery terminals, which Tennessee does not have.

But Tennessee's lottery officials say it is difficult to compare states, and that they use varying time periods to calculate sales and population. Plus, they said lotteries with more longevity make more money than first-year lotteries.

Paul said first-year sales vary on types of games sold, competition from nearby states, demographics and government regulation, among other things. And in Tennessee, several bordering states already have lotteries, reducing potential sales to out-of-towners.

''You just can't compare a 30-year lottery with a first-year lottery,'' she said. ''It doesn't make any sense.''

For instance, a 30-year-old lottery may have six to eight online games, she said. Tennessee has three, and plans to roll out more.

''What is important to us is what we accomplished in Tennessee,'' said Paul, who celebrated the first anniversary of the lottery at a press conference yesterday at MetroCenter, complete with cake and speeches. ''We are very pleased, if you look at any projections.''

One goal exceeded

Lottery officials announced yesterday they made $863.4 million in gross ticket sales for the first year.

The state originally calculated it would make $165 million for education in the first year, according to state Sen. Steve Cohen, who introduced the lottery bill in the Senate. It actually made more than $246 million for education. The money funds scholarships and after-school education.

Cohen called Paul ''the best lottery director America has ever known.''

Earlier, he surmised that Tennessee's per person sales might have been affected by competition from other lotteries and casinos in Tunica, Miss., which bills itself as the ''South's casino capital.''

Yardsticks

Another way to judge first-year results is to look at other states' first-year sales. The recent lotteries introduced in the nation vary widely. Nebraska, which only had $1 scratchoff games its first year, made about $42 per person. Louisiana had about $297 per person its first year when adjusted for inflation, but has since seen sales fall as competition with casinos increases.

David Gale, the executive director of the National Association of State and Provincial Lotteries, agreed it was difficult to compare lotteries.

Advertising costs, for example, vary from New York to Arizona.

A better gauge is to see if sales increase year to year, Gale said, explaining that sales typically drop a bit after two or three years, then begin to rise again as the lottery introduces more games.

Lotteries can be judged on whether they continue to generate excitement years down the road, he added.

''You sell a lottery ticket the same way you sell a bottle of Coke. You have to advertise. You have to fight for space in a retail place. You have to do research.''

As for coming years, Tennessee expects sales to drop off somewhat, given the initial rush to buy tickets at the beginning of the year.

Sales during the 2005 fiscal year are expected to reach $740.4 million but then climb the next year to $768 million.

Paul said the lottery will continue to improve operations and roll out new games, a key driver of increased lottery sales. Paul said yesterday the lottery will introduce a new online game in the spring but would not divulge details.

Top 10 ticket retailers


  • State Line Conoco, Fayetteville

  • South Lincoln Food Mart, Fayetteville

  • Stateline Market, St. Joseph

  • HP Max Fuel, Ardmore

  • The Ardmore Exchange, Ardmore

  • True Discount Tobacco Outlet, Ardmore

  • Ardmore Exxon, Ardmore

  • TNT Beer & Tobacco, Ardmore

  • Ivey Produce, Fayetteville

  • Chiefs Bar-B-Q, Iron City

Sales breakdown, per capita

First year sales and profits per capita, adjusted for inflation, for some of the most recently launched lotteries:

Tennessee, 2004



  • $147.8 sales

  • $42 profits

South Carolina, 2002


  • $160 sales

  • $45 profits

New Mexico, 1996


  • $17 sales

  • $3.89 profits

Nebraska, 1993


  • $42 sales

  • $8.50 profits

Georgia, 1993


  • $208 sales

  • no profits per capita figure available

Texas, 1992


  • $133 sales

  • $43 profits

Louisiana, 1991


  • $297 sales

  • no profits per capita figure available

Kentucky, 1989


  • $108 sales

  • $16.53 profits

Florida, 1988


  • $223 sales

  • no profits per capita figure available

Source: Individual lotteries.  Inflation was figured by getting actual sales, and using a government calculator that figured in the Consumer Price Index.

Tennessean

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3 comments. Last comment 12 years ago by Todd.
Page 1 of 1

United States
Member #379
June 5, 2002
11296 Posts
Offline
Posted: January 21, 2005, 3:46 pm - IP Logged

TN needs to join Hot Lotto or Lotto South in the near future.

    Avatar
    Urbandale, IA
    United States
    Member #8624
    November 11, 2004
    115 Posts
    Offline
    Posted: January 23, 2005, 6:11 pm - IP Logged

    Pretty ridiculous to apply the CPI (inflation rate) to per capita income spent on lottery tickets.  The price has not changed.  The per caps spent in some state 10 years a ago on $1 tickets is the same today.  The newspaper might try to take a stab at guessing the percentage of disposable income over time, but this reporter has missed the point by a mile.

      Todd's avatar - Cylon 2.gif
      Chief Bottle Washer
      New Jersey
      United States
      Member #1
      May 31, 2000
      23259 Posts
      Offline
      Posted: January 24, 2005, 1:38 am - IP Logged

      Chuck32,

      Interesting point about the inflation figures, I'd have to agree.  The reporter's comparison to the other lottery states from last year is a little closer to the mark:



      Nationwide last year, state lotteries took in an average $183 per person, or $161 per person when excluding states that have the video lottery terminals, which Tennessee does not have.


      The point being that Tenn.'s $147 per capita spend rate is much lower than the national average.  Of course, this is a very broad comparison, so the usefulness is limited.

      Overall, however, I would say that subjectively Tennessee could have had a better year.  New state lotteries in general perform much better these days than they did many years ago, due to better marketing, more exposure, people playing in neighboring states, and the Internet.  South Carolina, for example, is a true success story.

      Tennessee had overwhelming press coverage in its first year of existence; so much so, that Ms. Paul complained that it scrutinized everything too closely.  So they can't complain that there was not enough exposure.

      Perhaps the anti-gambling forces in Tennessee are stronger than in other states, or maybe some other factor is in play, but I think there is something keeping Tennessee from blowing the doors off.

      Personally I think their Web site could be a lot better, but I don't know how many people would agree that's a factor in limiting sales.   I think they should seek some web help from a guy who has built a decent lottery forum web site.

      One factor in Tennessee's defense is that they still have not come out with a full slate of games, but I wonder what they're waiting for.  Plus, strange decisions like not posting the jackpot amount for their Pick 5 jackpot game can't help.  (Which they recently remedied.)

       

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