Scratch-offs are biggest chunk of $3.77 billion, as Lotto Texas' popularity drops
Officials with the Texas Lottery Commission took a gamble on scratch-off games a few years ago and, according to the latest figures, the bet's paid off: The agency's overall ticket sales rose to $3.77 billion in fiscal 2006, the highest total in the agency's history, with most of the increase coming from the games that provide immediate gratification.
"The big growth is in the scratch-offs," said Robert Heith, the agency's chief spokesman. "People want to know right now if they've won anything."
Overall ticket sales jumped 3.1 percent between September 2005 and August 2006, but growth was not across the board. Sales of Lotto Texas, the state's flagship game, plummeted 21.4 percent, from $306.7 million last year to $241 million this year.
The real jump in revenue came from the 80 or so scratch-off or instant ticket games, which cost as much as $30 each and tell ticket holders if they're winners or losers in as little time as it takes to put coin to paper.
Scratch-off tickets generated $2.8 billion in sales this year, 5.8 percent over last year's figures, and they accounted for nearly 76 percent of all ticket sales.
Lottery officials were clearly pleased by news of record sales. The past 15 months have been rocky ones at headquarters; the agency's executive director, Reagan Greer, resigned last summer after acknowledging he repeatedly inflated advertised Lotto ticket jackpots to boost sluggish ticket sales. Agency morale sunk. Finally, a few months ago, Anthony Sadberry was named Greer's replacement after filling in for six months.
"It's a good way to begin his tenure," Heith said.
The Texas Lottery has sold at least 469 winning tickets of $1 million or more since it began in 1993. It has paid out nearly $25 billion in prizes in that time and has generated more than $13 billion for the state, according to agency numbers.
Divided up, 60 percent of sales go to pay out prizes; 28 percent is earmarked for the Foundation School Fund, which supports public school education in Texas, 5 percent goes for administrative expenses, 5 percent for retailer commissions and 2 percent, the unclaimed prizes, for various state programs.
The agency spent big dollars recently advertising the fact that lottery sales put about $8 billion into public education over eight years. But those claims don't appease critics who argue that state-sponsored gambling is a regressive way to pay for education.
"The story is that it takes $3.7 billion out of the pockets of Texans to raise $1 billion for education. That is a bad gamble for Texans," said Weston Ware, volunteer legislative director with Texans Against Gambling. "Scratch-off tickets," he added, "are about instant hope and immediate despair."
Studies have indicated that those who earn the least spend more on the lottery.
For instance, a person who earns less than $20,000 a year spent more on the lottery each month, $76.50, than someone who earns $50,000 to $59,000, $39.24 per month, according to a report put out last year by a Texas Tech research group.
Blacks and Hispanics spent, per player, almost twice as much as Anglos, the report said. And high school dropouts spent more than three times as much as those with college degrees.
Defending the agency, Heith responded: "That criticism is always going to be there, but we don't target any particular group. We put out games to appeal to everyone."
Other critics note that lottery sales fund but a tiny fraction of the $35 billion the state spent last year on public education. (Public education took in $1.03 billion from ticket sales for fiscal 2005-06).
Heith said that's $1.03 billion the Legislature doesn't have to draw from elsewhere.
Correcting for inflation, lottery ticket sales were actually higher in the mid- to late-1990s. In fiscal 1997, sales rose to $3.75 billion, or $4.73 billion in today's dollars. They saw a decline of 31 percent during the next two years.
David Gale, executive director of the North American Association of State & Provincial Lotteries, said scratch-off tickets, which tend to pay out higher percentages to winners, have been the key to success in states where they've been adopted.