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N.C. Lottery sales fall short

North Carolina LotteryNorth Carolina Lottery: N.C. Lottery sales fall short

North Carolina's lottery sales have tumbled since July, and the game's director predicts that — under the best scenario — the lottery will generate $75 million less for education than projected in the current state budget.

The sales of numbers games, such as Powerball and Cash 5, are up slightly since July, but scratch-and-win ticket sales have plummeted. Scratch, or instant, tickets are supposed to provide the growth in lotteries nationally, but in North Carolina, sales shrank from $52 million in July to $38 million in November.

"We are not on track at this point," said Tom Shaheen, the N.C. Education Lottery's executive director.

Shaheen said he has no clear explanation for the downturn.

But he theorized that sales could suffer because consumers are spending more on gas, there's been no big Powerball jackpot to drive up playing, and North Carolina placed a lower limit on prize money than other states.

N.C. law also sharply limits the amount of money the lottery can spend on advertising and prohibits ads from encouraging people to play.

"It has often been the case that the sales do go down a little bit" in the first months of a lottery, said Charles Clotfelter, a Duke University economics and law professor and a published expert on lotteries.

"There's an initial blush of excitement, and sometimes they go down. That's the kind of circumstance that leads legislators to go back to the lottery agency and say, 'You're not being aggressive enough.' That's something we might anticipate," he said.

Key state legislators expect to meet soon to examine the lottery's results so far and whether its guidelines need to be adjusted.

Shaheen emphasized that the lottery is still "hugely successful" with a revenue stream of nearly $1 million per day from all sales for education that didn't exist a year ago. Lottery executives have taken leftover money from the agency's operations budget to award more prizes in hopes of enticing more players.

Charlie Wilson, who works at Oak Island Sporting Goods in Oak Island, N.C., said he's seen a downturn — but that's because the tourists have left.

"The same people that have been playing the lottery tickets all along are still playing them," Wilson said.

But several retailers in Brunswick County, N.C., said sales are strong.

Raichelle Brunty, who works in the Han-Dee Hugo in Winnabow, N.C., said regulars bolster her store's sales, too. Brunty works the lottery desk and said that Sunday she probably sold about $2,000 in lottery tickets from 3 p.m. to 11 p.m.

State officials likely will have to drain the $50 million reserve created to cover shortfalls in lottery revenue this year. They also can use an extra $13 million produced because the game started several weeks before the beginning of the fiscal year, July 1.

Even adding that funding, however, would not cover the $425 million in education spending that the lottery is supposed to finance.

"It's something we warned lawmakers about for years that seems to have come to fruition very quickly. The revenue from the lottery is unreliable," said John Rustin, lobbyist for the Family Policy Council in Raleigh, which opposed the lottery.

Lottery proponents in the General Assembly pushed the state-sponsored gambling through as a fundraiser for education and wrote into the lottery law that 35 percent of proceeds would be funneled to pre-kindergarten, more teachers, scholarships and school construction.

Shaheen warned legislators when he signed on as director, though, that their budgeted projection was too high. They had forecast about $1.2 billion in sales during the first full year, which translates into $425 million for education.

The lottery commission last summer adopted a more modest projection of around $1.1 billion in sales, but even that figure isn't holding up, Shaheen said last week. He now says the lottery could do $1 billion in business by June 30, the fiscal year's end.

That works out to $350 million for education — $75 million less than lawmakers included in the budget.

It also would require a boon in sales in the coming months. The lottery is expected to sell $440 million in tickets between July and the end of this month.

North Carolina lottery projections

  • $425 million — expected lottery money for education in current state budget
  • $350 million — amount lottery officials expect to generate for education this year
  • $38 million — scratch ticket sales in November
  • $70 million — total lottery sales in November
  • 50 percent — amount of lottery money devoted to prizes
  • 35 percent — amount of lottery money devoted to education

McClatchy Newspapers

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25 comments. Last comment 10 years ago by Tenaj.
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Todd's avatar - Cylon 2.gif
Chief Bottle Washer
New Jersey
United States
Member #1
May 31, 2000
23261 Posts
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Posted: December 26, 2006, 10:47 am - IP Logged

This is a disaster for North Carolina -- $75 million is a huge percentage of the $425 million they were projecting for education.

Blaming the shortfall on gas prices is a pretty dumb argument.  I think Shaheen needs to do a little more soul-searching to figure out what's not working.

My hunch is that it's something to do with marketing.  I don't buy the argument that the limits on TV ads are causing the sales problems.  I don't think TV ads generate a lot of scratch ticket sales, and the poor scratch ticket sales are the root cause of the shortfall.

It's nothing personal against the people in marketing at the N.C. Lottery, but I think it would pay huge dividends to enlist the help of some marketing folks who are more experienced and "energetic".

Right from the get-go the marketing has been a problem.  Remember all the wackiness surrounding the creation of the logo, and the fact that they used clipart to send stuff to the media?  The lottery should employ the highest quality marketing personnel and materials, they should not try to "make do" with what they have.

(I still think the logo is pretty bad, even after the make-over.)

Again, this is a gut reaction.  I'm not there, so I could be totally wrong.  For all I know it could be the game mix, the prize mix, or something operational.  But my gut says it's marketing.

 

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    Avatar
    Coastal Georgia
    United States
    Member #2653
    October 30, 2003
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    Posted: December 26, 2006, 11:52 am - IP Logged

    I agree, Todd. Marketing is extremely important and NC has certainly lacked in this area.

    There have been several Powerball second prize winners and even a huge jackpot winner, so excitement should drive sales...

    What's wrong with the scratchers ?  I am told the NC has a very poor payout percentage.

    I have never bought one, but this is just what I'm told..

    I have the opportunity to buy them, but pass them by for SC tickets...

    DD

     

                                   

                  

     

     


      United States
      Member #379
      June 5, 2002
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      Posted: December 26, 2006, 12:17 pm - IP Logged

      I agree, Todd. Marketing is extremely important and NC has certainly lacked in this area.

      There have been several Powerball second prize winners and even a huge jackpot winner, so excitement should drive sales...

      What's wrong with the scratchers ?  I am told the NC has a very poor payout percentage.

      I have never bought one, but this is just what I'm told..

      I have the opportunity to buy them, but pass them by for SC tickets...

      DD

      I've heard that North Carolina's scratches pay only 52%. Some stores in South Carolina have posted signs telling that SC's scratches pay better than in NC.

      This is one example where players have noticed the significant differences in payout percentage.

        Todd's avatar - Cylon 2.gif
        Chief Bottle Washer
        New Jersey
        United States
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        May 31, 2000
        23261 Posts
        Online
        Posted: December 26, 2006, 12:34 pm - IP Logged

        I've heard that North Carolina's scratches pay only 52%. Some stores in South Carolina have posted signs telling that SC's scratches pay better than in NC.

        This is one example where players have noticed the significant differences in payout percentage.

        That's your opinion.  I don't agree.

         

        Check the State Lottery Report Card
        What grade did your lottery earn?

         

        Sign the Petition for True Lottery Drawings
        Help eliminate computerized drawings!

          wpb's avatar - DiscoBallGlowing
          Charlotte North Carolina
          United States
          Member #464
          July 9, 2002
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          Posted: December 26, 2006, 2:37 pm - IP Logged

          I think NC should revamp the pick 5 and add pick 4.  The pick 5 game is a joke, you have to hit all 5 numbers for a good payout.  4 out of 5 wins has never been $500.

          Just my opinion.

          wpb

            Tenaj's avatar - michellea
            Charlotte NC
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            Member #17406
            June 18, 2005
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            Posted: December 26, 2006, 2:43 pm - IP Logged

            I think NC should revamp the pick 5 and add pick 4.  The pick 5 game is a joke, you have to hit all 5 numbers for a good payout.  4 out of 5 wins has never been $500.

            Just my opinion.

            I'd like to see midday pick 3 and pick 4.

            takeemtothebank

              cps10's avatar - Lottery-004.jpg
              The Carolinas - Charlotte
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              Member #21627
              September 12, 2005
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              Posted: December 26, 2006, 2:50 pm - IP Logged

              I would like to see the midday games as well; and also play the Pick-5 like how SC models it. I also think a Classic P6 would benefit a lot of North Carolinians with a game to call their own instead of following the leader with Powerball. Many people around here that I've talked to are very unhappy with the low jackpots thus far in NC's limited Powerball history.

              Granted, playing the PB is a terrible proposition, but sales spike when the jackpots swell. Right now, at $75 million, that's hardly grounds for people to get excited.

              I also agree the Marketing is B.S. I have come to them with several different ideas and promotions to get sales generated, all which have been shot down. If they aren't willing to listen and step up some of the marketing efforts, they are headed for dire straits.

              The North Carolina Education Lottery - so much a joke that here are their mascots:

              Stooges

                cps10's avatar - Lottery-004.jpg
                The Carolinas - Charlotte
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                Posted: December 26, 2006, 2:53 pm - IP Logged

                Another thing I see wrong is the fact that the State, granted at least they are currently working on the education system for which the lottery is named, is that they are spending the money before they have it. That is poor budgeting, and you should never count your chickens before they hatch. If I were the Comptroller, I would budget assuming I had NO lottery funds coming, and then if and when the lottery funds come through, use that to IMPROVE areas of the education system.

                For example, if they had a $1 billion (just for sake of numbers) budget in 2006, then budget for $1.1 billion, or whatever their cost-of-living increases are. Then, if $400 million comes in from the lottery, then use that money to go ahead with adding 2 new schools in Raleigh, or wherever. But don't spend it before you make it. That seems assinine.

                The North Carolina Education Lottery - so much a joke that here are their mascots:

                Stooges

                  wizeguy's avatar - animaniacs04

                  United States
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                  Posted: December 26, 2006, 3:16 pm - IP Logged

                  I tend to tune out commercials but I can't remember the last lottery commercial I saw. Increase the payouts on the scratchers too. NC is losing sales because of it, especially on the borders. I still buy gas and smokes across the border and see a lot of NC plates.


                    United States
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                    Posted: December 26, 2006, 4:29 pm - IP Logged

                    I would like to see the midday games as well; and also play the Pick-5 like how SC models it. I also think a Classic P6 would benefit a lot of North Carolinians with a game to call their own instead of following the leader with Powerball. Many people around here that I've talked to are very unhappy with the low jackpots thus far in NC's limited Powerball history.

                    Granted, playing the PB is a terrible proposition, but sales spike when the jackpots swell. Right now, at $75 million, that's hardly grounds for people to get excited.

                    I also agree the Marketing is B.S. I have come to them with several different ideas and promotions to get sales generated, all which have been shot down. If they aren't willing to listen and step up some of the marketing efforts, they are headed for dire straits.

                    There is a "Carolina Plus 6" in the works, according to South Carolina www.sceducationlottery.com Don't know whether it would SC only, or both Carolinas.

                      Pick3forSC's avatar - Lottery-017.jpg
                      North Carolina (West of Charlotte)
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                      Posted: December 26, 2006, 5:18 pm - IP Logged

                      There is a "Carolina Plus 6" in the works, according to South Carolina www.sceducationlottery.com Don't know whether it would SC only, or both Carolinas.

                      Hi Cash

                      Where did i miss that on SC's website?  I looked under NEWS & GAMES but did'nt see anything concerning a Carolinas Plus 6.


                        United States
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                        Posted: December 26, 2006, 5:22 pm - IP Logged

                        Hi Cash

                        Where did i miss that on SC's website?  I looked under NEWS & GAMES but did'nt see anything concerning a Carolinas Plus 6.

                        Go back. There is a link at the bottom.

                          Pick3forSC's avatar - Lottery-017.jpg
                          North Carolina (West of Charlotte)
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                          Posted: December 26, 2006, 5:39 pm - IP Logged

                          Go back. There is a link at the bottom.

                          Thanks Cash

                          I found it under "Notice of public meetings"  Curious to see where it goes.

                            Coin Toss's avatar - shape barbed.jpg
                            Zeta Reticuli Star System
                            United States
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                            January 17, 2006
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                            Posted: December 26, 2006, 9:11 pm - IP Logged


                            In actuality the money really doesn't go to eduaction.

                             Via voodoo bookkepping it's plugged into the state's education system in one place, and an equal or even larger amount comes out of the education system in another place.  

                            Otherwise, every state that has had a lottery for years would have the finest schools anywhere. We all know that's definitley not the case.  

                            Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

                            Lep

                            There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.