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Ohio Lottery panel rejects new Gov.'s call for smaller prizes

Ohio LotteryOhio Lottery: Ohio Lottery panel rejects new Gov.'s call for smaller prizes

Ohio Lottery Commission officials say a recommendation from Ohio's new Governor that they reduce prizes to give their profits a boost would have the opposite effect.

Lottery officials responded yesterday to a report from Gov. Ted Strickland's transition advisers that said the lottery has an "inordinately high percentage of prize payouts."

The advisory panel last month asked lottery commissioners to consider scaling back the 59 percent it returned in prizes, which was higher in 2004 than what Michigan and Pennsylvania paid out.

The recommendation didn't take lottery commissioners by surprise.

"We have an ongoing debate on whether our prize payments are too high," said Mark Dottore, chairman of the Ohio Lottery Commission.

Although the lottery has improved sales in recent years, that hasn't translated into more money for education, which is where profits are sent.

Sales are up nearly 16 percent since 2001, but the amount of money that schools received has increased by less than 2 percent.

Mike Abouserhal, the lottery's executive director, acknowledged at a commission meeting yesterday that there's room to improve profits but said that lowering prizes on instant scratch-off tickets - where payouts are the highest - is not the way to go.

"There's a direct correlation between higher prize payouts on instant games and ultimate profitability," Abouserhal said.

He was backed by Dottore and Commissioner Erskine Cade, who said Strickland's advisers did not have enough information to reach the recommendation they made.

Abouserhal noted that Massachusetts pays out 72 percent on instant tickets and has the higher per-capita sales in the nation. He also pointed out that payouts in surrounding states have increased in recent years, while Ohio's have remained steady.

"If you look at the best practices in the industry, you'll see we're significantly behind most other states," he said.

Tee Tee Taylor, 47, of Cleveland, left the Gateway Newsstand at Tower City with a handful of instant tickets yesterday. She said a decrease in prizes would affect the amount she spends.

"I'd probably slack up," Taylor said. "You're already losing a lot of money."

The governor has reviewed the advisory panel's report but has not made a decision on whether to back any of its recommendations, Strickland spokesman Keith Dailey said.

The majority of the lottery's sales increase over the past few years has been in instant tickets, and the reason more of that money hasn't gone to schools is that the profit margin for those games is slimmer, Abouserhal said.

That's why he's focused on increasing sales in other games, including Pick 3, Pick 4 and Classic Lotto.

The lottery already has shuffled its lineup twice in the past 18 months, first replacing Super Lotto Plus with Lot 'O Play, which had disappointing sales and was scrapped for Classic Lotto last month.

The lottery has scaled back prizes in the Classic Lotto drawings. Profits are expected to increase because Classic Lotto has a payout of 55 percent compared with up to 80 percent for the old Super Lotto Plus.

Abouserhal expects to present commissioners with a product strategy next month that will improve sales for those games.

AP

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8 comments. Last comment 10 years ago by CASH Only.
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liberal47's avatar - Rowlf
Holt MI
United States
Member #2244
September 4, 2003
69 Posts
Offline
Posted: February 13, 2007, 9:56 am - IP Logged

I have to wonder how many lottery tickets, and what actual experience the governor has, with the lottery. He sounds like the carpers you hear at the local store, demanding more lower tier prizes because they have not recieved any return on the two dollars a week they spend. He should support better marketing and promotions, that is what really drives sales. I don't recall Ohio joining the trend in offering a raffle this past holiday season???

    Avatar
    Kentucky
    United States
    Member #32652
    February 14, 2006
    7314 Posts
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    Posted: February 13, 2007, 12:05 pm - IP Logged

    I have to wonder how many lottery tickets, and what actual experience the governor has, with the lottery. He sounds like the carpers you hear at the local store, demanding more lower tier prizes because they have not recieved any return on the two dollars a week they spend. He should support better marketing and promotions, that is what really drives sales. I don't recall Ohio joining the trend in offering a raffle this past holiday season???

    "Lottery officials responded yesterday to a report from Gov. Ted Strickland's transition advisers that said the lottery has an "inordinately high percentage of prize payouts."

    It seemed to me the report was about the profitability of some of the scratch-off games and not the lottery in general. Governor Strickland probably got similar reports from his transition advisers concerning all state agencies. Does he need to purchase a hunting, fishing or liquor license to understand those reports too?

    By the way, the Ohio Lottery held a raffle on Labor Day and the 2nd raffle will begin sales on February 18.

      jeffrey's avatar - moon
      Hamilton, OH
      United States
      Member #4162
      March 27, 2004
      277 Posts
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      Posted: February 13, 2007, 12:26 pm - IP Logged

      The new lotto is already a decrease. It starts at 1,000,000 rather than 4,000,000 and only increases by 100,000 rather than a million a drawing. Wonder if sales will decrease?

        Avatar
        Northern California
        United States
        Member #19948
        August 9, 2005
        151 Posts
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        Posted: February 13, 2007, 1:17 pm - IP Logged

        59% total payout is not "bad" but it is certainly not a "best practice" level of payout - especially for a mature lottery. Only a healthy online game mix (with lower payouts than instants) can help a lottery be successful at that overall payout level. From what I've heard and read here and at other sites, it sounds like Ohio has had real problems with their online games. Maybe they need Marty Morrow to come back and lead their marketing team...

         

        The earlier comment about "marketing and promotion" driving sales is a laugher - how many Batchy (the Lottery Industry Ad Awards) winning campaigns ever laid a claim to a measured increase in sales? Maybe ScratchMan in Texas - oh yes - they killed him. You have to advertise and maintain a presence - but it is true that a lot of lottery ad and promo dollars are not as well spent as they could be. 

         

        Winning drives sales. Its what keeps people coming back. You can start off a lottery (or at least you could in the old days when fewer states had lotteries) with lower payouts but without adequate payouts long-term it's like trying to grow an orchard without enough water. The enterprise will be stunted.

         

        Look when happened when the TX Legislature reduced payouts to improve profits. Sales went down dramatically (as did profits) and the Lottery is still trying to recover from the negative impact on playership. 

         

        Politicians rarely invest the energy to learn what makes the lottery tick. Shame on the staff of the Ohio Lottery for not doing a better job communicating the facts.


          United States
          Member #3676
          February 10, 2004
          425 Posts
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          Posted: February 13, 2007, 2:15 pm - IP Logged

          Yes the higher the payout percentage the higher the excitement and the higher the revenues. Sometimes though when you have a high payout percentage and all that money goes to super inflated jackpots a lot of little people dont realize the higher percentages. Not every scratch off game needs to have million dollar payouts. That is where I think these lotteries get wacky. Let the online games have the huge payout of millions and tens of millions. Let the scratch off games have reduced life changing amounts from 100k to 500k. There is never a need in my eyes to have a 2 million dollar scratcher when the online games should be the ones with those jackpots. What is the point of having a 20 dollar scratcher that wins you 2 millions when the odds against it approach jackpot games status. I would play ten dollar tickets all day long if some of the games offered me a better chance at winning 100k opposed to obscene odds of winning 2 million.

            Avatar
            Kentucky
            United States
            Member #32652
            February 14, 2006
            7314 Posts
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            Posted: February 13, 2007, 3:44 pm - IP Logged

            The new lotto is already a decrease. It starts at 1,000,000 rather than 4,000,000 and only increases by 100,000 rather than a million a drawing. Wonder if sales will decrease?

            When you read the fine print, it actually starts at $500,000 if the winner takes the cash option.  It should gain some following from the people that like to play traditional lotto because it pays $2 for hitting 3 out of 6.

            The jackpot increases at minimum of $100,000 but has increased by $900,000 in the last 3 draws so it should eventually increase by a million as the jackpot grows.

            The sales should be much better then Lot 'O Play but because of Mega Millions, I don't see it matching the sales of Super Lotto.

              MADDOG10's avatar - smoke
              Beautiful Florida
              United States
              Member #5709
              July 18, 2004
              20117 Posts
              Offline
              Posted: February 14, 2007, 6:28 pm - IP Logged

              It's time for them to wake up and smell the "Chock full of Nuts"....... or maybe they think everyone else is...!

                                                           

                                                             "  When Injustice Becomes Law, Resistance Becomes Duty "


                United States
                Member #379
                June 5, 2002
                11296 Posts
                Offline
                Posted: February 15, 2007, 10:38 am - IP Logged

                When you read the fine print, it actually starts at $500,000 if the winner takes the cash option.  It should gain some following from the people that like to play traditional lotto because it pays $2 for hitting 3 out of 6.

                The jackpot increases at minimum of $100,000 but has increased by $900,000 in the last 3 draws so it should eventually increase by a million as the jackpot grows.

                The sales should be much better then Lot 'O Play but because of Mega Millions, I don't see it matching the sales of Super Lotto.

                I've said numerous times that Ohio continues to make the same mistake for its in-state annuitized jackpot games. Mega Millions cash value winners (in all 12 states) get the "actual retail value" of the cash value of the annuity, minus withholdings. But Ohio continues to fix the cash value of the annuity (currently 50%) of its in-state game (Classic Lotto.) Therefore lump-sum winners of Ohio Classic Lotto will not get their full share of the cash value.