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S.C. Lottery Director: Profit losses leveling off

Oct 10, 2007, 10:17 pm

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South Carolina LotterySouth Carolina Lottery: S.C. Lottery Director: Profit losses leveling off

Sales of South Carolina lottery tickets initially sank as gas prices climbed, but customers seem to have gotten used to paying more at the pump, the state's lottery director said Wednesday.

When gas prices climbed above $3 a gallon after Hurricane Katrina, lottery sales at South Carolina gas stations fell sharply, probably because customers felt that they had less pocket change after filling up. But a sample survey of retailers shows convenience store sales have since leveled, director Ernie Passailaigue said at a hearing for Gov. Mark Sanford's executive budget.

Lottery profits in South Carolina fell to $988 million in the last fiscal year, down $156.5 million from 2005-06, when profits reached an all-time high.

Passailaigue attributed the 14 percent drop largely to the North Carolina lottery, which began siphoning off customers when it launched in March 2006. But it could have been worse, Passailaigue said.

North Carolina residents still account for 15 percent of players in South Carolina, down from 35 percent, he said. And Passailaigue says he hopes those losses have leveled off.

He expects the agency to meet expectations this year of a $250 million profit, which funds college scholarships and other education projects.

But Passailaigue cautioned the lawmakers who craft the state budget to be realistic about future sales, especially since South Carolina's conservative lottery law prevents the agency from aggressively promoting the games.

By law, the agency can't spend more than 1 percent of sales on advertising, and no game can cost more than $10.

"My goal is not to maximize lottery sales," the former state senator said Wednesday. "We try to operate responsibly."

Passailaigue, the lottery's executive director since its creation in 2001, said he recognizes a large portion of South Carolina voters, including many legislators and the governor, never wanted the games.

Declining lottery revenues and increasing demand for the scholarships they provide means students could see their tuition grants drop.

"The governor is opposed to the lottery. He thinks legalized gambling is counterproductive to the economy," Sanford spokesman Joel Sawyer said. "But that said, if we're going to have a lottery, he wants to make sure every possible dollar is going to education."

When the governor's staff quizzed Passailaigue about ways to increase revenue, he suggested allowing sales during the primary and general election, which could cost the state up to $2 million in 2008.

He noted that South Carolina remains vulnerable to losing customers to North Carolina, where lawmakers changed its lottery law this year to allow higher payouts for scratch-off tickets, in an effort to encourage more people to buy tickets. North Carolina sets no maximum on ticket costs, which have been as high as $20 each.

Sanford is willing to consider signing a law allowing lottery sales in South Carolina on statewide election days, Sawyer said. A proposal to do so sits in a House committee after passing the state Senate earlier this year.

House Speaker Bobby Harrell, R-Charleston, said he'd be OK with having ticket sales on Election Day.

But he and Sanford oppose other ways of raising revenue, including eliminating the $10 maximum on per-ticket costs and allowing online games like Keno.

"I don't want to encourage people to spend more per person," Harrell said.


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