Sweet dreams in hard times add to lottery sales

Sep 14, 2008, 9:49 pm (3 comments)

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When gasoline prices shot up this year, Peggy Seemann thought about saving the $10 she spends weekly on lottery tickets.

But the prospect that the $10 could become $100 million or more was too appealing. So rather than stop buying Mega Millions tickets, Ms. Seemann, 50, who lives in suburban Chicago and works in advertising sales for a financial Web site, saved money instead by packing her lunch a few days a week, keeping alive her dreams of hitting a jackpot and retiring as a multimillionaire.

"With companies tightening and not giving cost-of-living increases, you have to try to make money elsewhere," she said, though conceding, "It might be convoluted logic."

Many state lotteries across the country are experiencing record sales, driven in part by intense marketing but also by people like Ms. Seemann who are trying to turn a lottery ticket into a ticket out of hard times.

"When people view themselves as doing worse financially, then that motivates them to purchase lottery tickets," said Emily Haisley, a postdoctoral associate at the Yale School of Management who in July published a research paper on lotteries in The Journal of Behavioral Decision Making. "People look to the lottery to get back to where they were financially."

Of the 42 states with lotteries, at least 29 reported increased sales in their most recent fiscal year. And of those 29, at least 22, including New York, New Jersey and Connecticut, set sales records. Further, sales in some states are on a pace to finish higher still in the current year.

"I was surprised, because I thought with gas prices up and people not leaving the pump to go into the stores, we'd see a greater impact" on the downside, said Jodie Winnett, acting superintendent of the Illinois Lottery, whose sales increased 3 percent in the last fiscal year and are doing even better this year.

Others are not at all surprised.

Rebecca Hargrove, president of the Tennessee Lottery, said that in her 25 years working in lotteries, "I've noticed that if there's a recession or a downturn in the economy, people cut back: it might be on the new car, the new house or the new fridge."

"But the average player spends $3 to $5 a week on lottery tickets," Ms. Hargrove said, "and it's a pretty benign purchase."

John Mikesell, a professor of public finance and policy analysis at Indiana University, published a study in 1994 showing that from 1983 to 1991, lottery sales tended to rise with unemployment rates.

"The findings were that in slump periods, lotteries historically have gotten a little bump upward," said Professor Mikesell, who has not analyzed recent lottery data. "It's taking a shot at getting some relief in hard times. It's usually not a good gamble, but it's a dollar, and if they happen to accidentally hit it, it may well change their lives."

Lottery scratch cardsTo be sure, other factors as well are pushing lottery sales. Lottery directors have spent the last few years heavily marketing their products through greater presence in stores, new games and partnerships with sports teams and television shows.

Among their new offerings are $20 and $50 scratch-off tickets that provide higher payouts, as well as additional fast-paced electronic games, part of the goal being to draw players who might otherwise head to a casino. Indeed, New York State's 10 percent increase in lottery sales in the last fiscal year was due largely to the introduction of more video lottery terminals.

"We're going after discretionary entertainment dollars," said Anne M. Noble, president of the Connecticut Lottery, whose sales increase last year was 4.3 percent. "Let's keep it fresh, keep it fun, encourage people to play in moderation and use the money they do have."

In Massachusetts, where the per-capita sales volume last year was $707, the highest in the country, officials rolled out a $20 instant-win ticket in September, partly in hopes of appealing to gamblers who might be tempted to go to one of the two casinos in neighboring Connecticut.

It seems to have worked. Thanks in part to the introduction of the ticket, the Massachusetts Lottery achieved a record $4.7 billion in sales for the 12 months ended June 30, compared with $4.4 billion for the year before, and sales have continued to rise in the two months since the end of the fiscal year.

Drawing those casino players to the lotteries has been crucial. Though experts say casino gambling and lotteries have both been historically recession-proof, high gasoline and food prices have contributed to a revenue decline experienced this year by gambling destinations including Las Vegas and Atlantic City. (Atlantic City did record a slight rise in August.)

"The lotteries are on every street corner, and you do have to travel a bit to get to a casino as a general rule," said John Kindt, a professor of business administration at the University of Illinois who has studied lotteries. "The accessibility of the lotteries is a plus for them. They're in everybody's backyard."

The higher sales of the current economic downturn have generally drawn higher net revenue along with them, in continuation of a longer trend. A study issued in June by the Rockefeller Institute of Government, a research arm of the State University of New York, found that lottery revenue had grown steadily over the last 10 years, with the highest growth rates during the nation's last recession, in 2001-2.

Increased lottery returns do little to offset declines in larger sources of revenue, like sales and income taxes, that have forced some states to impose hiring freezes, layoffs and wage reductions during the current downturn. "If your personal income tax is weak or sales tax is weak, the lottery isn't enough to make up for that," said Scott D. Pattison, executive director of the National Association of State Budget Officers. "But any revenue that is doing well, or at least not too bad, certainly helps."

Somewhat incongruously, there is a thought that the hard times contributing to the lottery sales boom may well bring about its demise: if the economic slump continues, or even deepens, the thinking goes, many players may at last have had enough.

No one can know, of course, whether that reversal will be fully realized. But a survey of regular players by Independent Lottery Research, a consulting firm based in Chicago, found last month that 20 percent of them were already playing less or buying less expensive tickets.

So lottery directors are girding for the possibility of their own hard times, and that means staying innovative. To keep players buying, Buddy W. Roogow, director of the Maryland Lottery, is partnering with sports teams — a winning player may get tickets to a home-team game, for instance, rather than cash — and has introduced a simulated-racetrack game. "We have a challenge ahead of us," Mr. Roogow said.

For now, anyway, Sheyda Belli, 38, a human resources director in Aliquippa, Pa., continues playing the lottery, though she and her husband tightened their belts by canceling their summer vacation and cutting back on all manner of other expenses, including cable television and eating out.

"I always joke with my husband that I'm a winner," Ms Belli said, "until they tell me I'm not."

The other day Lou Mott, who owns a convenience store in Aliquippa, a town that has struggled since its steel mills closed in the 1980s, sold tickets to about 40 people in the 45 minutes before the state lottery numbers were broadcast. Most spent $10 or more each.

Though Mr. Mott shakes his head in bewilderment at some of his repeat customers, including one retired woman who spends up to several hundred dollars a day on scratch-off tickets, he understands the motivation.

"I guess everyone is looking for a rainbow," he said.

Thanks to BobP for the tip.

New York Times


Abdi's avatarAbdi

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"When people view themselves as doing worse financially, then that motivates them to purchase lottery tickets," said Emily Haisley, a postdoctoral associate at the Yale School of Management who in July published a research paper on lotteries in The Journal of Behavioral Decision Making. "People look to the lottery to get back to where they were financially."

read the rest of the story a bove


yes,the lottery is taking in billions right now!


I happen to be one of those people mentioned above. I play the lottery religiously while dreaming sweet dreams. It certainly WOULD turn my life around, even if it were only $200,000! I enjoy dreaming unrealistically. But at some point, someone somewhere will have something happen to them that they never would have believed. I am always happy for the winners. Especially if they are in need.

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