TALLAHASSEE, Fla. — Since the multi-state lottery game Powerball arrived in Florida a year ago, people have bought more than $430 million in tickets. But even that couldn't stop overall lottery revenue in 2009 from dropping 3 percent compared with the year before.
Lottery sales, which are usually immune from recessions, have taken a hit during the downturn. Sales have plummeted nearly $300 million since the lottery's high-water mark in 2008. It's the first significant drop since 1995.
But without the Powerball money, the decrease in sales certainly would have been worse.
"It's really allowed us to limit the decrease that I think we would have experienced had we not joined Powerball when we did," said Leo DeBenigno, secretary of the Florida Lottery. "It was really great timing, in retrospect."
State officials usually talk about the lottery in terms of the money it provides to K-12 schools, colleges and scholarships. The educational enhancement fund accounts for about 7 percent of the state's $19.8 billion education budget.
For the current fiscal year, state economists predict a relatively modest drop in lottery money for the education fund: $60 million from a $1.3 billion pot of money. To keep the payouts to education from falling as quickly as sales, lawmakers raided a separate unclaimed property fund and also deeply cut into the lottery's reserves.
Rep. Alan Hays, whose legislative committee oversees the lottery's budget, said the drop in sales isn't necessarily a bad thing.
"I would hope that those who are having decreases in income realize they don't have as much discretionary income to play with," said Hays, R-Umatilla. "Instead of putting their dollars into some gambling thing, they need to put their dollars into their family needs."
More than 30 states participate in Powerball, which offers mega-jackpots at odds of 1 in 195 million. The game has resulted in 13 new millionaires in Florida. An Orlando dermatologist won the state's first jackpot, a $101 million lump-sum payment, in October.
By joining Powerball, lottery officials anticipated some people would stop playing Lotto, the state's pick-six game. But DeBenigno says there has been a net gain in revenue — combined Powerball and Lotto sales eclipse Lotto sales from past years.
But the drop in Lotto sales — roughly $275 million, or 36 percent — can still raise eyebrows.
"People are shifting from Lotto in a greater amount than we thought," said Amy Baker, the state's top economist.
Baker and gambling experts say the overall sales figures are a function of the sputtering economy. Lottery tickets are similar to other types of goods and services, says economics professor Doug Walker, who studies gambling at the College of Charleston.
"It's not surprising to me that there would be some decline in sales and revenues," he said.
But recessions didn't used to mean a drop in lottery funding. What's different this year? "It's probably because this is a more serious recession than we've seen in years past," Walker said.
DeBenigno also said that this latest downturn is different because it came with a spike in gas prices. More than half of lottery retailers are gas stations.
"When you have to spend $50, $60 to fill up your gas tank, you're not in a real good mood," he said. "You're less likely to go into the store and perhaps purchase a lottery ticket."
Scratch-off tickets, which generate about half of lottery revenue, were also down nearly 10 percent in 2009. Officials expect those numbers to rebound, thanks to 1,000 new vending machines installed in October that have increased awareness of the tickets.
DeBenigno said he hopes the machines, coupled with a new promotion in the spring, will make up the expected shortfall in lottery money for education.
Thanks to Nino224 for the tip.