Lottery sales shrinking as people cut back

Controversial when voters approved it in 1983, the Colorado Lottery has pumped $2 billion into open space, parks, trails and recreational facilities across the state while creating a few hundred millionaires.

Although the odds of winning the Powerball jackpot are an astronomical one in 192 million, the promise of instant riches keeps them coming.

Odds are better for other games, including scratch tickets, Cash 5, which was introduced in 1996, and Lotto, marking its 20th anniversary this year.

Since its launch, Lotto has made 368 people millionaires and provided $572 million for recreational programs.

Stephen Pletka, an engineer who bought five Lotto quick-picks this week at a gas station, hopes he's the next big winner and isn't bothered by long odds. He plays the multistate Powerball, too, but only when the jackpot hits $100 million.

"I realize it's all just a luck thing," he said. "But if you don't play, you don't stand a chance."

Players like Pletka helped the lottery set a record in 2008 with $500.4 million in ticket sales, a rise of 2.8 percent over 2007. But since then sales have slowed, possibly due to the shrinking economy, lottery director Jack Boehm said.

"We're suffering this year from lack of spending in discretionary dollars," Boehm said.

"All lotteries are saying the same thing: Sales are down because of the down economy."

He said revenues have fallen $500,000 to $750,000 per week in the past several months compared with last year. The biggest drop is in Powerball, because it hasn't had a large jackpot in months, he said. It sat at $42 million this week.

According to a survey in 2007, who's buying tickets is changing, from old to young, and from lower income to the more well-heeled.

Boehm said players usually don't bet the milk money on the lottery.

"People who don't have the money aren't playing," he said. "Typically, what we find is they say, ‘I had an extra dollar and thought I'd buy a ticket.'"

But critics say the states make money off the games of chance without addressing the gambling addictions they can foster.

"Where the state has the dual role of maximizing profit while minimizing harm, all too often states in general tend to focus on maximizing profit," said Keith Whyte, head of the National Council on Problem Gambling. "It does tend to create a conflict of interest."

The most recent study on gambling addictions commissioned by the Colorado Department of Revenue in 1997 found 4.4 percent of residents were problem gamblers and another 1.8 percent were pathological.

"A lot of states use gimmicks, such as restricting the money to parks and education," Whyte said. "It shouldn't obscure the fact that at least a percentage should be dedicated to programs to treat."

Last year, Colorado Lottery spent $48,488 out of its $500.4 million in sales on promotion of National Problem Gambling Awareness Week, aid to Problem Gambling Coalition of Colorado, brochures, a gambler hot line and other related programs.

Lottery spokeswoman Erika Gonzalez said $13,000 more will be added in 2009.

Last year, the Legislature set up a $150,000 fund for prevention and treatment grants, said Lois Rice, executive director of the Colorado Gaming Association. "It's a major step forward for Colorado," she said.

There's no arguing, though, that the lottery has been a blessing for the state's parks.

Through Great Outdoors Colorado, the Conservation Trust Fund and State Parks-Colorado Greenway Program, the lottery has funneled $127 million just to El Paso County.

Projects range from big ventures such as Cheyenne Mountain State Park ($13.7 million), and Red Rocks Open Space ($1 million), to small improvements such as trails in Calhan ($10,000).

The city of Colorado Springs' parkland inventory more than doubled to 15,300 in 25 years, aided by $72 million in lottery cash, said parks analyst Aimee Cox.

"It helps stretch our dollars, and we can complete more projects in a timely manner," she said. Without it, Cox added, "A lot of these projects wouldn't have happened."

To keep the money rolling in, the lottery needs to create games and appeal to a younger audience, Boehm said. One recent instant game gave off scents when scratched.

Another challenge is keeping retailers on board. After reaching a high of 2,900 last year, the number of convenience and liquor stores, groceries, smoke shops and bars selling lottery tickets has dropped to 2,828, "mostly due to businesses that have closed," Boehm said.

The economic downturn complicates the decision of whether to cut the 7.4 percent commission paid to retailers as recommended by the State Auditor's Office. Only Michigan, Oregon and Rhode Island pay higher commissions.

While reducing commissions by 1 percentage point would save $5 million, Boehm said, "We run the risk of losing retailers."

Colorado ranks 11th among the nation's 43 state lotteries in the proportion it pays in prizes - an average of 60 percent of sales.

State auditors recommended prize payouts be lowered to increase returns to GOCO and the other beneficiaries, but Boehm said it's unlikely to happen. "We don't think we can get instant games to 50 percent because players won't buy tickets," he said. "The higher payout you have, the more sales you'll have."

For Matt Daugherty, who bought something to drink at a convenience store on Friday, the payouts are immaterial.

"I think it's a waste of money," he said. "At the time of this economy, the money could be spent on housing, utilities, on gas, on food, on clothes."

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Contact the writer: 636-0238 or pam.zubeck@gazette.com  

What are the odds?

For Powerball, 1 in 34. Powerball jackpot, 1 in 192 million.
Lotto, 1 in 20. Lotto jackpot, 1 in 5.2 million.
Cash 5, 1 in 201.
Scratch, 1 in 4.5.

How much is paid out?

Powerball is designed to pay 50 percent of proceeds in prizes.
Lotto pays 57.5 percent.
Cash 5 pays 55.3 percent.
Scratch tickets pay 60.5 percent to 78.5 percent.