NCPA - National Center for Policy Analysis


December 30, 2008

The sour economy is striking the one source of government financing that had been widely regarded as recession-proof: lotteries. Across the U.S., many state lotteries are reporting hefty declines:

  • Ticket sales are down nearly 10 percent in California, 4 percent in Texas and 2 percent nationwide.
  • In Colorado, sales since July have dropped $5 million (2.3 percent), compared with the same period last year; the state is predicting a total 5 percent drop for the entire year.
  • This is only the second time since 1992 that lottery sales have dipped; in 1998, they edged down less than 1 percent.

The decline in lottery sales "is an unusual phenomenon, " said John W. Kindt, a gambling critic and business professor at the University of Illinois.  A big proportion of lottery tickets are bought by people with gambling problems who are likely to play more in bad economic times, he said, even as intermittent players cut back.

A focus group held by the Texas Lottery Commission found that die-hard players reported only small cutbacks, but 27 percent of less-frequent players reported declines in their lottery purchases of 81 to 100 percent in the past year.

Lottery revenue has marched steadily upward, rising more than $1 billion in the most recent fiscal year; but in some states, lottery officials are warning that programs that benefit from lottery sales will be receiving less money.  For example, in Bridgewater Massachusetts, lottery revenue accounts for 10 percent of their total revenue.  A cut this year would probably mean closing a library or a senior citizen center.

Source:  Leslie Eaton, "State Lotteries Show Big Declines," Wall Street Journal, December 26, 2008.

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