NCPA - National Center for Policy Analysis

State Lottery Revenues Drying Up

May 4, 2001

For several decades, legal lotteries contributed significant sums to state revenues. But now those revenues are in decline. "The booming economy is not masking the long-term decline in lotteries anymore," says Jown W. Kindt, a commerce professor at the University of Illinois.

What's behind the lotteries' now-tarnished promise? Fewer people are playing the lotteries and other forms of gambling are drawing participants away.

  • In the last fiscal year, profits from 20 of the nation's 37 state lotteries fell -- up from just eight states five years ago.
  • For example, annual lottery profits dropped 19 percent in Wisconsin, 8 percent in Texas and 6 percent in Connecticut.
  • Fourteen states direct all lottery proceeds toward education, while five more use only a portion.
  • As for competition, 11 states now have casino or riverboat gambling, while Indian tribes have built casinos in 24 states since 1988.

Many lottery games have done a poor job attracting younger people -- and regardless of age, many people just get tired of losing and quit playing.

To attract more players, some states have increased the size of their jackpots. But any increase in participation is often cancelled out by heftier payouts.

Source: Robert Berner, "State Lotteries Are Coming Up Snake Eyes," Business Week, May 7, 2001.


Browse more articles on Government Issues