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N.D. lottery revenues exceed expectations

Aug 2, 2005, 8:06 am

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North Dakota Lottery

North Dakota's three lottery games have raised $7.2 million for the state treasury since Powerball sold its first ticket in March 2004, the state's lottery director said.

North Dakotans bought $24.9 million worth of tickets in 15 months.

Although lottery demand was greater than state officials expected, sustaining the pace will be "much more challenging," said Chuck Keller, director of the North Dakota Lottery.

"I realize that our honeymoon period is over, and that sales for the lottery are going to become more and more driven by the amount of the jackpots, and by the marketing promotions that we do," Keller said Monday.

The $7.2 million goes into North Dakota's general fund, which is spent on an assortment of programs, from aid to local schools to medical care for the poor. Another $400,000 in lottery revenues has been reserved for treatment programs for compulsive gamblers.

North Dakota state government operates on a two-year budget. The state's 2003-05 biennium ended June 30. On Monday, the lottery office made public an unaudited statement of the games' revenues and expenses from March 25, 2004, when the Powerball game opened in North Dakota, until June 30.

North Dakotans bought $18.9 million worth of Powerball tickets during the period. The Hot Lotto game, which began June 24, 2004, registered $4 million in ticket sales, while another game, called Wild Card 2, sold $2 million in tickets, the lottery's revenue summary says. It debuted Sept. 23.

Wild Card 2 has paid the biggest North Dakota lottery prize so far. A Walsh County couple cashed a $420,094 prize ticket last month, a payout that totaled $291,798 when taxes were withheld. From March 2004 through last June, the lottery paid almost $11.9 million in prizes.

Aside from prize expenses, the lottery's biggest cost was $2.58 million in commissions paid to Scientific Games International Inc., which supplies and services the lottery's sales terminals. The Georgia company takes a commission of 10.63 cents for every lottery ticket sold.

The lottery also paid $1.24 million to the North Dakota merchants who sell tickets. Four hundred businesses get a nickel commission for every ticket they sell.

Initial lottery revenues have greatly exceeded state officials' expectations. The Legislature estimated the lottery would provide $1.43 million for North Dakota's general fund during the 2003-05 biennium, rather than $7.2 million.

Lawmakers set more ambitious lottery profit goals for the 2005-07 biennium. They are counting on the lottery games to supply $10 million for the general fund over the two years.

The lottery tries to keep administrative costs low, Keller said. It has only seven employees, and uses Montana's lottery computer, which is located in Helena, to run its games. The North Dakota Lottery relies on Scientific Games to do tasks normally done by a state lottery's own field employees, Keller said.

"The lottery adopted a very efficient business model of operation," Keller said. "For the lottery to be successful, we had to optimize efficiencies."

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