The law requiring the North Carolina lottery to return at least 35 percent of all ticket sales to state education programs could inhibit sales and ultimately cost the state money, according to the lottery's executive director and other experts.
To meet the requirement, North Carolina will pay out less to winners than neighboring states offer. Tom Shaheen, director of the state lottery and a past president of the North American lottery trade association, said that could mean fewer tickets are sold. Dedicating more money to prizes encourages more people to buy tickets and leads to more money for the state, experts say.
"I wouldn't say it's scientifically an absolute, but I believe it personally from my experience in the lottery," Shaheen said.
South Carolina's lottery director, Ernie Passailaigue, said he likes that his state doesn't dictate how much the lottery must give to education programs.
"Politicians don't understand this," said Passailaigue, a former state senator. "But the players understand this very much. If they buy the games and do not have very pleasant experiences - either through the dollars won or the repetitiveness of the wins - they are either not going to play or else go somewhere where they have a better chance."
South Carolina will pay out 61 percent of its sales revenue in prizes this year, he said. Virginia and Georgia are paying about 58 percent and Tennessee paid about 54 percent last year.
North Carolina's first batch of scratch-off lottery tickets will offer about $79.5 million in prizes. That's at least $10 million less than what Virginia and Georgia would pay and at least $14 million less than what winners would get in South Carolina.
Several states have seen success by increasing their payout percentages, while Texas saw a steady decline in business when it reduced its payouts from 60 percent of sales to 50 percent in 1997. Lawmakers reversed their decision two years later.
California, Ohio, Colorado, Connecticut, Washington and other states saw significant increases in sales and profits after increasing the percentages paid in prizes in recent years.
"What they understand is that it's a volume business and that more sales is the way to bring in more actual dollars," Shaheen said. "We like to say that you don't pay for scholarships with a percentage. You pay for them with real dollars."
State Sen. Tony Rand, D-Cumberland, said he doesn't recall how the 35 percent requirement made its way into law, but says he wouldn't object to a revision if it would mean more money for schools.
"If there's a better way to skin the cat," he said, "then the cat better look out."
Why am I not surprised ?
Ive been saying this all along. Higher paybacks means more net income as more people will play. But states love to be stingy. And since you get taxed on winnings, more people will win so you will sort of get that increased payback money a bit back anywhere through the back door. Why would people play lotteries that payback 50% when you can go to the horsetrack and get 80% back or the casino and get 90%+ back?
people will play nc lottery. will they have pick 3
State Sen. Tony Rand, D-Cumberland, said he doesn't recall how the 35 percent requirement made its way into law, but says he wouldn't object to a revision if it would mean more money for schools.
A legal way for the grabbers to get their cut.
Ive been saying this all along. Higher paybacks means more net income as more people will play. But states love to be stingy. And since you get taxed on winnings, more people will win so you will sort of get that increased payback money a bit back anywhere through the back door. Why would people play lotteries that payback 50% when you can go to the horsetrack and get 80% back or the casino and get 90%+ back?
NY Rotto pays back only 38%-40%. Let's hope NC doesn't get THAT stingy.
Good grief! We have some of the highest gas prices in the nation, now good ole NC is dipping in to our lottery profits. How embarrasing! Guess those Virginia trips are still a go.
anniep, what is wrong with our home state?? Its like a bunch of ignorant people fumbling and putting together something horrible. NC have fumbled this ball so much, its embarassing!
What Rocket Scientist figured out lower payouts will result in lower sales? Can I get a copy of that brilliantly analyzed document?
What Rocket Scientist figured out lower payouts will result in lower sales? Can I get a copy of that brilliantly analyzed document?
Lucky for me I guess, the company I work for makes deliveries in VA & SC. Thank God! Once a month, 20 bucks goes north and 20 bucks goes south. I'm still gonna send that 20 bucks up north without fail. What a bunch of idiots! I'm so embarrassed! Folks everywhere were laughing at us being the only state on the east coast without a lottery, now they're going to be laughing again. Y'know, I guess we've done it to ourselves. Someone recently posted we should call out lottery ... "we's gamblin now".......We really should.
Va and SC won't lose any money off NC
It will be very interesting to see what the prize return is for pick-3 and pick-4. Doesn't sound like NC will ever pay 60% like some states do.
A lot of you are ignoring the amount of negative publicity that the lottery has had to endure just to get off the ground.Do you think the house would have pass the lottery bill if the payout were over 50%?No way.This lottery has had to fight it's way up hill right from the start.Let's get the games running before everybody starts crying about payouts.There's no law that says the games can't be tweeked later on.It was the most important thing to get the lottery passed,first.