Retailers worried about loss of revenue, store traffic

ATLANTIC CITY, N.J.For Tushar Patel, every $1 lottery ticket he sells at his Pantry 1 Food Market in — For Tushar Patel, every $1 lottery ticket he sells at his Pantry 1 Food Market in Hammonton yields more than the 5-cent commission he gets from New Jersey.

Patel said he makes more from the other purchases of customers who visit the store for lottery tickets.

"Eighty (percent) to 90 percent of the people who play the lottery here buy coffee and other things," Patel said.

The state lottery posted record sales exceeding $2.6 billion in 2010. Now, proposed legislation seeks to increase the lottery's profits by allowing gamblers to buy tickets online directly from the lottery.

Patel and other convenience store owners are worried that would eat into their businesses. They hope the proposal is a long shot of Mega Millions proportions.

The threat to the mostly small businesses that sell the tickets comes at a time when the New Jersey Lottery Commission has experienced its greatest success as more and more residents seek a big payday.

The lottery returned $924 million in profits to state programs last year, funding education, human services and veterans services, about $37 million more than the fiscal year before.

And in a state grappling with major budgetary issues, a money-making operation is a valuable commodity.

Assemblywoman Annette Quijano, D-Union, sponsored the proposal, which cleared the Assembly Regulatory Oversight and Gaming Committee in December.

The bill is still a work in progress, and Quijano said she is listening to concerns from businesses and problem-gambling organizations.

Some details of the bill itself — whether it would mean starting a new game available only online or including ones available in stores is still being discussed, she said. It would not apply to scratch-off tickets.

Quijano said she does not believe the online sales would draw customers away from convenience stores but will attract a new lottery audience.

"Whatever would help bring in additional revenues would help decrease property taxes, but I'm not going to do that on the backs of small businesses," she said.

The bill includes an amendment that says the state would redistribute 5 percent of the electronic sales among lottery agents but does not outline how to do that.

The proposal has raised eyebrows in convenience stores, where lottery machines hum throughout the day printing Pick 3, Pick 4, Jersey Cash 5, Pick 6 Lotto, Powerball and Mega Millions tickets.

One trade group is trying to estimate how much is at stake.

Connecting lottery tickets to sales of hot dogs, chips, beef jerky and coffee is nearly impossible, said Sal Risalvato, executive director of the New Jersey Gasoline, Convenience Store and Automotive Association.

Stores' cash registers are not tied to lottery machines. So in January, Risalvato asked some businesses to log the spending habits of ticket purchasers.

Although he is still receiving results from the informal surveys, Risalvato said anecdotally it can mean big money.

"If someone buys a couple of dollar tickets and a cup of coffee for $1.50, I just made a buck. I made a buck on the coffee and 5 cents on the lottery ticket," he said.

"Many times, when I'm getting that cup of coffee (in the store), it's because I'm there. I smell the cup of coffee. We all have human nature built in us," Risalvato said.

The Lottery Commission did not comment on the proposal

The hype surrounding a big lottery is hard to miss. And southern New Jersey has had its share of big winners: In 2007, Campark Liquors in Woodbine sold a ticket to a buyer who split a $390 million jackpot, the largest American single lottery payout at the time.

Later that year, Blitz's Hole-in-the-Wall Market in Lower Township sold a winning ticket on a $330 million jackpot.

Campark Liquors manager Fern Gandy said the store was packed in 2007, and is still that way today.

"When those lotteries were big this time and the time before it, the lines were all the way down the aisle and around the store," Gandy said.

Versions of online payments for lottery games exist in other states.

The New York Lottery has a subscription service for its Mega Millions and Lotto games, allowing players to sign up for a subscription form and pay for their numbers online.

The service has about 90,000 subscribers, said Carolyn Hapeman, spokeswoman for the New York Lottery.

"In bad weather and for other folks who can't go (out) to play their numbers, they never miss a drawing," she said.

The proposed legislation in New Jersey would add another change to the lottery system: It would allow ticket buyers to use debit cards, both online and in stores.

Currently, the only way to buy a lottery ticket in New Jersey is with cash.

The proposal creates some concerns for the Council on Compulsive Gambling of New Jersey.

"This is a new form of access to lottery tickets, and any time a new form of gambling becomes available or improved ... we run the risk of increasing the number of problem gamblers, the extent of the problem," said Donald Weimbaum, executive director of the council.

And in New Jersey, the lottery has increasingly become the source of phone calls to 1-800-GAMBLER, the 24-hour problem-gambling hotline listed on the backs of tickets. The lottery now accounts for about 15 percent of calls, Weimbaum said. In 2004, it accounted for 9 percent.