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Strong Iowa lottery sales are slipping: The culprit? You guessed it, COVID-19

Apr 21, 2020, 8:21 am

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Iowa Lottery

After eight months of Iowa Lottery ticket sales topping budgeted projections, those sales are starting to arc downward.

One of the reasons: 95 of the retail outlets selling lottery tickets are shuttered under Gov. Kim Reynolds' COVID-19 orders, Iowa Lottery officials said Wednesday.

Through the first three quarters of fiscal 2020, lottery sales were running 1.8 percent ahead of last year's record pace. However, sales of lottery products in March were about $2 million short of the budgeted expectation of $30.9 million.

Lottery spokeswoman Mary Neubauer said the lottery's operating expenses are 14.63 percent under budget, thanks to conservative fiscal practices and to the use of a five-year rolling average of sales and expenses "to take into account the fluctuations in results that will occur and should be expected."

However, she noted, "the current year is outside the norm in so many, many ways," given the onset of the global coronavirus pandemic that arrived in Iowa last month.

This fiscal year's sales are 2.76 percent below the lottery's five-year gross sales average through March, Neubauer noted.

"Instant-scratch ticket sales remain relatively stable here in Iowa," she said. "Through February 2020, gross sales of scratch tickets for the year were closely tracking the record-breaking pace for that product category set in fiscal year 2019.

"We saw a slight dip in the scratch-ticket sales in March, but they do remain fairly steady, unlike the decline we're seeing in jackpot-oriented lotto games."

Last fiscal year's record sales of $390.9 million were fueled in part by major jackpots in both Powerball and Mega Millions. The Mega Millions jackpot grew to $1.54 billion until a winning ticket was bought Oct. 23, 2018, in South Carolina. Powerball saw a jackpot run up to $768.4 million, before it was claimed in Wisconsin on March 27, 2019.

Those extraordinary jackpots are somewhat skewing this fiscal year's comparisons, Neubauer said, noting that last month's Powerball sales were down by more than 74 percent compared to March 2019.

"Most of the Iowa Lottery's sales categories were seeing a positive trend prior to the current public health emergency," she said.

"The lotto category was the general exception to that statement, and that was largely due to the jackpot differential we're seeing in Powerball and Mega Millions," she said. "The jackpots in those games have been won more often this past year, which has kept the games' grand prizes at a lower level than we have seen in past years. That in turn, has kept sales in those games to a lower overall level.

"The COVID-19 emergency has further strained the lotto category."

Also, the 95 retail outlets that sell lottery products that are now closed averaged about $10,000 a day in Iowa Lottery product sales, so that is expected to have an estimated $300,000 impact in lost sales, she noted.

"We are doing our best to ensure that the Iowa Lottery will meet its budgeted projections for fiscal year 2020, which ends June 30," Neubauer added.

While Iowans likely are spending less of their discretionary dollars on travel, given the current COVID-19 environment, they also are functioning under restricted movement, which means fewer trips running errands when they might have picked up a lottery ticket in the process, she said.

"With any of us spending a lot more time at home while social distancing, we know that folks are looking for entertainment choices, and scratch tickets are one of the options for some, especially our extended-play games like Crossword and Bingo that are designed to provide more playing time per ticket.

"We believe that factor has helped buoy scratch-ticket sales."

Through March, the $57.1 million the lottery has provided Iowa's budget is more than $3 million above the budgeted proceeds. The budgeted amount for the entire fiscal year is slightly more than $70 million.

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