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Some lotteries see spike in sales growth amid pandemic

Jul 15, 2020, 10:43 am

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Not all lotteries mired in economic difficulty

By Kate Northrop

While some state lotteries are left trying to figure out how to make up for sales deficits in the wake of the COVID-19 pandemic, other states are experiencing surges in lottery sales inversely driven by the overall economic slump.

With the closure of thousands of retailers across the country, players were generally limited in their ability to purchase lottery tickets out of convenience. Sales for the major Powerball and Mega Millions draw games have dipped, which prompted the Mega Millions Consortium to lower the starting jackpot and determine minimum increases based on ticket sales.

While this means that premeditated purchases for major draw games have dipped, this left the door open for spur-of-the-moment buys, primarily scratch-offs. Montana demonstrates this trend well, where sales increased from $1.4 million to $16 million in March through May. Scratch-off tickets made up a whopping 83% of those sales compared to a year ago.

Texas serves as another example, although its sales were boosted given the fact that 20,000 retail locations were deemed essential services, according to Texas Lottery Commission Executive Director Gary Grief. In just this past week alone, sales in for scratch-off tickets are up $26.5 million — that's a 30% increase compared to the same week last year.

Cornell University business professor David Just offers an explanation for the trend, citing that players will likely shift toward purchases that offer instant gratification in strained situations.

"We have known for some time that people end up playing the lottery more often or with more of their dollars when they get put in dire circumstances, when they have a drop in income," Just said. "Unemployment is one of the potential big drivers for something like that. We saw that at the beginning of the pandemic."

"Massive rises in unemployment, you would expect, would lead people to this place where they want to take more risks to try and get back what they've lost."

Arkansas is another example of a state that's shown a boost in lottery revenue, particularly in April and May, that is said to be due to "people simply being bored and looking for activities that they can do in their own homes," according to Arkansas Scholarship Lottery Director Bishop Woosley.

Some state lotteries that were previously hindered by the pandemic have finally started to see their numbers revving back to life.

Following the stay-at-home order in Minnesota, lottery sales saw an initial drop in March but rebounded in April and May, surpassing the previous year's by $13 million and $29 million respectively.

During Pennsylvania's stay-at-home order, the state shut down about 30% of the Lottery's retailers, which contributed to the 25% drop in sales for March. The sudden 7% growth in scratch-off ticket buys helped the Pennsylvania Lottery recover in April and May.

The Maryland Lottery went through a rough patch before finally bouncing back. Toward the beginning of the virus' spread in the U.S., lottery officials initially projected that profits would be $50 million below the state's original projections for the fiscal year that ended June 30. Fortunately, that expectation is no longer as dismal, with expected profits to be only $10 million below the original projections.

Sales for the Maryland Lottery were down a startling 30% in April. "We really didn't know where the bottom was at that point," Maryland's lottery and gaming director Gordon Medenica said. "We were just seeing sales absolutely collapse."

Thankfully, sales rebounded remarkably well since then. Hopefully the trend bodes well for other state lotteries that are currently struggling.

"In the month of May, we actually had our all-time best month for the year in both sales and profits," Medenica recalled. "Instant tickets have been booming. Our daily numbers games have been booming. Lottery is doing really well."

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