Pennsylvania Lottery sales hit record high, but revenues decline

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HARRISBURG -- While total sales of Pennsylvania Lottery tickets hit an all-time high of more than $3 billion in fiscal year 2007-08, net revenues to the state Lottery Fund, which pays for senior citizens programs, continued a modest three-year decline.

That's because of the growing popularity of "instant" or "scratch-off" lottery tickets, which have a higher payoff for the ticket buyer and less profit for the state, lottery officials say.

Nonetheless, state Revenue Department officials yesterday boasted about the lottery, whose sales, they say, have so far withstood a nasty combination -- the downturn in the economy and growing competition from slots, as more casinos open in Pennsylvania.

Revenue Secretary Tom Wolf said, "In these tough economic times, the Pennsylvania Lottery had an extraordinary year" in fiscal 2007-08.

He said that state lottery set an all-time sales record in the fiscal year, which ended June 30. They totaled $3.089 billion; that compares with overall sales of $3.076 billion in 2006-07, $3.07 billion in fiscal 2005-06 and $2.645 billion in 2004-05.

And yet, net revenue for the state -- the "profit" that goes back into the Lottery Fund -- is down somewhat over the last three years. In fiscal 2005-06, it was $968 million; in 2006-07, it fell to $949 million; and for the just-ended fiscal 2007-08, it fell again, to $928 million.

Lottery spokeswoman Elizabeth Brassell said that $968 million was the highest-ever amount of net revenue since the lottery began in 1972. Even though the 2007-08 figure dropped to $928 million, that's still the third-highest profit for the state, she said. Net revenue from 2004-05, by comparison, was $853 million.

"The Lottery Fund is solvent," she said, adding that $928 million "is a lot of money."

Any ongoing, large-scale reduction in Lottery Fund revenue would be a serious situation, because the lottery pays for several important services for senior citizens, such as property tax and rent rebates, free and reduced-fare transit and low-cost prescription drug programs.

Steve Miskin, spokesman for House Republicans, disagreed with Revenue Department officials about the lottery figures.

"We have a huge concern" about lottery net revenues continuing to decline, he said. He complained that Gov. Ed Rendell has used more Lottery funds to pay for administrative costs, such as for the Department of Aging, which further strains the Lottery Fund.

He also said that recent studies have shown that lottery sales have, in fact, dropped in areas around casinos. So far only seven casinos are open, but when all 14 permitted by law are open, two or three years from now, there could be reductions in overall lottery sales as well as in net revenue for the state, Mr. Miskin contended.

Ms. Brassell said the net revenue for the state will vary from year to year "because the mix of instant versus terminal-based games is different."

In previous years there were more terminal-based games, such as Powerball or the daily games, but in recent years, instant games have risen in popularity both in Pennsylvania and nationally.

One reason is that a ticket buyers know immediately if they've won. Also, instant games have a slightly higher percentage of payout for the winner, and slightly lower profit margin for the state, than terminal based games, Ms. Brassell said. Instant lottery tickets now account for 55 percent of overall sales.


Bureau Chief Tom Barnes can be reached at tbarnes@post-gazette.com or 1-717-787-4254.


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