HARRISBURG -- Since slots gaming opened in Pennsylvania in November 2006, counties with casinos have seen a reduction in state lottery sales compared to non-casino counties, a report released yesterday said.

The report, done by the state Legislative Budget and Finance Committee, said that in 2007, counties that are home to casinos saw a 4.2 percent reduction in lottery sales compared to 2006.

By contrast, counties without a casino, but adjacent to a county with a casino, showed a slight increase of 0.7 percent in lottery sales.

However, counties that had neither a casino nor abutted counties with a casino showed a much larger increase of 3.8 percent in lottery sales.

The committee's report was required by the Pennsylvania Race Horse Development and Gaming Act of 2004 -- also known as the slots law -- in response to concerns that the slots industry would hurt sales for the Pennsylvania Lottery, which helps lower-income seniors pay for prescriptions and transportation.

The study takes into account the first six casinos that opened in the state, beginning in November 2006 and going through January 2008. A seventh, the Hollywood Casino near Harrisburg, opened in February. Seven other future casinos are not yet ready for business.

But despite slowing growth in lottery sales, state Revenue Secretary Thomas Wolf said yesterday there is no reason to believe that slots gaming is having a negative impact on the lottery.

"The lottery is a dynamic business affected by a myriad of factors such as jackpots' sizes, marketing efforts, the economy and even the weather," Mr. Wolf said. "We cannot attribute any single factor as the sole reason for an increase or decrease in lottery sales."

Rep. Dave Levdansky, D-Forward, a committee member, said the area of southern Allegheny County and Washington County contradicts the notion that lottery sales can be tied to slots gaming.

He pointed to Washington County's overall increase in lottery sales over the past year, despite the fact that The Meadows Racetrack & Casino ranks highest among the seven casinos in the state in daily per-machine revenue.

"If you're going to see a negative impact from the lottery, you're probably most logically going to see it in our area, right?" he said.

Mr. Levdansky acknowledged that, "generally speaking," in the immediate region around the other casinos there appears to be a noticeable impact on lottery sales.

Five of the first six Pennsylvania casinos are located in counties bordering other states. Mr. Wolf argued that these counties are "very much affected" by the Mega Millions game in which New Jersey, New York, Ohio and Maryland participate.

"In the end of 2007, the lottery did poorly in almost all the border counties largely because Mega Millions had a high jackpot, and our big jackpot game, Powerball, did not," he said. "So, as the report says, there are a lot of things operating here and proximity to a casino seems not to be that important."

Overall for 2007, the lottery saw only 0.2 percent growth, following four years of double-digit increases.

In order to jumpstart lottery revenue, officials have developed a business plan that attempts to respond to customer desires for more instant game opportunities and higher jackpot games.