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State lottery officials wager Powerball will boost revenue
Sunday, January 06, 2002 By Martha Raffaele, The Associated Press
HARRISBURG -- During the Pennsylvania Lottery's earlier days, Marina Cugino could count on hordes of customers clamoring for tickets on a regular basis at her family's suburban Philadelphia newsstand.
Today, she senses that the lottery has lost its luster. Although business is steady for the Daily Number, Big 4 and Cash 5 games, Super 6 Lotto is largely ignored unless the jackpot reaches at least $50 million.
And with the jackpots in the multistate Powerball lottery reaching hundreds of millions of dollars, luring players over the state line to Delaware, "we really don't get any play on our regular lotto," she said.
As its own lottery approaches its 30th anniversary, Pennsylvania faces competition from four neighboring states that offer either Powerball or The Big Game, another multi-state lottery. A projected deficit of more than $187 million by fiscal 2004 is also raising concerns about how to meet the escalating cost of senior-citizen programs that lottery revenues help subsidize.
So starting this summer, Pennsylvania will take a gamble on Powerball, joining 21 other states and the District of Columbia. Odds of winning the jackpot are about 80 million-to-1.
"I think with the lottery, the way it's going, it can't hurt us," said Cugino, who manages Cugino's Newsstand in West Chester. "For the past year, the lottery has been weak."
Powerball began as a way for smaller states to compete with larger state lotteries by pooling their wagering dollars. It was introduced in 1992, replacing a less successful multi-state game, Lotto America, which was created in 1987.
Because Pennsylvania could generate sizable jackpots, the state initially never considered itself a Powerball candidate, lottery spokeswoman Sally Danyluk said.
Pennsylvania once held the record for the largest North American jackpot -- $115.5 million split among 14 winners of the now-defunct Super 7 game in 1989. A $363 million Big Game jackpot won by two players in May 2000 now tops the list of richest U.S. lottery prizes, followed by a $295.7 million Powerball jackpot won in July 1998.
Delaware and West Virginia are the closest Powerball states to Pennsylvania. Maryland and New Jersey are among seven offering The Big Game, and New York plans to join them in the spring. Ohio Gov. Bob Taft has signed legislation allowing his state to join a multi-state lottery, but officials have not decided on a game.
"As time went on, we saw more and more states around our borders looking at The Big Game and Powerball," Danyluk said. "We were constantly asking, what did players want, and we kept hearing over and over again, 'When are you bringing Powerball to Pennsylvania?' "
Powerball's annual sales nationwide have exceeded $1 billion for six of the past seven fiscal years, according to the Multi-State Lottery Association, which operates the game. Sales dipped to $895.5 million during fiscal 1997, when Georgia left to join The Big Game.
"It has always been good for the game to grow," said Charles Strutt, the association's executive director, noting that more players produce bigger jackpots.
Even if Powerball is not the top-selling game in a given state, it still represents a significant chunk of total lottery revenues, according to officials in Powerball states.
The game generated $49.4 million in West Virginia, accounting for 30 percent of that state's fiscal 2000 sales for instant and online games. Sales accounted for 29 percent of Iowa's lottery proceeds for fiscal 2001. In both states, also participants in Lotto America, sales were exceeded only by revenue from instant scratch-off games.
"When we had our statewide Lotto, it was unusual for us to have a jackpot that was even a million dollars. We had very irregular revenue flows," West Virginia Lottery spokeswoman Nancy Bulla said.
West Virginia officials are not too worried about losing Powerball business to Pennsylvania; in fact, they hope Pennsylvania's involvement will relieve the crush of customers their retailers experience during peak playing periods, Bulla said.
"We still have Ohio and Virginia to draw from, and we didn't suffer badly when Kentucky came on board," she said.
Delaware, however, expects the loss of its Pennsylvania business to be significant, state lottery director Wayne Lemons said. Officials are considering two new games they hope will fill the revenue gap.
"When we have large Powerball jackpots ... we estimate that 20 percent of the players are from Pennsylvania," he said.
Although Cugino is looking forward to stocking Powerball tickets alongside her Pennsylvania Lottery games, she is skeptical that the multi-state game will have lasting appeal.
"I'm sure that it's going to make a big difference in the beginning, but I'm not sure that it will after six months, after the novelty of it wears off. There will be a lot of interest if the jackpots get up to $300 million, but the odds of winning are so high," she said.
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