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Economy doesn't slow spending for local lottery players

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By Nick Schrager

You can’t win if you don’t play. That’s the slogan used by the Kentucky Lottery Corporation (KLC), but playing certainly doesn’t guarantee you will be a winner, either.

With constant reports in the news about the economy and how people are cutting back expenses, you might think a non-essential expense like lottery tickets would be at or near the top of their list from which to cut. Think again.

This year marks the 20th anniversary of the lottery in Kentucky, and in fiscal year 2009, Kentuckians played the lottery more often than in the previous year, spending more than $810.5 million for a 4.2 percent increase from fiscal year 2008. The state paid out more than $470 million in prize money in fiscal year 2009.

On the local level, players in Washington County spent $1,049,805 on the lottery, while collecting $664,165 in prize money. The economy might have had an impact on spending, but not a great one. Local players spent $1,202,885 in fiscal year 2008, with $765,417 paid out in winnings. Even with the local dip, the state as a whole saw growth, with $32 million more in sales than the previous year.

More than 50 percent of what’s spent in the community, as well as in the commonwealth, is paid out in prizes, and local retailers continue to see lottery players coming into their stores. Gayle Goff, manager of Fast Food convenient store in Springfield, said she sees people come in daily and buy tickets, and in her opinion, the economy has had little effect on lottery sales.

“We have a lot of customers who come in every day to play Pick 3 and stuff like that,” Goff said. “Pick 3 and Powerball are tops, and people really show up when the jackpot is over $100 million. A lot of people say $20 million isn’t enough.”

Goff estimated that about 50 percent of the people who shop in her store buy a lottery ticket. Some like the online games, which include Powerball, Pick 3, Cash Ball and other games that are played with printed tickets for which the winning numbers are drawn by lottery officials. Others enjoy the instant gratification of a scratch-off ticket.

“The scratch-off tickets do really well, and they are very popular,” Goff explained. “They switch them out and there’s something new all the time to keep people interested.”

Goff has seen some pretty hefty prizes in the 20 years the store has been selling lottery tickets. They began back in 1989, the same year Kentucky introduced the lottery to its citizens.

“We’ve had a $40,000 winner on a scratch-off ticket, and a guy won $10,000 on a Cash Ball ticket about a month ago,” Goff said.

Even if they don’t win, Goff said the players continue to give it a shot.

“It shocks me with the way the economy is going. You wouldn’t think people would have the extra money, but I don’t really see a change. I see $100 bills in the scratch-off machine every day. They keep playing, and I guess it’s because they think they will get lucky one day, so they just keep trying.”

They try at Fast Food, but also at EZ Stop in Willisburg, which sells its share of lottery tickets, too.

“We’ve had some big winners,” said Lynn Hagan, a clerk at EZ Stop. “We’ve had some $1,000 winners on scratch-off tickets, and we had a man win $600 on a Win For Life ticket. He missed winning it all by one number.”

That one number gave the man a one-time win of $600, rather than the $1,000 weekly prize for the rest of his life.

“We have lots of regulars who play regardless, and I’d say at least half of our customers buy lottery tickets,” Hagan added. “On Powerball, a lot of people do a (computer-generated numbers) quick pick, but on Pick 3, a lot of people like to select their own numbers.”

Hagan recalled one customer who came in on Sept. 11 wanting to play the numbers 9-1-1. When the numbers were entered into the computer, her numbers were denied because the limit of liability had already been reached on those numbers. Hagan explained that the lottery system only allows a certain amount of any number combination to be played on a given day to limit the possible liability of the state in the event of numerous players selecting those numbers. Lottery officials added that a limit of $1.5 million daily on the winning Pick 3 numbers, and the most that can be won on one set of Pick 3 numbers per day is $600.

Even with those liability limits, there’s nothing to stop the number of successful players with scratch-off tickets, and Washington County had its share in fiscal year 2009. More than 2,800 winners of at least $25 each were sold in the county, and the largest of those was $25,000. More than 700 of those winners collected a prize of at least $100, according to numbers provided by Jennifer Cunningham with the Kentucky Lottery.

Giving back

It’s not all about winning and losing with the Kentucky Lottery, it’s also about giving back. In fiscal year 2009, the commonwealth received record-breaking dividend transfers of $204.4 million during the year to be used for the literacy, college scholarship, and grant programs funded by KLC proceeds. The previous record was $204.3 million set in fiscal year 2006. This is $12.3 million (or 6.4 percent) more than what was transferred in fiscal year 2008, but falls $5 million less than what was anticipated by the state budget.

 “The commonwealth handed us a large order last year to increase our profitability to 28 percent of sales,” said KLC President and CEO Arch Gleason. “We took significant steps that led to our improving our profitability from 24.4 percent in fiscal year 2008 to 26.5 percent in fiscal year 2009. These included slightly reducing cash prizes and substituting free tickets for low tier prizes in scratch-off ticket prize structures, eliminating 13 percent of our workforce, reducing advertising expenses, and significantly reducing capital and other operating expenditures.”

Gleason added that KLC is proud of what it has been able to do for the state.

“While we fell just short of our goal, we’re proud of the additional $12.3 million we were able to transfer to the commonwealth this year, and the fiscal year 2010 budget does project the commonwealth to receive 28 percent of sales,” Gleason said. “A recession, high gas prices and an increasing unemployment rate made for an extremely challenging year. I’m very pleased with the hard work of our employees and our retailers to turn in a record-breaking year in spite of these significant hurdles.”