U.S. lottery sales surge: Is economy the reason?

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Rob Anderson, right, kisses his wife Tuesday as they were presented a representational check for $128.6 million for winning the Kentucky Powerball jackpot in Louisville, Ky., Wednesday Jan. 6, 2009. They live in Georgetown, Ky. Kentucky Lottery CEO and President Arch Gleason, left, looks on. (AP Photo/The Courier-Journal, Sam Upshaw Jr) NO SALES, NO MAGS NO ARCHIVES

Updated: November 16, 2011 1:27AM

Despite a struggling economy — or perhaps because of it — lottery ticket sales have surged across the country, including in Illinois.

Financial records for 41 state lotteries that end their fiscal year in June show 28 had higher sales than the year before. Seventeen of those states set all-time sales records.

In Illinois, lottery sales were $2.27 billion in the last fiscal year — July 1, 2010, through June 30, 2011 — up abut 3 percent from the previous year. Some $632 million was transferred to the Common School Fund and $54 million went to the Capital Project Fund, the Illinois lottery said.

Since fiscal year 2007, Illinois lottery sales have increased by more than 11 percent, the state reported.

Kate Sweeny, an assistant professor of psychology at the University of California-Riverside, said an uptick in lottery sales largely occurs when people feel a lack of control over events larger than themselves, such as the economy.

But Jeff Anderson, head of the executive committee of the North American Association of State and Provincial Lotteries, which represents 52 lotteries in the U.S. and Canada, said sales growth most often reflects changes in lottery games.

“In general, the play is inexpensive entertainment,” said Anderson, who is also director of the Idaho State Lottery. “I have not seen any empirical evidence that indicates in a down economy, people play more.”

California had the highest percentage gain over 2010 — 13.2 percent — to $3.44 billion, just shy of a record $3.6 billion set in 2006, spokesman Alex Traverso said.

Arizona posted a record $583.5 million in ticket sales, and Missouri topped $1 billion for the first time.

Multiple studies of state lotteries have found that those with low incomes spend a higher percentage of their income on lottery tickets than wealthier individuals. That, combined with the correlation between a bad economy and increased lottery sales, raises questions, said Garrick Blalock, associate professor of economics at Cornell and a co-author of a study on lottery players.

“If what looks like is going on is actually going on, states are solving budget shortfalls with what effectively amounts to a regressive tax on the poor,” said Blalock.

Buying lottery tickets is a “voluntary transaction,” Anderson countered.

“If responsible adults want to decide how they want to spend their entertainment dollars, it’s a little trite to say, ‘You shouldn’t spend that much,’ ” he said. “Maybe somebody can’t afford two tickets to the movies, but they can afford $2 in scratch-offs. We still have freedom in the United States,” he said.

Illinois lottery officials gave some credit for the increase to its new private manager, Northstar Lottery Group. The company is bringing “a new energy” to the business, the lottery said. The firm makes day-to-day decisions about the lottery while the state retains ownership.

When the firm was selected last year, the company said that it anticipated an annual growth rate of 10.6 percent over the next five years. One aim: to reconnect with “more than 4.5 million light, lapsed and non-players in all communities across the state.”

Gannett News Service with Sun-Times staff