Kentucky Lottery posts record profits

By BRUCE SCHREINER
Associated Press Writer
LOUISVILLE, Ky. (AP) - Kentucky's lottery defied the odds of a
reeling economy, posting record sales amounting to its heftiest
contribution ever to the state treasury, officials said Friday.
It was the fourth straight year that lottery sales - an
important revenue source for Kentucky higher education, especially
scholarships - set a state record. The strong sales came as the
state dealt with a seasonally adjusted unemployment rate of 10.9
percent in June.
In the fiscal year ending June 30, Kentucky lottery sales
totaled $810.5 million, beating the previous year's record level by
$32.3 million, or 4.2 percent, lottery officials announced Friday.
The lottery transferred $204.4 million to the state for the full
year, up from $192.1 million the previous year and barely ahead of
the then-record amount contributed to the state earlier in the
decade.
Scratch-off tickets ranging from $1 to $20 set the pace with a 7
percent sales increase to reach $504.1 million, said Kentucky
Lottery Corp. President and CEO Arch Gleason.
Gleason said the latest figures indicate that adults who play
the lottery spend between $10 and $15 weekly on lottery tickets -
comparable to average amounts in recent years.
"Lottery sales historically have been a bit more resilient in
economic downturns than the general economy," Gleason said in a
phone interview.
The lottery's strength amid a recession indicates some people
see the games of chance as "a way to cope," said John Vahaly,
chairman of the University of Louisville's economics department.
"The increase in demand is just sort of coming from people's
attempts to try to make a bad situation better," Vahaly said by
phone.
Lottery sales of $810.5 million included $45.5 million in free
tickets awarded as prizes for scratch-off games, lottery officials
said. Actual cash sales totaled $765 million for the fiscal year,
down slightly from $778 million in cash sales the previous year.
Free scratch-off tickets replaced the lowest-end prizes, which
equaled the ticket's purchase price.
The lottery did away with those smallest cash prizes because it
found players tended to ask for another ticket instead of the cash
payout.
"From a profit standpoint, it basically washes out almost to
zero," Gleason said.
Online game sales increased slightly to $292.2 million in the
just-ended fiscal year, led by gains in the daily Pick 3 and Pick 4
games. Powerball sales fell 1.5 percent to $96.9 million.
Retailers also benefited from higher overall sales, receiving a
record $50.2 million in commissions and incentives. The lottery's
operating expenses for the year totaled $33.1 million, or 4.3
percent of sales.
The lottery's record contribution to the state treasury comes as
lawmakers have struggled to keep the state budget balanced amid the
sluggish economy.
The first $3 million of lottery proceeds to the state go to
literacy programs.
Most state-directed lottery money goes to college scholarships
and grants, both merit- and need-based. Lottery revenues also are
used to fund the Kentucky Educational Excellence Scholarship
program. KEES scholarships go to Kentucky high school students as a
reward for good grades and test scores.
The remainder goes to the state General Fund to "support
restoration of higher education funds."
Looking ahead, the lottery projects sales of $829 million in the
year that started July 1, with projected contributions to the state
of $211.5 million, Gleason said.
Lottery officials are seeing sales flatten, however, which could
lead to more belt-tightening, he said.
Last year, the lottery trimmed its work force by 25 positions, a
13 percent cut, and closed a regional office as part of efforts to
reduce expenses by about $4.5 million.
Gleason sought to reassure lottery staff Friday and said he
wasn't looking to further reduce staffing "because I think we've
already cut staff to the bare bones."
Also on Friday, the lottery's board gave Gleason a
two-year-contract extension through 2014.

(Copyright 2009 by The Associated Press. All Rights Reserved.)


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