Bucking economic doom: Lottery offers rare revenue
Game sales and revenue up last year and expected to grow
Buddy W. Roogow had just finished briefing the state's Video Lottery Facility Location Commission about potential slots operators when he remembered something.
"I'd be negligent if I didn't remind everyone that the Mega Millions jackpot is $145 million," the Maryland Lottery director said.
"And just for the record, we are still eligible?" commission Chairman Donald Fry asked.
"That's my pension portfolio," joked Commissioner Robert R. Neall.
For Maryland officials, reeling after months of state revenue declines, the lottery is a rare reason for lightheartedness these days. It is the lone bright spot in an otherwise gloomy economic forecast.
On Sept. 30, the state's Board of Revenue Estimates reported that tax receipts for fiscal 2010 will come in nearly $683 million less than anticipated.
Individual income taxes were off by $480.3 million. Corporate income taxes were down $60.5 million. Sales taxes missed projections by $81.6 million.
But lottery receipts are one of just three revenue streams performing above expectations this fiscal year, along with death taxes and court fees.
It makes for a sobering trio that state officials say reflects economic realities.
"Retail numbers are low, but you look at certain industries like alcohol, quite frankly, they hold steady or go up," said Joseph Shapiro, a spokesman for Comptroller Peter V.R. Franchot (D). "Just like fast food."
When times are tough, some people figure they'll take a shot at the lottery, Shapiro said.
"It is a cycle that we see in downturns that lottery sales hold or go up. They don't drop, like other retail sales," he said.
About $473.2 million in lottery revenue went to the state general fund to support education, public health, human resources, public safety and other programs.
Designated proceeds based on Maryland's sales of tickets for the 12-state Mega Millions game, which totaled $20 million in fiscal 2009, benefit the Stadium Authority.
Fiscal 2009 lottery revenues exceeded expectations by $17.3 million.
But, "the lottery is not immune to the economic downturn," Roogow said.
When gasoline is expensive, people tend to pay at the pump and not go inside for lottery tickets or convenience items, he said. And fewer patrons at bars and restaurants mean fewer Keno players.
"Last year's rate of growth was less than we would've expected in a strong economy," he said.
This year, Mega Millions and Racetrax game sales are on a record pace, and a new Ravens Cash Fantasy scratch-off game introduced in August "is one of the most successful ever," Roogow said.
Revised estimates have lottery revenues growing by 10.5 percent this year over fiscal 2009, to nearly $522 million. But sales are expected to grow by only 2.1 percent as analysts expect prize payouts to return to normal after "abnormally high levels" in fiscal 2009, the board reported.
That shouldn't discourage Marylanders from playing, said Roogow, ever the promoter.
"Go buy a Mega Millions ticket for Friday," he said.