A Jackpot for Retailers : Landing a lottery franchise can be the winning ticket for businesses ranging from barber shops to roadside stores to bowling alleys.

When it comes to peddling lottery tickets, there’s not a retailer in California that even comes close to the Wills Fargo convenience store in Baker, a desert oasis along Interstate 15 between Barstow and Las Vegas.

Combining a flair for promotion with a strategic location, this country store that sounds very much like a well-known California bank normally sells more than 100,000 lottery tickets a week, providing the tiny town of 400 with a welcome jolt of money and excitement.

“This has helped the whole community,” said store manager Stephen Zwerner. “On the days of the big (jackpot) drawings, the whole town is buzzing with activity.”

Lottery franchises can be big deals for small retailers like Wills Fargo, particularly in little towns near the state’s border, where huge California jackpots lure buyers by the thousands every week from Nevada, Arizona and Oregon.

From bowling alleys to self-service laundries to the ubiquitous 7-11 stores, about 21,000 retailers across California are licensed to sell the lottery games known as scratchers, but only 8,100 of those are also authorized to sell the popular, fast-growing game known as Lotto.

The Lotto game is played by selecting six numbers from 1 to 49 for jackpot drawings held on Wednesday and Saturday. Anyone selecting all six numbers--the odds of which are about 14 million to 1--is eligible for jackpots that have exceeded $60 million on occasion. The scratcher games generally offer instant prizes ranging from $2 to $25,000.

It’s the Lotto game that generates most of the excitement and provides most of the revenue to the state lottery. The lottery had $2.6 billion in sales in its past fiscal year, about two-thirds of which came from Lotto sales.

“It’s the Lotto where the big bucks are made,” said Nikki Smith, manager of network development for the lottery. In the three years since Lotto was established, 260 people have hit the jackpot and total Lotto winnings have exceeded $2.7 billion.

For their part, retailers make 5 cents on every ticket sold and receive the equivalent of 0.05% of each jackpot if the winning ticket is sold in their store. Lotto winners have bought their tickets in Baker three times in the past 18 months, providing Wills Fargo with total payments of $120,000, Zwerner said.

Most lottery sales are mundane transactions, done as a matter of routine through small stores that sell liquor or groceries. With lottery sales in the fourth year of operation, the novelty with the public has largely worn off.

Yet, sales have been steadily climbing, fueled by heavy sales during times of big Lotto drawings. Lottery revenues have risen a total of nearly 86% in the past two years, and lottery officials expect sales to keep growing in this fiscal year.

Although liquor and convenience stores are the most common lottery franchises, there are plenty of unexpected sales outlets, ranging from businesses that sell everything from vitamins in Glendale to auto parts in Mountain View.

The State Theater at 7th Street and Broadway in downtown Los Angeles has a Lotto franchise, while in Pasadena, at a small shopping center on East Orange Grove, customers buy Lotto tickets, get keys made and watch sports on television while waiting for a haircut in Walker’s Barber Shop.

Even a dentist’s office in Southern California once mistakenly received a license to sell scratcher tickets. Lottery tickets are supposed to be marketed through established businesses that sell goods and services.

The establishment of a Lotto franchise in a small town can be a controversial and contentious affair because lottery officials generally want to limit outlets to one for every 3,200 to 3,300 people.

“We get calls from retailers who say we are ruining their business on Saturday night because they don’t have a lotto machine,” lottery official Smith said.

“If you put one Lotto machine in one store and not the other, there’s a definite chance it will impact the other’s store business,” said Shannon Gordon, a market analyst for the lottery. “This happens everywhere, but the impact can be bigger in a small town.”

Take Copperopolis, for example, a tiny town in the foothills outside Sacramento where three retailers are vying for a Lotto terminal. Residents must now drive 10 miles if they want a Lotto ticket.

Whomever lottery officials select for the Lotto franchise, two retailers are bound to be very unhappy, Smith said, adding: “I don’t know how we are going to handle that one.”

The effort to get a Lotto machine became something of a political issue in Tulelake, a town of 892 just south of the Oregon border that is best known to outsiders for its output of horseradish sauce.

Tulelake is also the first town in California on Highway 139, a road heavily traveled by gamblers on their way to Reno from the Pacific Northwest.

In a bid to attract shoppers from Oregon and entice Reno-bound travelers to stop in town, Mayor Alfred Kongslie mounted an all-out effort for a Lotto machine on the main drag through town--even though another Lotto terminal was already being installed at a grocery outside town.

Kongslie finally succeeded, only after months of intense lobbying. “I just kept harassing them,” the mayor said in a telephone interview. “Well, maybe ‘harassing’ is not the right word. I just kept after them not to forget us.”

The Wills Fargo store in Baker owes its success both to promotion and its strategic location on the main highway from Southern California to Las Vegas. The 49-mile stretch from Baker to the Nevada border is a strip largely devoid of commerce.

That makes Wills Fargo the last store in California where travelers en route to Nevada can buy a Lotto ticket and, more important, the first store inside California where Nevadans can buy one.

Zwerner hypes his Lotto business by dotting the barren roadsides along I-15 with billboard promotions and advertising heavily in Las Vegas. Although Nevada is a gambling mecca, it does not have a state-sponsored Lotto-style jackpot game.

Occasionally, when a store has a rash of winners, a kind of mystique starts to build and feed on itself. If enough winners are sold at a single location--and it generates enough publicity--the store can attract buyers from all over the state.

That’s exactly what happened with one convenience store in San Leandro, near Oakland, known as the Quik Stop Market No. 7. Not long after scratcher ticket sales first began selling several years ago, the store sold so many large winning tickets that people started driving from as far as Los Angeles to buy tickets there, according to store owner Ken Reddy.

At the height of the sales frenzy, the store was besieged by lines and selling as many as 120,000 tickets a week. One afternoon, on a Super Bowl Sunday, a sales clerk was so overwhelmed by ticket purchases that he closed the store temporarily.

When Reddy dropped by after the football game, he said he found a line of people two blocks long, waiting in the drizzling rain for the store to reopen. “That just shows you how crazy people are,” Reddy said.