Lotto Sales Off 25% After Game Change

The California Lottery’s sale of Lotto tickets dropped 25% in the first month after officials made the game harder to win, prompting increased criticism of the operation of the state-run game of chance.

Lottery officials, who acknowledged a few weeks ago that sales had slackened but did not believe the downturn could be attributed to game alterations, are now blaming the drop on the media exposure given to the changes.

“The immediate downturn in sales was to be expected with the negative media coverage we received, but we similarly expect sales to turn around,” Executive Director Chon Gutierrez said in a recent report to the California Lottery Commission. A spokesman for the agency, however, said officials also believe that the soft economy has contributed to the slump.

On June 21, the lottery added four numbers to the field from which players select when buying Lotto tickets, nearly doubling the odds against winning while also increasing the odds of producing a super jackpot. Officials said that sales immediately plummeted statewide, with the drop fairly uniform in each geographic region.

“This year’s Lotto sales average about $23 million a week, which is off by about 25% since the field size change in June,” Gutierrez said in his report.

July’s $104.08 million in Lotto sales was the worst month so far this year.

Legislators who head committees that focus on lottery issues said the statistics confirmed their suspicions that the change in odds was not being well received by the gambling public, particularly habitual players, and provided further proof that it has been a bad business decision.

“I don’t think you can call the truth negative publicity,” said Sen. Ralph C. Dills (D-Gardena). “People for the first time were made aware of the situation, that the odds were exorbitant. Frankly, I used to buy some tickets just to be crazy, but when this (change) came along, I decided I wasn’t that crazy.”

Both Dills and Assemblyman Richard E. Floyd (D-Carson) said that the best bet for the lottery now is to go back to a field of 49, where the chances of winning the jackpot were one in 14 million instead of the present one in 23 million. To make a Lotto wager, players must choose six numbers from the field.

“They need to admit they screwed up,” Floyd said. “I don’t think they’re going to pick up this 25% by just waiting it out. They could lose another 15 or 20% in sales.”

Unswayed by the criticism, lottery officials stuck to their contention that by increasing the field, they would produce more super jackpots of $30 million and more and eventually draw more players to the game. Experience in other states, they said, shows that player interest in the game seems to be directly in proportion to the number of big jackpots it produces.

In California, officials said Lotto stopped producing big jackpots in the last half of 1989 because so many people were playing that there were rarely nights without a winner. Jackpots cannot build unless there is a succession of drawings in which there is no winner, and the jackpot is rolled over.

By increasing the field, officials said that they lowered the chances of having a winner, thus making super jackpots more frequent.

“If we hadn’t changed the field size, sales would still be going down,” said Joanne McNabb, communications manager for the Lottery. “The fact that the change in field makes an extra dip for a period of time is just a hump to get over. It doesn’t make it a bad business decision. The change in field size is the solution to the problem, even though initially it may produce a negative reaction itself.”

Lotto sales increased significantly last week when there was a $44 million jackpot, McNabb said, adding that this could be the beginning of a turnaround.

“The bulk of industry evidence on this issue indicates that the popularity of bigger jackpots more than offsets player concerns about increased odds,” Gutierrez told his board in June. “Some states reported initial public concern regarding their field size expansion plans; they also report, however, that opposition ended following the resulting improvement in the game’s interest with more larger jackpots.”

But Floyd said that player attitude in other states may not be mirrored in California. He said slumps in sales in other games also raised questions about the operation of the lottery. In their report to the commission, officials said that in July Scratcher sales were about 40% short of their goals, and Decco sales were about 35% short of goals.

Floyd said the statistics are an indication of the need to select better games and advertise them more effectively.

“This is probably the greatest example of why government should not be running a business. It ranks right up there with the post office,” he said.

McNabb, however, said that as player behavior fluctuates, the lottery has had to learn to compensate. Because Scratcher sales slumped when the agency made a decision to introduce games less frequently, the lottery has returned to its old pattern of having new games every six weeks. McNabb attributed the decline in Decco sales to its failure to get across to the public that Decco produces the best odds of any game that the lottery offers.

Lotto is the lottery’s most popular game, accounting for $1.8 billion of the $2.5 billion in total sales recorded by the lottery in the fiscal year 1989-90. The lottery is required by law to contribute at least 34% of its revenues to public schools, but last year its contribution was 39% or $985 million.

LOTTO SALES

This chart shows the fluctuations in Lotto sales during the first seven months of 1990.

January $138.12 million February $214.86 million March $146.7 million April $160.41 million May $136.12 million June $120.95 million July $104.08 million

Source: The California Lottery