Lottery remains hot ticket

  • Article by: RICHARD MERYHEW , Star Tribune
  • Updated: August 22, 2012 - 5:40 AM

State sales set another record - for the fifth year in a row.

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At the On the Run Exxon station off Interstate 35W in New Brighton, cashier Heather Minke checked Donald Enderlee’s $33 in winnings from scratch-off Slingo tickets.

Photo: Richard Tsong-Taatarii, Star Tribune

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The Minnesota State Lottery has hit the jackpot -- again -- posting record ticket sales for a fifth consecutive year as recession-weary consumers keep betting on the hope that a big payday is only a play away.

Ticket sales for the 2012 fiscal year, which ended June 30, topped $520 million, an increase of $15.6 million from the previous year, officials announced Tuesday.

Much of the increase is credited to a spike in the sale of lotto tickets, which totaled $164.8 million, up 10 percent from the previous year.

While the heady numbers pleased lottery officials, the figures also surprised them, considering lingering economic woes and a three-week shutdown of state services last summer that included the lottery.

"If you asked me five years ago if we'd record five years of consecutive records sales, I would have said 'No.' I wouldn't have expected that," said Don Feeney, Minnesota Lottery research and planning director. "There are just too many factors that come into play."

Ken Winters, a psychiatry professor at the University of Minnesota Medical School who has studied gambling since the state lottery was established in the early 1990s, said it isn't unusual to see sales increase in times of economic stress, in part because the thought of holding a winning ticket, however slim the odds, offers hope.

"Tough times surely tap into the lure of a lottery," he said. "And that lure attracts people across the ages, whether you are wealthy or not wealthy.

"As people are told, the odds are remote. But human nature being what it is, it still attracts players. There's so little downside. A dollar or two isn't much when you can dream of the upside."

Mike Sjodin, 34, a MnDOT surveyor from South St. Paul, was thinking just that Tuesday as he stopped at the Wash & Fill convenience store in New Brighton to buy a sandwich and a Mega Millions ticket.

Sjodin plays the lottery "every once in a while when I've got a spare dollar or two," but said he has never won big.

Still, he's hopeful.

"Why not today?" he said, smiling. "I've got an extra buck. Why not?"

Steady trend

Minnesota is one of at least two dozen states to post record sales over the past year, Feeney said.

Sales slumped in 2003, he said, but every year since, "they've been on a pretty steady upward trend."

Lottery sales set a record in fiscal 2012, even though most state services shut down for nearly three weeks in July 2011 -- at the beginning of the new fiscal year -- during a legislative budget impasse.

Feeney said that as late as September 2011 "we were running week by week lower than the previous year. If you asked us last September or October 'Are we going to set a record?' I would have said, 'Absolutely no way.'"

John Spry, an associate professor of business economics at the University of St. Thomas who studies the gambling industry, credits part of the sales surge to aggressive marketing by lottery officials, who have continually tweaked and fine-tuned their product.

He said most state lotteries have experimented in recent years with scratch games, offering different games and ticket prices to entice customers to play.

Scratch games fueled much of the sales increase in Minnesota over the past year, with a record $355.3 million in tickets sold. Prize payouts also set a record, reaching $320.6 million.

"The lottery has been innovating,'' Spry said. "On the one hand you have $650 million jackpots. On the other hand, you can play a scratch game where you can win a $100,000. Different players like different profiles of risk. And the lottery has sort of over time learned what appeals to the different players."

The ability for customers to play two large-payout games -- Powerball and Mega Millions -- also influenced the sales spike.

Previously, states offered one game or the other. That changed in early 2011 when most member states of each game agreed to sell each other's products, Feeney said.

With so many states offering the games and with so many potential players, jackpots quickly escalated, creating huge winnings.

"With the odds so hard to hit the jackpot, you can have rollovers" of that jackpot into an even higher one, Spry said. "And when you have several rollovers, that's actually really good for the lottery," creating a "lotto fever" across the country.

Earlier this year, the Mega Millions jackpot reached a record $640 million before the winning tickets were sold.

"When you get to $640 million, you are going to get extra sales," Spry said.

Feeney said Powerball ticket sales also increased after ticket prices doubled to $2 and the minimum jackpot doubled to $40 million.

"You never know," said Dmitriy Salo, a 42-year-old machinist from Ramsey who bought a Mega Millions ticket at the Wash & Fill on Tuesday afternoon. "This may be my lucky chance."

Richard Meryhew • 612-673-4425

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