Powerball, Mega Millions give state budgets a lift

Feb 23, 2014, 5:12 PM

IOWA CITY, Iowa (AP) – The scores of losing players in last week’s $425 million Powerball jackpot did more than take an extremely long shot at getting rich. Their ticket purchases also helped fund a small but increasingly important part of their states’ budgets.

Changes in the nationwide Powerball and Mega Millions games have led to some of the world’s largest jackpots in the last two years, boosting player interest and sales. Fueled by the growth of those games and the steady expansion of other offerings, many state lotteries last year reported record revenues and transfers to the state budgets and programs they helped fund.

For every $2 ticket, 50 cents or more might end up paying for police officers in Massachusetts, services for the elderly in Pennsylvania, or education in rural school districts in Idaho, lottery directors say. In all, about $20 billion out of the roughly $70 billion in overall annual lottery revenues is used by states after prize money, retailer commissions, advertising and administrative expenses are taken out. Most states target their lottery revenue to specific causes, with education being the most popular.

Texas Lottery Commission executive director Gary Grief said Powerball sales in his state multiply several times as the jackpots rise, from a normal range of about $3 million per week all the way up to 10 or 15 times that amount. That means millions more dollars for public education in Texas, the lottery’s beneficiary, he said.

“That’s a very small piece of a big pie, but every dollar counts,” he said. “It helps alleviate the drain on other revenue sources for state government.”

He and other lottery directors say that revenue from jackpot games still make up a small fraction of overall sales _ instant scratch tickets remain their bread and butter.

Overall, state budget experts say lottery revenue typically represents a single-digit percentage of overall state budgets. That means a momentary sales frenzy for Powerball has little impact in the big picture, other than helping the lottery become a dependable and incrementally growing funding source.

“In the big scheme of things, we have a $16 billion budget in Oregon,” said that state’s chief financial officer, George Naughton. “The individual sales, the individual jackpots, do have an upward tick but it’s probably not going to change from a revenue perspective the decisions that elected officials are going to make down the road.”

Naughton said the lottery generates roughly $1 billion over two years to help fund education and other programs.

Critics say lotteries are a terrible way to fund state services. They argue that lottery tickets are heavily taxed since only a fraction of the money goes to payouts and winnings are taxed again. And they say the poor are more likely to play more often, making it a regressive funding source.

“This is going to help the states big time. There’s no denying that,” said Dawn Nettles, a lottery critic from Texas who runs lotteryreport.com, which tracks the industry. “But how many people are going to max out their credit cards?”

Supporters such as Grief say the lottery is voluntary, gives everyone a chance to dream big and avoids the need for tax increases.

Critics admit they have mostly lost the argument. Lawmakers across the country over the last three decades have opened and expanded lotteries. Forty-three states now operate them, while organized political opposition has largely vanished.

“The notion that any state would eliminate their lottery is just absurd,” said Patrick Pierce, a political scientist at St. Mary’s College and co-author of “Gambling Politics: State Government and the Business of Betting.”

“States are looking for some quick money to stop the bleeding right now,” Pierce said.

Increases in lottery revenues have helped maintain services in recent years during a tough time for state budgets, said David Gale, executive director of the North American Association of State and Provincial Lotteries. He said overall lottery revenues likely increased one or two percent in the budget year that ended last July, above the $68.7 billion of the previous year.

In Massachusetts, cities and towns benefit when sales spike because lottery revenues are among the state’s “single largest source of unrestricted local aid,” said Beth Bresnahan, executive director of the state’s lottery. The money is divvied up based on a formula set by state lawmakers and used for everything from police officers to transportation, she said.

She said that during a December frenzy over the last large Mega Millions jackpot, retailers were selling $11,000 in tickets per minute _ “and this was in a statewide snow emergency.”

“When we see a surge in sales, it does impact the bottom line,” she said, “regardless of the smaller amount of overall play it represents in our portfolio.”

(Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

United States News

President Joe Biden shakes hands with Senate Majority Leader Chuck Schumer of N.Y., after signing t...
Associated Press

What’s in big Biden bill? Health, climate goals become law

WASHINGTON (AP) — President Joe Biden arrived at the White House promising to “build back” America, and legislation he signed Tuesday delivers a slimmer, though not insignificant, version of that once sweeping idea. Approved by the divided Congress, the bill brings the biggest investment ever in the U.S. to fight climate change. Also in the […]
18 hours ago
FILE - Courtroom notes showing that a Washington County, Oregon, judge threatened to hold Oregon Pu...
Associated Press

After firing public defense commissioners, new members named

PORTLAND, Ore. (AP) — The day after Oregon Supreme Court Chief Justice Martha Walters fired all nine members of the state commission that oversees public defense, she said Tuesday that she was appointing four new commissioners and reappointing five commissioners from the previous group. Walters had fired the commission members out of frustration that hundreds […]
18 hours ago
FILE - Musician R. Kelly leaves the Leighton Criminal Court building in Chicago on June 6, 2019. Ke...
Associated Press

R Kelly jury picked in child pornography, trial-fixing case

CHICAGO (AP) — A federal jury was impaneled Tuesday in R. Kelly’s hometown of Chicago to decide multiple charges against the R&B singer, as prosecutors and defense attorneys argued toward the end of the process about whether the government was improperly attempting to keep some Blacks off the jury. Kelly, who is Black, is accused […]
18 hours ago
Associated Press

Man guilty in Christmas Day slayings of wife, son, neighbor

PONTIAC, Ill. (AP) — A central Illinois jury found a man guilty Tuesday of killing his wife, son and neighbor on Christmas Day 2019. The Livingston County jury convicted Clifford Brewer, 55, of Cullom, of murder in the three slayings. returning the verdicts a few hours after receiving the case. Brewer told police he woke […]
18 hours ago
FILE - Wichita City Council candidate Mark Gietzen, right, visits with Sedgwick County Commissioner...
Associated Press

Kansas abortion vote: Why recount with such a large margin?

TOPEKA, Kan. (AP) — Kansas on Tuesday began a partial hand recount of this month’s decisive statewide vote in favor of abortion rights, a move forced by two Republican activists even though the margin was so large that the recount won’t change the outcome. Nine of the state’s 105 counties are doing the recount at […]
18 hours ago
FILE - This image provided by the Hennepin County, Minn. Sheriff's Office shows Thomas Lane, who wa...
Associated Press

Ex-cop Lane will report to Colorado prison in Floyd killing

MINNEAPOLIS (AP) — Former Minneapolis police officer Thomas Lane, who was sentenced to 2 1/2 years for violating George Floyd’s civil rights, will do his time at a low-security federal prison camp in Colorado. A court order Tuesday directs Lane to report to the Federal Correctional Institution Englewood in the Denver suburb of Littleton on […]
18 hours ago

Sponsored Articles

...
Dr. Richard Carmona

Great news: Children under 5 can now get COVID-19 vaccine

After more than two years of battle with an invisible killer, we can now vaccinate the youngest among us against COVID-19. This is great news.
...
Day & Night Air Conditioning, Heating and Plumbing

Most plumbing problems can be fixed with regular maintenance

Instead of waiting for a problem to happen, experts suggest getting a head start on your plumbing maintenance.
...
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

Vaccines are safe if you are pregnant or breastfeeding

Are you pregnant? Do you have a friend or loved one who’s expecting?
Powerball, Mega Millions give state budgets a lift