Economy & Economic Development  March 12, 2010

You bet lottery takes a hit from hard times

The Colorado Lottery has been churning out hundreds of millions of dollars to local governments for open space, trails, wildlife habitat and other outdoor amenities since the first tickets were sold in 1983.

And yes, making a few millionaires along the way, as savvy game players and those who buy the occasional impulse ticket plunk down their money for a chance at early retirement.

But the economic downturn has been eating into that revenue stream in recent years, although not as much as might be expected in a time when many people have less disposable income to spend on a ticket.

“We’re down a little bit,´ said Tom Kitts, acting director of Colorado Lottery. “The year before last was our all-time highest year, so that kind of blew the bar out of the water. But the economy may have had something to do with it.”

The lottery operates on a July 1 to June 30 fiscal year, and for the 2009 fiscal year – which included the economic meltdown in the last half of 2008 – lottery sales fell by about $12.5 million.

Kitts said lottery sales in the current fiscal year – which ends June 30 – are also down from the previous year. “We’re certainly not seeing any growth,” he said. “We’re down about 2 percent this year, but quite frankly we’re pleased to be where we are. We’re sort of holding our own.”

Kitts said it would be “an overgeneralization” to say people tend to play the lottery more in good economic times and less when the economy stalls.

But a look at the history of the lottery’s scratch ticket sales shows they fell steadily after first going on sale in 1983, remaining weak through the recession years of the late 1980s and early 1990s and not picking up significantly until 1993, when the economy started to climb out of that recession.

Since 1993, scratch ticket sales have grown steadily, reaching their peak in fiscal 2008 (July 1, 2007, through June 30, 2008), when the lottery hit a milestone by surpassing half a billion in sales at $505.8 million. And among all of the continually changing games run by the lottery, scratch tickets continue to be the most popular form of play, accounting for $328 million of the total $493 million sales in fiscal 2009.

Colorado joined the multi-state Powerball jackpot game in August 2001; a month later the weekly drawing was broadcast live from Denver in honor of the occasion.

$2.2 billion raised

Since 1983 the lottery has raised more than $2.2 billion for Colorado parks, recreation facilities, open space, trails, wildlife habitat and state capital projects.

The most recent figures for Northern Colorado show Larimer County receiving $80.8 million in lottery proceeds over the last 26 years and Weld County receiving $65 million. Portions of those awards come through the Conservation Trust Fund, which are based on a county’s population, and from competitive Great Outdoor Colorado grants that usually require some kind of local match.

Larimer County’s biggest GoCO grant came in 2004, when $11.6 million was awarded to help purchase 55,000 acres for the Laramie Foothills Mountains to Plains project.

GoCO is a separate entity from the lottery, with its own board of directors that makes decisions on awarding GoCO grants. GoCO board members are nominated by the governor and must be confirmed by the state Senate.

GoCO is in the process of adopting a new strategic plan covering the next five to 10 years. Chris Leding, GoCO spokeswoman, said the plan is independent of the lottery’s revenue stream.

“We have not factored that into the strategic plan,” she said. “Every year, the board adopts a new spending plan, and that’s when we look at what the revenue picture looks like. It all depends on our cash flow.”

Leding said two things that might be affected by a continuing economic downturn and lower lottery proceeds would be purchases of real estate and the amount of match money required for GoCO grants.

“We know with the real estate market as it is there are some good land acquisition opportunities that previously didn’t exist,” she said. Leding also noted that dwindling resources on the part of local governments due to the downturn could result in GoCO lowering its required amount of local match funds.

Leding said requests for GoCO grants have always outpaced what’s available since their inception in 1992. “Our demand has always outstripped the money available,” she said. “We still see about twice as many applications as money available, in good times or bad.”

Kerri Rollins, Larimer County’s interim open lands manager, said any reductions in lottery proceeds will have an impact.

“In my mind it would make those competitive (GoCO grant) dollars even more competitive,” she said.

Rollins said the county has come to rely on Conservation Trust funds for its recreational operations and maintenance.

“(A funding decrease) would have an effect on us as far as what we’re able to do,” she said. “With the general fund down and if fewer people are recreating and paying fees, it would definitely have an impact.”

Kitts said the lottery is always looking for new ways to draw in new and additional players. It just launched the in-state Match Play game and will begin offering Mega Millions, a multi-state jackpot game, in May. Twenty-three states joined Mega Millions at the beginning of the year in a cross-selling agreement with Powerball, bringing the total number of states in the game to 36. Powerball is now available in 43 states.

“We try to keep the product fresh out there,” he said. “The one thing we want to do is respond to provide the games our players want and will play.”

The Colorado Lottery has been churning out hundreds of millions of dollars to local governments for open space, trails, wildlife habitat and other outdoor amenities since the first tickets were sold in 1983.

And yes, making a few millionaires along the way, as savvy game players and those who buy the occasional impulse ticket plunk down their money for a chance at early retirement.

But the economic downturn has been eating into that revenue stream in recent years, although not as much as might be expected in a time when many people have less disposable income to spend on…

Related Content