LOTTERY TAKES A LOSS
Scholarship fund expected to get $5M less due to decrease in sales; officials say letdown after huge wins to blame
The state’s scholarship fund is projected to receive $5 million less in lottery money this fiscal year because of flagging sales in big-jackpot tickets, which a lottery official blames more on a letdown after huge wins than on the coronavirus pandemic.
The scholarship fund is expected to get $38 million from the lottery, a significant dip from last year’s $43 million and the lowest since 2017, New Mexico Lottery CEO David Barden said, noting the official report has yet to be finalized.
By state law, 30 percent of the lottery’s gross revenue goes to the scholarship fund, which is used to help pay tuition for in-state higher education students.
The biggest factor in the diminished fund is the steep drop in Powerball and Mega Millions sales, Barden said.
Powerball and Mega Millions had a combined loss of 43 percent, or $21 million, from 2019, Barden said. Powerball’s net sales of $16.8 million are the lowest in 10 years, he said.
These lottery games are experiencing a lull after gigantic jackpot wins decreased the prize money that could be offered, making the lottery less attractive to ticket buyers, Barden said.
“You’ll see after we have a good year, generally [sales] fall back the next year because … there’s a certain amount of jackpot fatigue,” Barden said.
In October 2018, someone won $1.6 billion playing Mega Millions. Four months later, a Powerball player hit a $750 million jackpot.
After that, the jackpots for each game fell by two-thirds or more. Although they still were large, they didn’t excite buyers’ imaginations like the colossal
payoffs did, Barden said.
Meanwhile, scratch-ticket sales were up almost 6 percent, partly because these games were revamped so people would win smaller prizes more often, he said. But that’s not nearly enough to offset the hefty Powerball losses, he said.
“We have the lowest payouts in the country as far as scratchers,” Barden said.
It’s unknown how much the pandemic is affecting lottery sales, Barden said. People buy lottery tickets at grocery stores and gas stations, although some places have quit selling the tickets during the pandemic, he said.
At Allsup’s Convenience Store on North Guadalupe Street, lottery ticket sales have changed little during the pandemic, manager Velia Bojorquez said.
“Everything is the same,” she said.
If New Mexicans could buy lottery tickets online, especially now that they are staying at home more, that might increase sales, Barden said. Other states are moving toward online sales both for convenience and for safety amid the pandemic, he said.
Some people have wondered whether the casinos being shut down have caused those gamblers to turn to the lottery for their fix, Barden said.
“I would guess that we are getting some casino players,” Barden said. “I don’t think it’s a wave.”
Two years ago, Barden supported a bill that would have removed the requirement that 30 percent of lottery sales go to the scholarship fund. The bill never gained traction.
The idea was to free up money to offer more lottery prizes, with the aim of luring more ticket buyers and boosting sales.
Under that proposal, if the lottery failed to generate enough revenue to pump at least $40 million into the fund, the system would revert to the 30 percent formula.
Barden thinks if that system were in place, the fund would get $40 million-plus this year instead of $38 million.
Othiamba Umi, a New Mexico Lottery board member, is not convinced that would be the case.
Barden, he said, offers optimistic projections but has never explained exactly how the plan would achieve his targets.
This year’s revenue decline shows how uncertain funding would be under that system, Umi said. In contrast, the current 30 percent allocation is locked in and stable, he said. “It’s a sure thing,” Umi said. The lottery, which has been around almost 25 years, has lost its novelty, making it difficult to lure a horde of new ticket buyers, Umi said.
“There’s limited opportunity for revenue growth in New Mexico,” Umi said.
But Barden said the lottery doesn’t have to be confined to the state. He would like to market New Mexico’s Powerball and Mega Millions games globally to increase international sales, he said.
People have flown in from other countries to play these games when the jackpots became huge, he said. Such efforts to grow ultimately are meant to boost tuition assistance in New Mexico, he said.
“At the end of the day, that’s why we’re here: to get more money to students,” Barden said.