State lottery bucks the economic trend

Guy Ledman
Guy Ledman of St. Paul buys a couple of lottery tickets every month. Ledman figures a few dollars isn't much to pay for a shot at a dream.
Martin Moylan

Guy Ledman of St. Paul buys a couple of lottery tickets every month. Ledman figures a few dollars isn't much to pay for a shot at a dream.

"I'd like to retire early," Ledman joked.

Odds are good he won't win, of course.

But the Minnesota state lottery has been a big winner in this recession, propelled by a tremendous jump in scratch ticket sales. With those tickets, players know immediately if they've won.

Clint Harris, director of the Minnesota Lottery.
Clint Harris is the director of the Minnesota Lottery. Harris suspects some people who might have gone to casinos in Minnesota, or even Nevada, are now satisfying their urge to gamble by buying lottery tickets.
MPR Photo/Martin Moylan

For the second half of 2008, Minnesota state lottery sales were up 12 percent. If that pace continues, sales for the current fiscal year would come close to $500 million. That would be a new record, even while betting at most lotteries --- and casinos -- across the country is down.

Clint Harris, director of the Minnesota Lottery, has no hard research that explains why the state's lottery is doing so well. But he has a few guesses. "The economy is really in the tank," Harris said. "But I think buying a lottery ticket can be a very economical expense, if you think of having a shot at millions of dollars for $1 ticket. Granted, the odds are long."

Harris also expects some people who might have gone to casinos in Minnesota, or even Nevada, are staying home to save money. He suspects they're satisfying their urge to gamble by buying lottery tickets, because they're cheaper and don't require a special trip.

"Buying a lottery ticket can be a very economical expense, if you think of having a shot at millions of dollars."

"Going to a casino is sort of planned event," said Harris. "It's a destination form of gaming vs. an in-your-neighborhood form of gaming."

But Minnesota's lottery is bucking national trend. Most state lotteries are seeing sales drop.

In all, 43 states have lotteries. For the fiscal year that ended last June, 18 of them saw increased sales, while the other 25 saw a decline.

Even in Nevada, visitors have curtailed their betting. Casinos there saw their winnings fall 10 percent in 2008.

"A lot of it is pretty much basic common sense, that if you have less money floating around, people aren't going to be gambling as much," said David Schwartz, director of the Center for Gaming Research at the University of Nevada-Las Vegas.

Schwartz says it's a myth that gambling is unaffected by the economy.

"Some people have said that it was recession-proof," he said. "If you look at the numbers going back 50 years, it's pretty obvious it's never been."

Jeannette Hinsley
Jeannette Hinsley of Pine City likes to play the video slot machines at the Grand Casino in Hinckley. She says she notices fewer people are gambling.
Martin Moylan

In Minnesota, casinos run by Indian tribes don't disclose their finances. But they acknowledge a drop in betting. It'd be hard to deny.

Jeannette Hinsley of Pine City likes to play the video slot machines at the Grand Casino in Hinckley.

"There's not as many people as there used to be," Hinsley said. "There used to be standing room only on the weekends. But now you can come in and take just about any machine you want."

A drop in casino revenue means tribes may have to cut their funding for schools, housing and services provided to tribal members.

Casinos aren't suffering alone. Pulltabs and other forms of charitable gambling in Minnesota are also hurting. Those sales fell 13 percent last year, to a little over $1 billion.

Hinckley casino
Patrons of the Grand Casino in Hinckley say they notice fewer people are gambling.
Martin Moylan

Regulator Tom Barrett says the recession isn't the only factor.

"I think we're still feeling the impact of the smoking ban," Barrett said. "The economy obviously has had an impact."

The drop in charitable gambling means less money for youth, veteran, fraternal and other groups that depend on gambling proceeds for much of their budgets.

Even while most forms of gaming are down, some state legislators see an expansion of gambling as a way to bring in much-needed revenue. They want to deploy video lottery machines in bars throughout the state.

Harris, the state's lottery director, says that could generate a load of money.

"On a conservative basis, in Minnesota we could be providing the state with $1.2 billion in revenue per year," he said.

Harris expects the move would not erode other lottery revenue very much.

Over the years, there have been several proposals to put video lottery machines in bars, but they have all failed.

This time around, supporters think the odds of success are greater, given the state government's need for revenue.

But tribal gaming leaders oppose such an expansion of gambling. They argue it would threaten many of the jobs and other economic benefits Indian casinos deliver to communities in outstate Minnesota.

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