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Where does your lottery money go?
You know how people will say the goofiest things. Smack your thumb with a hammer and somebody will ask you if that hurt. Pull your car off to the side of the road with two flat tires and steam coming from beneath the hood and a Good Samaritan will ask if you are having trouble.Paula Otto has heard all of that, and more. She heard when she was a television reporter in Richmond, when she was director of public affairs for the Virginia Lottery, when she was professor of mass communications at Virginia Commonwealth University.
It wasn't until she returned to the Virginia Lottery in January as executive director that this native of Arlington heard the goofiest thing of all.
“Can you tell me the winning numbers for (pick a day there is a drawing).” Ha-ha-ha.
A better question, although it's not so goofy, is “how is my dollar used if I buy a scratch ticket?”
It breaks down like this: 55 cents goes to the prizes, 5-6 cents to the retailer, up to 10 cents to operate the lottery, and 33-34 cents to public education.
“About two-thirds is distributed through a regular state funding formula,” Otto said. “About a third goes directly to the localities. Superintendents have some guidelines on how they choose to spend the money. They have told us they use it for everything from school buses to computers in the classrooms to new playground equipment.”
When the lottery was launched in September 1988, the revenue followed a different route. The money went to the state's General Fund and was meted out from there via General Assembly appropriations.
At the time the state's only dedicated fund belonged to the Department of Game and Inland Fisheries. Lawmakers felt a dedicated fund for lottery money was a problem. What would they tell folks back home if their schools were not receiving a fair share? What if the money was truly needed for something other than public education? Better to handle it all in the General Assembly.
In 1999, via voter referendum, a state constitutional amendment was adopted that created the lottery's dedicated fund.
“It's called the Lottery Proceeds Fund,” Otto said. How it is spent is part of the state budget process. For fiscal year 2009, however, “there is more than a basic aid formula. There is a list of very specific programs” such as Preschool Initiative, additional support for school construction and operating costs, remedial summer school, foster care, and school breakfast.
In fiscal year 2008, the lottery generated $455 million. “That's a significant amount of money,” Otto acknowledged. “But it accounts for about six percent of the state's budget for education.” Since 1988, Virginia Lottery has generated more than $20 billion.
Scratch games account for roughly 50 percent of all lottery sales, she said. The games cost from $1 to $20 and offer a variety of prizes, from free tickets to money prizes of upwards to $1 million. From 40 to 50 tickets are in play at any one time, Otto said.
The advantage of buying a $20 ticket versus a $1 ticket is better odds at winning something. You are, however, facing longer odds at winning the ticket's grand prize.
Although traditionally recession proof, lottery sales have been flat during the ongoing economic downturn, Otto said. “Many of our tickets are sold at places that sell gasoline,” she said. The high cost of gas meant fewer dollars left over for lottery tickets. The fact many consumers were paying with credit cards at the pump meant fewer customers in the convenience stores and the accompanying impulse buys.
“One place we have seen an increase in in grocery stores,” Otto said. “That may be a reflection of people not eating out as much.”
People. Not only will they say goofy things, they'll do goofy things.
Virginia offers the Mega-millions drawing that keeps rolling over until some lucky soul has a winner. The jackpot can range from a couple million to a couple hundred million.
Not as many people buy tickets when the jackpot is less than $100 million, Otto said. “We haven't had any really big mega-millions winners,” she said. “So our ticket sales have been down in that area.”
Like buying a $1 lottery ticket on a $100 million jackpot is a waste of a busy person's time.
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