State Lotteries Are Booming in Tough Times

Seventeen states set lottery sales records in the past year.

ByABC News
September 2, 2011, 11:13 AM

Sept. 2, 2011— -- It's one business that's thriving in this rocky economy – lottery ticket sales.

Two-thirds of the 41 state lotteries that end their budget year in June enjoyed higher sales than the year before, and 17 of those states set all time sales records, according to data compiled by USA Today.

Numerous studies have shown that poor people make up a disproportionate number of lottery players, lured by slogans such as "All it takes is a dollar and a dream." But there is a bitter debate whether tough times are responsible for surging ticket sales.

Researchers have found that when the economy goes bad, lottery revenues go up, but they have not conclusively proven that one leads to the other.

"Looking at historical data it is fair that there has been a trend of lottery tickets sales moving in tandem with economic conditions," Garrick Blalock, a Cornell University economist who co-authored a 2004 study on lottery revenues, told ABC News.

"A very likely explanation is that when people are feeling desperate, they are more likely to stop by the gas station and buy five lottery tickets, hoping they get a big windfall," he said.

In a 2008 study, researchers at Carnegie-Mellon University found that the more impoverished someone feels, the more likely he is to play the lottery.

"Some poor people see playing the lottery as their best opportunity for improving their financial situation, albeit wrongly so," said the lead author, Emily Haisley, when the study was published."The hope of getting out of poverty encourages people to buy tickets, even though their chances of stumbling upon a life-changing windfall are nearly impossibly slim and buying lottery tickets exacerbates the very poverty that purchasers are hoping to escape."

Lottery Sales Are Recession Proof

In state after state setting lottery records this year, officials acknowledge the lottery appears to be recession-proof. But they have attributed the growth in revenue largely to the introduction of new games and other improvements, not these tough times.

The states breaking lottery records this past year include Tennessee, where ticket sales hit a record $1.19 billion, a surge of 4.2 percent, and Illinois, where receipts climbed 3 percent to $2.28 billion.

The Ohio Lottery Commission announced record sales of $2.6 billion for fiscal year 2011, the 10th consecutive year sales have increased.

California Lottery sales soared by a whopping 13 percent in fiscal 2011, reaching nearly $3.44 billion, second only to sales in fiscal 2006.

One researcher said lotteries might be indirectly benefitting from the poor economy because of anecdotal evidence that some gamblers are staying at home and playing lottery gamers rather than traveling to a casino to wager.

"It isn't that people are saying, 'I don't have a job, I might as well buy a lottery ticket.' Instead, people are choosing convenience gambling. Instead of going to a casino and paying for a hotel, what we call destination gambling, they are staying at home and buying lottery tickets," said Bruce LaFleur, vice president of LaFleurs, a research firm that gathers data on lotteries around the world.