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May 2009


by Tracey Lamphere

Drawing A Crowd

Texas Lottery Weathers Economic Changes

Months before Hurricane Ike dealt its blow to Texas Lottery sales, a national economic storm loomed.

Growing consumer uncertainty and a decline in discretionary spending contributed to a 2.7 percent drop in lottery sales for fiscal 2008, and is partly to blame for a 2.1 percent slide for the first half of fiscal 2009. While Texas Lottery Commission officials have not formally studied the impact of the nation’s lingering economic crisis on ticket sales, vendors have noticed a shift in consumer demand.

“Sales were OK during the holidays because people were buying lottery tickets as stocking stuffers and buying them as gifts,” says Amy Tran, manager for the A&B Corner Foodmart in Round Rock. “But now, ticket sales have really slowed down.”

Even the store’s regular lottery players have altered their strategies due to the economic climate.

“Instead of buying one $20 scratch-off, they buy 10 $2 tickets because they think they’ll have more chances of winning,” she says.

Odds of winning vary by game, but the odds of winning a prize from a $2 scratch off is about 1 in 4.3, whereas the odds of winning on a $20 scratch off is one in about 2.9.

Lottery buyers, however, have upped the ante at the Pure Country Convenience Store near Whitsett, about 60 miles south of San Antonio, where lottery sales have soared.

Did You Know? Since 1997,  the Texas Lottery  has contributed  $11 billion to  state education.

“We used to sell a $50 scratch-off ticket every so often, but now we’re selling three or four a day,” says Karen Weber, the store’s manager.

Lottery ticket sales revenue at the store averaged about $4,700 each week last spring, but had increased by at least 25 percent as of March.

Leaving It to Chance

For lottery player Ben Jones of Dallas, the prospect of claiming part of a Mega Millions jackpot has motivated him to purchase tickets every Tuesday and Friday for the past four years.

“I don’t play for fun,” Jones says. “I play to win.”

Jones and a group of 27 co-workers he plays with have won $150, but other than that the jackpot has been elusive.

Ike rendered 4,616 of 5,051 lottery terminals in the Houston district inactive, according to Texas Lottery officials. The area, the largest district of 10 in the state, houses approximately 30 percent of the state’s lottery vendors. As of March 13, 2009, only 39 terminals remained inactive.

Although the hurricane magnified the state’s sales slump, Texas was not alone in its losses. Lottery sales nationwide decreased by about $215 million, or nearly 2 percent, from July through September 2008 compared with the same period in 2007.

Ebb and Flow

When lottery sales rise and decline, Texans might wonder how the change affects education funding.

The Foundation School Fund (FSF) is appropriated by the Legislature, which in fiscal 2009 totaled about $20.7 billion. The lottery’s current annual contribution to the FSF is targeted at $1 billion and from fiscal 2003 to 2007 it exceeded that target. When the funds total less than $1 billion, money from the state’s General Fund is used to make up the shortfall. As of Feb. 28, about $467.4 million has been transferred to the fund, compared with $466.4 million for the same period in fiscal 2008.

Lottery Numbers

During its 17-year history, the Texas Lottery has steadily increased its sales, prizes and contributions to education funding. About 76 percent of its sales comes from scratch-off tickets, which cost from $1 to $50.

Fiscal YearsLottery Sales (in billions)Prize Payout PercentageFoundation School Fund Contribution
(in billions)
2002$2.9757.8%$0.869
2003$3.1358.9%$0.888
2004$3.4459.3%$1.003
2005$3.6660.8%$1.016
2006$3.7861.2%$1.030
2007$3.7761.3%$1.032
2008$3.6762.1%$0.983
2009$3.64n/a$0.963

Note: 2009 figures are based on Comptroller’s Biennial Revenue Estimate 2010-2011

Source: Texas Lottery Commission

Texas Lottery contributions to the FSF should total $1.9 billion for the 2008-2009 budget period, 5.8 percent less than in the previous biennium. The lottery expects its FSF contributions to decline by another 3.1 percent during 2010-2011, due to product line maturity, resulting in a $120 million shortfall in the FSF. This shortfall will be covered by general revenue, in an amount equivalent to about 0.155 percent of the general revenue fund. FN

For more information on the Texas Lottery, visit www.txlottery.org.

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