The CA Lottery turned 30 in 2015 - But Where's the 34% - Part II
In Part I of this story we learned that gross revenues for lottery sales in California increased by 46.1% in the four year period after the passage of AB 142. The amount that the state's Education Fund received from those revenues did not increase nearly as much. If we examine the ten year period from 2005 through 2014 we find that the increase in gross revenues for lottery sales was a whopping 66.21%.
Strangely enough, the sales for the lottery games Super Lotto, Mega Millions and Powerball only increased by 10.88% during the same period. Meanwhile, sales for Scratcher tickets rose an incredible 89.37% over those ten years. This is where those Scratcher tickets that carry the amazing price point of $30 come into play.
In 2007, the highest priced Scratcher ticket offered regularly was $5. Scratcher ticket sales were $1.8 billion that year, a 5.46% decrease over the prior year. In 2014 sales for Scratchers were $3.3 billion. Not quite double, but a significant gain. Did the target market for these tickets nearly double over this period? Or did the tickets with the larger prices attract more dreamers? Or, is there some possibility that the decrease in the percentage of lottery revenues going to education; allowing prizes to be dramatically raised for these games, drive the record sales?
The big questions are who really benefits from these increases, and how is California doing in comparison to other states that offer lotteries. The first question can be answered in five letters. Actually, the full answer requires eight letters. GTECH S.p.A, is an Italian company. In August of 2006 it acquired GTECH, an American corporation. More than half of GTECH S.p.A is owned by a privately held firm in Italy, the De Agostini Group. That company's net revenues in 2013 were $4.44 billion (4.0906 billion Euros). These are the people who benefit the most from increases in CA lottery sales, and in fact, lottery sales just about anywhere in the world. They have contracts to manage lotteries in Europe, Australia, Asia and Latin America.
They're also big donors in California. $50,000 in 2012 to Governor Brown's pet measure, Proposition 30. Another $37,300 that year to various Democratic candidates in the Sunshine State and the CA Democratic Party (they got $20,000 of that $37,300). The year before that, they donated $73,500 to political causes, all of which went directly to the CA Democratic party. It's no wonder that the following year the CA State Lottery signed a six year contract with GTECH for them to provide lottery services to California.
But that's peanuts compared to when the Gubinator was in office. According to the Contra Costa County Times, GTECH spent $1.36 million in support of Prop 1C on the May 2009 California ballot. This was the proposal to allow the state to borrow against future lottery revenues that failed badly at the polls. Clearly GTECH wants to see lottery sales in CA to go up and have a vested interest in that agenda.
Who else stands to benefit from the increased sales, and more importantly, the reduced contributions to the Education Fund? Perhaps those who work directly for the state's lottery? During the same ten year period in which lottery sales revenues rose by 66.21%, the number of lottery employees increased from 650 to 791, an upswing of only 21.69%. However, salaries and benefits expenses for that employee base rose by a whopping 57.73% during the exact same period. One of the provisions of AB 142 was that rather than 16% of total lottery revenues going to expenses, only 13% were to go for that expense category. Hmmmm.
Finally, how is California's lottery doing in comparison to other states? According to the CA Lottery's 2014 annual report there are currently 43 states and the District of Columbia that are running lottery games. Since state populations vary widely the only effective measure of how well a state lottery does is to look at the per capita lottery spending. The state doing the best is Massachusetts, by a wide margin. The per capita spending on the MA lottery is a gigantic $721. The next closest state is Georgia, at $403 per capita. The low is North Dakota, where the population is only spending $37 per capita. The average spending in these 44 states (and D.C.) per capita is $189. California is below the average at only $131.
The CA Lottery. We were made promises and they have apparently been broken.
Strangely enough, the sales for the lottery games Super Lotto, Mega Millions and Powerball only increased by 10.88% during the same period. Meanwhile, sales for Scratcher tickets rose an incredible 89.37% over those ten years. This is where those Scratcher tickets that carry the amazing price point of $30 come into play.
In 2007, the highest priced Scratcher ticket offered regularly was $5. Scratcher ticket sales were $1.8 billion that year, a 5.46% decrease over the prior year. In 2014 sales for Scratchers were $3.3 billion. Not quite double, but a significant gain. Did the target market for these tickets nearly double over this period? Or did the tickets with the larger prices attract more dreamers? Or, is there some possibility that the decrease in the percentage of lottery revenues going to education; allowing prizes to be dramatically raised for these games, drive the record sales?
The big questions are who really benefits from these increases, and how is California doing in comparison to other states that offer lotteries. The first question can be answered in five letters. Actually, the full answer requires eight letters. GTECH S.p.A, is an Italian company. In August of 2006 it acquired GTECH, an American corporation. More than half of GTECH S.p.A is owned by a privately held firm in Italy, the De Agostini Group. That company's net revenues in 2013 were $4.44 billion (4.0906 billion Euros). These are the people who benefit the most from increases in CA lottery sales, and in fact, lottery sales just about anywhere in the world. They have contracts to manage lotteries in Europe, Australia, Asia and Latin America.
They're also big donors in California. $50,000 in 2012 to Governor Brown's pet measure, Proposition 30. Another $37,300 that year to various Democratic candidates in the Sunshine State and the CA Democratic Party (they got $20,000 of that $37,300). The year before that, they donated $73,500 to political causes, all of which went directly to the CA Democratic party. It's no wonder that the following year the CA State Lottery signed a six year contract with GTECH for them to provide lottery services to California.
But that's peanuts compared to when the Gubinator was in office. According to the Contra Costa County Times, GTECH spent $1.36 million in support of Prop 1C on the May 2009 California ballot. This was the proposal to allow the state to borrow against future lottery revenues that failed badly at the polls. Clearly GTECH wants to see lottery sales in CA to go up and have a vested interest in that agenda.
Who else stands to benefit from the increased sales, and more importantly, the reduced contributions to the Education Fund? Perhaps those who work directly for the state's lottery? During the same ten year period in which lottery sales revenues rose by 66.21%, the number of lottery employees increased from 650 to 791, an upswing of only 21.69%. However, salaries and benefits expenses for that employee base rose by a whopping 57.73% during the exact same period. One of the provisions of AB 142 was that rather than 16% of total lottery revenues going to expenses, only 13% were to go for that expense category. Hmmmm.
Finally, how is California's lottery doing in comparison to other states? According to the CA Lottery's 2014 annual report there are currently 43 states and the District of Columbia that are running lottery games. Since state populations vary widely the only effective measure of how well a state lottery does is to look at the per capita lottery spending. The state doing the best is Massachusetts, by a wide margin. The per capita spending on the MA lottery is a gigantic $721. The next closest state is Georgia, at $403 per capita. The low is North Dakota, where the population is only spending $37 per capita. The average spending in these 44 states (and D.C.) per capita is $189. California is below the average at only $131.
The CA Lottery. We were made promises and they have apparently been broken.
posted by me at 4:20 PM
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