Here’s something rather counter-intuitive. Lotteries, in the US at least, are feeling the recessionary pinch.
“Just like Coke or Pepsi, we’re competing for discretionary dollars in the marketplace,” says David Gale, executive director of the North American Association of State & Provincial Lotteries in Geneva, Ohio. “People have fewer dollars left over after paying their bills, and they’re spending carefully.”
That’s from a BusinessWeek article discussing the industry. We’re also told that sales for Mega Millions, a 12-state lottery, are down 8 per cent in the 12 months through November. At Powerball, which runs in 29 states, revenue is down 17 per cent in the first half of the 2009 fiscal-year. In individual state lotteries sales are also suffering. California in particular, has reported a 10 per cent slump since the beginning of its current fiscal year.
Besides the effect on public sector finances (a large part of state lotteries’ revenues, about 30 per cent on average according to BusinessWeek, goes into funding public services) the slowdown is also impacting the fortunes of publicly-traded gaming companies. In the States, Las Vegas giants like MGM Mirage and Las Vegas Sands have plunged, while in the UK companies like PartyGaming and 888 Holdings are reporting stagnant or slowing sales as well.
The Economist’s Free Exchange blog has provided a suitably poker-faced (ahem) analysis of the phenomenon:
ECONOMISTS tend to deride state lotteries as a regressive tax. Poorer people generally spend more than the $514 American annual average on lottery tickets…
I would expect that the lottery fantasy is an inferior good. The smaller your income the more you desire that winning fantasy. This would suggest that in these uncertain times lottery ticket sales would increase. But actually, sales of lottery tickets, and gambling generally, have slowed. It seems people are cutting back on lottery tickets along with other forms of discretionary spending. It would be interesting to know if fewer people are buying lottery tickets or if the same people still purchase tickets, only fewer of them. Buying one ticket still provides the fantasy (it may just seem a little more remote).
The regressive nature of the lottery means its decline in popularity may not be the worst thing to come out of the downturn. Perhaps this trend reflects the move toward a new era of sobriety and realistic risk calculations.
I’m not sure “realistic risk calculations” have ever entered into the minds of a lottery-player or average gambler. If anything, surely a decline in the number of people playing such games means there’s a greater chance of winning? Bring on the EuroMillions, we say.
Related links:
Losing faith in gambling’s allure - BusinessWeek
Last resort, a bet on ‘El Gordo’? – FT Alphaville