Rich, poor: Who spends the most on the lottery?
$50 scratch-off game may be drawing in more wealthy players

By LISA SANDBERG and JULIE DOMEL
San Antonio Express-News

AUSTIN — If you thought the state's priciest scratch-off tickets were sure to fly off the shelves mainly in areas where people could easily afford them, you haven't been crunching the numbers.

That's OK; neither has the state.

Several months ago, when the Texas Lottery Commission introduced a $50 scratch-off game, agency officials expressed confidence it would draw affluent customers. But they had little to base that assumption on.

As it turns out, they were right for the first 10 days of sales, at least.

But had they mapped ticket sales of their pricier tickets for the past 12 months — the $10, $20, $25, $30 and $50 games — they might have discovered retailers in the state's 10 poorest ZIP codes sold $2.4 million of them, some 50 percent more than retailers in the state's 10 wealthiest ZIP codes.

Per-capita spending on the high-dollar tickets was $25 in the 10 poorest ZIP codes versus $18 in the 10 wealthiest.

That's counting the early sales data from the new $50 game, which went on sale May 7, and not including ZIP codes with a population of less than 100.

By itself, the new $50 ticket sold faster in more affluent ZIP codes.

Concern for customers
In the state's poorest ZIP code, which the 2000 Census identifies as 79901 in El Paso, retailers sold nearly $483,000 in all pricey scratch-offs combined, more than retailers did in 11 of the state's 12 wealthiest ZIP codes.

At a convenience store in that poor El Paso neighborhood, four blocks from Ciudad Juarez, Mexico, clerk Steve Gonzalez sells a lot of pricey tickets to people who can least afford them.

Sometimes, he wants to tell them to save their dough.

"They spend to their last dollar," Gonzalez said.

"(They) come in and they put a lot of money into these games. I have never seen people look so disappointed that their gambling odds didn't come through. It's really bad."

A world away, John Dhuka doesn't face such dilemmas as owner of a store in Rice Village, where the median family income in the last census stood at $104,000, making the area the state's eighth-most affluent.

His customers have little interest in higher-priced tickets, so he doesn't sell them.

State officials dismiss suggestions that the poor are more apt to wager money on high-dollar lottery scratch-offs.

"Because it's a poor neighborhood doesn't mean that the poor are buying the tickets," maintains Rep. Ismael "Kino" Flores, D-Palmview, who oversees the Lottery Commission as chairman of the House Licensing and Administrative Procedures Committee.

"Before, what used to be neighborhood stores now cater to people moving through the neighborhood. I've seen it. People stop at different stores and buy their tickets," he said.

Fighting the lottery
Robert Heith, the Lottery Commission's spokesman, said the only real way to determine who is buying big-dollar tickets would be to stand "at the door (of each retailer) and ask everybody who bought a lottery ticket where they lived."

By having a lottery, Flores said, the state gives folks a product they willingly line up to buy and at the same time raises more than a billion dollars a year in revenue for public schools.

"It's like cigarettes," Flores said. "If that's what people want, let them buy it."

Critics say state-sponsored gambling wasn't as problematic when most games cost a dollar. ("Oh rats!" Gov. Ann Richards exclaimed 15 years ago when she purchased the first ticket and discovered she'd become the first lottery loser.)

"They always argued it was a harmless, little game. Spend a buck. 'Oh, I lost. Big deal,' " said David Hudson, a former Democratic state representative from Tyler who waged a bitter campaign against attempts to introduce a lottery to Texas.

Lawmakers, then voters, approved the lottery the year Hudson left office, in 1991.

'Instant lack of gratification'
The state spent $2 million the first year on programs to help problem gamblers. The state now spends zero dollars on programs for problem gamblers even as ticket prices hit the stratosphere.

"We don't encourage people to buy cigarettes," Hudson said. "We don't go out and buy billboards advertising cigarettes. But we do advertise lottery tickets. Is this the kind of thing the government ought to be engaged in?"

Gerald Busald, a mathematics professor at San Antonio College who has campaigned to force the agency to publicize its long-shot odds on tickets and billboards, calls scratch-offs a form of "instant lack of gratification."

In pushing them, Texas has turned into little more than a bookie, he said.

"The state should have a responsibility to protect its citizens, not prey on its citizens who don't look out for themselves for lack of education or lack of hope," Busald said.

Texas' lucky investment
The state spends about $33 million a year promoting the games that inspire dreams of instant riches. It gets a good return on its investment.

The commission took in $3.8 billion in total sales in the last fiscal year, with $2.8 billion coming from scratch-offs.

Players forked down nearly $9 million for the new $50 game, called $130 Million Spectacular, within the first 10 days of its launch.

Roughly $243,000 of the total came from the state's 100 poorest ZIP codes, versus $682,000 in the 100 richest.

So, those who wince at the idea of a $50 game can take comfort in this: In the early going, customers in the 100 most affluent ZIP codes outspent those in the poorest 100 by 181 percent, indicating the state may finally have come up with a game too pricey for the poor to play.

Comments by Dawn Nettles, Publisher of the Lotto Report
Did you know that the State of Texas makes LESS money on the $50, $30,
$25 & $20 scratch tickets than they do on the $1, $2, & $5 tickets?

Examples:
#823 - $130M Spectacular - $50 Scratch Ticket
From total sales, the states share is 27.89% to cover ALL costs.

#732 - Weekly Grand - $2 Scratch Ticket
From total sales, the states share is 34.95% to cover ALL costs.
(7.06% increase in revenues compared to the $50 ticket.)

#694 - Double Doubler - $1 Scratch Ticket
From total sales, the states share is 40.06% to cover ALL costs.
(12.17% increase in revenues compared to the $50 ticket.)

COSTS: The printing costs for the more expensive scratch tickets is far greater than the
cost to print the $1, $2 & $5 tickets. This is because they print fewer tickets & each ticket
is considerably larger requiring more paper. Unit cost is far greater for the higher priced
scratch tickets. Additionally, more "taxpayer" money is spent on advertising
for the $20, $30 & $50 tickets. After all, they've got to get the word out to sell them!

Retailers still receive a 5% commission for each $1 sale. (Note: Some very
large retailers refused to sell a "$50" scratch ticket. One large retailer told me,
"$50 is too much for anybody to spend on a scratch ticket. As it is, those
who can least afford them buy them anyway." My hats off to them! At least now
I know there's one corporation out there who cares more about the human element
of gambling than the money he can make by selling something!)

G-Tech, on the other hand, earns a percentage of gross sales, not net sales!

Have you ever noticed that the TLC touts "total sales" rather than the
"bottom line?" This is really quite deceiving to the public and to our lawmakers.

And by the way, when and if you do see a "bottom line," do know that it has been
enhanced to some degree due to the holding of prize monies for sooo loooong!
(Story coming in the near future)

In a nutshell, the School Foundation Fund sees less revenue from sales
of $50, $30, $25, $20 tickets than they do from sales of $1, $2, $3, $5 tickets.

I wish someone would tell me why TLC management wants to increase
"gross" revenues each year rather than increasing profits for the state.

Professor Gerald Busald's Students Give
Current "True Value" Of Lottery Games
A new, very informative web site - compliments of San
Antonio College students. Very Interesting. Click here.