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‘Scratchers’ boosting NM lottery take

A customer at a convenience store uses a coin to see if he has a winning lottery ticket. Scratchers are making up a larger percentage of lottery revenue.(Adolphe Pierre-Louis/Albuquerque Journal)

ALBUQUERQUE, N.M. — New Mexico Lottery revenues, which had declined over the past year in part due to the COVID-19 pandemic, have picked up in recent months led by a 25% increase for July and August in the sale of instant lottery “scratcher” games.

Gamblers shelled out $15.4 million for scratchers during the two-month period, up from $12.3 million for the same period in 2019. Sales for all lottery products for the two-month period were $22.8 million – up from $19.8 million for the same period last year.

Lottery officials lauded the increase as good news while gambling opponents criticized it.

“The scratcher sales increase is great news for the Legislative Lottery Scholarship,” said Wendy Ahlm, director of advertising and marketing for the lottery. “However, it is early in the year and we do not know if it is sustainable.”

Anti-gambling activist Dr. Guy Clark, an Albuquerque dentist, called scratchers “the most addictive of the lottery games.”

“The gambling industry wants us to believe they are just another form of entertainment but going to the movies doesn’t drive people into bankruptcy.”

In most years, scratchers account for between 50% and 54% of lottery revenue but over the past two months, scratchers were bringing in more than 60%.

“Unfortunately, the cause for the increase cannot be determined,” Ahlm said. “It could be due to the lack of outlets for discretionary entertainment dollars.”

Under the state’s health order issued because of the virus, state licensed casinos and movie theaters have been closed since mid-March. Native American casinos voluntarily closed in March, but some of them have now reopened. Brew pubs, restaurants and other businesses are open on a limited basis.

But lottery retailers, primarily convenience and grocery stores, have remained open as essential businesses since March.

Clark last spring predicted an increase in scratcher game sales once the pandemic shut down the state’s casinos.

“I saw what was happening in Texas and figured it would happen here eventually,” he said.

The state lottery changed its marketing approach before the pandemic struck, offering new scratcher games with $500 and $1,000 prizes instead of $50,000 or $200,000. The smaller prizes allow for more winning tickets and Ahlm said that could be another reason for the increased popularity of the games.

Revenues from the lottery, which pays 30% of gross revenues into the scholarship tuition fund, were down about 12% for the fiscal year that ended June 30.

The New Mexico Lottery saw sales drop last fiscal year. (Roberto E. Rosales/Albuquerque Journal)

The tuition fund pays in-state tuition for qualifying New Mexico college students.

Over the past decade, demand for the scholarships, rising tuition costs and the volatility of lottery income have forced lawmakers to supplement the program with non-lottery revenue, tighten eligibility and reduce tuition awards, according to the Legislative Finance Committee.

State lottery records show the amount the lottery paid into the scholarship tuition fund dropped from more than $43 million in June 2019 to just over $38 million for the fiscal year that ended in June 2020.

Sales of the two national games, Powerball and Mega Millions, continued to drop and accounted for a decline in scholarship fund revenue, according to lottery officials.

Ahlm said lotteries around the country have seen the decline in revenue from the big national games “causing significant concern for beneficiary funding.”

Sales of the national “draw” games dropped by $21 million for the fiscal year that ended in June.

Powerball sales declined 7% and Mega Millions dropped 10%, Ahlm said.

Lottery officials around the country blamed the decline on a lack of large jackpots that attract people who don’t typically buy lottery tickets.

State lottery records show more people buy lottery tickets in the national games when the payouts reach $250 million or more.

The Mega Millions game payout reached $1.5 billion in fiscal 2019 and the Powerball game had a $768 million prize the same year. Those prizes led to record sales for the New Mexico lottery.

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