Lottery revenues totaled nearly $250 million in the fiscal year that ended Sept. 30, according to audited city financial data released last month. That’s a nearly 8 percent jump from the prior year, though it’s still below the lottery’s all-time sales high of $266 million in 2006.
As controversy continues to swirl five years later over the awarding of the D.C. Lottery’s main contract, officials said the improved revenue figures show success in responding to the area’s changing gambling market.
While selling in a relatively small and exclusively urban jurisdiction, the D.C. Lottery enjoys one of the country’s highest per-capita sales rates, according to figures compiled by GamblingData, a trade publication.
But revenue from the city’s local numbers games — the twice-daily draws that have accounted for the bulk of sales since the city’s lottery was launched in 1982 — have fallen in recent years, and new competition from Maryland and Virginia has cut into the District’s sales take from big multistate Powerball and Mega Millions jackpots. From 2007 through 2010, D.C. lottery sales dropped 14 percent, while national sales increased 5 percent.
To replace those thinning cash cows, D.C. Lottery Director Buddy W. Roogow said he has focused on improving scratch-off tickets and rolling out new instant-win games to draw in a new generation of players.
“The demographics here have changed dramatically,” Roogow said. “Older people like Pick 3 and Pick 4. It was such a common game in terms of the numbers racket” — the illegal games that predated the government lottery. Now, he said, “We’ve got to have more exciting games, or games within the games, to get people excited.”
That’s meant bigger payouts and more attractive designs on the instant tickets. The District is now selling its second series of $20 tickets with a top $1 million prize, matching payouts in Maryland and Virginia. The lottery also has done more branded tickets — Monopoly, Betty Boop, the Pink Panther, the Washington Wizards and now Soul Train — hoping to reach new players. On many losing tickets, players can enter a “second chance” sweepstakes to win prizes.
For Roogow, a former director of Maryland’s state lottery, scratch-off sales have been perhaps his biggest success, rising more than 30 percent since he took over the agency in 2009.
While instant tickets account for more than half of national lottery sales, in the District they account for only about 20 percent. The conventional wisdom has been that Washington is a “numbers market,” said John Gorman, instant-ticket director at the D.C. Lottery.
New numbers games rolled out under the new contract have aided the lottery’s bottom line. “Race2Riches,” based on a simulated horse-race run every four minutes, generated $7.1 million in sales last year, while “Fast Play” tickets — essentially a scratch-off card without the scratching — added nearly $6 million. Keno, introduced in 2004, also saw a slight bump.
Those games — which require little or no wait for players to learn their payoff — are more appealing to “the emerging market in D.C.,” said Emmanuel Bailey, owner of lottery contractor DC09. “This is an instant-gratification world.”
Bailey, who is partnered with Greek gaming giant Intralot, figured large in the political controversy over the lottery contract. But after early hiccups during its 2010 rollout, he said, the system is thriving.
In the past two years, the lottery has added 50 sales locations, with some retailers attracted to smaller and sleeker terminals. Many locations now offer self-service terminals and automated instant-ticket vending machines.
From DC09’s offices a block from Nationals Park, Bailey and his team target sales and promotion efforts to particular areas of the city and even times of day. The traditional numbers games do best east of the Anacostia River, for instance, while national jackpot tickets sell best downtown during lunchtime.
After accounting for players’ prizes, sales agents’ commissions, contractors’ fees and other overhead, only a fraction of lottery sales are transferred into city coffers. Last year’s 8 percent increase in sales translated into only a 6.7 percent rise in government revenue — from $62.3 million to $66.4 million. That’s significantly down from 2006, when the lottery put $73.8 million in city coffers, thanks to record Powerball sales.
Roogow said higher prize payouts and licensing fees for the new branded scratch-off games have driven costs up. “You do have to pay a little bit more,” he said, but “it allows you to reach out to that new player.”
At Union Station, the Soul Train tickets attracted new and old players alike — including some who considered themselves numbers players, not scratch-off aficionados. Ruthie Capies, a 53-year-old Northeast resident, plays Pick 3 and Pick 4 games weekly. “That’s my personal preference,” she said.
But she gave the Soul Train scratcher a shot. She broke even on her first ticket and used the proceeds to buy a second. That one was not a winner.