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Indiana’s lottery profits drop 17.5 percent

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Indiana’s lottery proceeds dropped by more than 17 percent in the past fiscal year, marking one of the sharpest decline in profits nationwide.

The state’s proceeds from the Hoosier Lottery fell by nearly $40 million, as profits dropped from $217 million in the 2008 fiscal year to $178 million in fiscal year that ended June 30.

It’s unclear whether new slot machines at the state’s two horse racing tracks have cut into lottery sales. Lottery officials told The Indianapolis Star that the decline is caused in part by the recession and a lack of big jackpots.

Frequent wins may be good for players, but they prevent huge jackpots that draw more ticket sales. The lack of big jackpots is why Rob Vondersaar, 53, bought cigarettes but no lottery tickets when he stopped at a downtown Indianapolis gas station.

“I only play Powerball when it gets crazy,” he said.

The recession has dried up disposable income. Sales of more expensive lottery tickets have declined, while sales of cheaper tickets have grown as players seek to cut back.

“They’re spending less, and they’re spending differently,” said Kathryn Densborn, executive director of the Hoosier Lottery.

Indiana’s 17.5 percent drop in lottery profits was among the sharpest of any state that has a lottery, according to a study on state-run gambling by the Nelson A. Rockefeller Institute of Government at the State University of New York.

Oregon and Arizona were the only other states that registered a double-digit decline in the study, which included data from 39 of the 42 states that have lotteries. Nationwide, states’ lottery profits were down 2.6 percent, according to the study.

“States cannot depend on gambling revenue because it is not likely to keep pace with long-term budgetary needs and spending growth,” said Rockefeller Institute senior analyst Lucy Dadayan.

The money Indiana receives from its lottery is just a drop in the overall state budget, which is about $13.2 billion for fiscal year 2010. But in tight budget times, lawmakers are looking for cash any place they can find it.

“When you have a state agency that’s producing revenues for you like this, and you’re suffering in those revenues, then obviously it’s a matter of concern,” said Sen. Luke Kenley, a Republican from Noblesville who heads the Senate Appropriations Committee.

House Ways and Means Chairman William Crawford, D-Indianapolis, predicts the lottery will revive as the economy heals.

“I think we’re in a temporary downturn, and it’s going to rebound,” Crawford said.

Indiana divides its lottery revenue into several accounts. The first $30 million goes to the Teachers Retirement Fund and the second $30 million goes to police and firefighter pensions. The rest subsidizes a state auto excise tax cut, which costs $263 million a year, and other projects such as new technology for libraries and universities.

Indiana does not use lottery revenue to fund education because lawmakers who created the lottery in 1989 didn’t want to rely on what they feared would be an unstable source of income.

Information from: The Indianapolis Star, http://www.indystar.com

© 2009 Associated Press. Displayed by permission. All rights reserved.

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