Are Lottery Players Smart?

Do Lotteries with Better Returns Get More Play? (Comprehensive Study)

The concept of a, 'Smart,' lottery player seems like it would be an oxymoron, but I hypothesize that the states with better lottery returns tend to have a greater loss per resident than the states in which the lotteries return more poorly.

In my other recent WoO Article, I took a look at the average gambling loss on a per resident basis for each of the fifty States that have a lottery, Tribal Casinos, Commercial Casinos or some combination of the three. While I was doing this, it occurred to me that it is possible that the lotteries actually generate a greater loss-per-resident when they have better RTP's (Returns-to-Player) which can also be expressed as a lower House Edge.

In order to make a final determination in this regard, it will be necessary to separate ticket sales data from other lottery data as there were some situations in which Lottery Revenues included revenues other than ticket sales. One example of this was West Virginia a state in which Commercial Casino revenues were denoted as Lottery Revenues due to the fact that everything falls under the purview of the West Virginia State Lottery. Furthermore, West Virginia also has, 'Slot Parlors,' that are licensed and regulated by the West Virginia State Lottery, and the revenues derived from those sources also went to Lottery Revenues.

As a result, in order to do an apples-for-apples comparison, it is incumbent upon us to separate the ticket sales losses from all other facets of the lottery in order to make a determination of the average losses per resident in just lottery ticket sales. While this may seem simple enough, all you do is subtract the prizes paid out from the tickets sold, I believe that a small number of States actually do not have the specific win/loss data on their Annual Lottery Reports. In these cases, I will make every effort that I can to ascertain this data, but in some cases, it might simply not be readily available.

Wyoming is another State that will not be considered because the Annual Report must actually be physically requested, that is unfortunate because at least some of the data is available for the other States.

***Just to make it absolutely clear, I want to reiterate that any differences between the numbers on this page and those on the previously written page stem from the fact that we are looking exclusively at lottery TICKET sales, which would exclude pull-tabs or any other forms of revenue generated by the lottery.

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Arizona:

For the State of Arizona, we are going to take a look at their Lottery Report that breaks down the 2014 numbers (the most recent data readily available) on Page 5 of the pdf which is Page 245 of the State's Appropriations Report.

In the case of Arizona, we see that they had 723.9 million dollars in total Lottery Sales from which 488.3 million were Instant Sales. That is going to be important because, I think that the Instant Sales Tickets (i.e. Scratch-Offs) tend to have a better Return-to-Player than Online (i.e. Drawing) type games, as a result, the States with a greater amount of Instant Ticket sales (as a percentage) might actually have better lottery revenues that the States that have lesser Instant Ticket Sales.

Going forward, we are going to be looking at the percentage of Instant Ticket Sales in a State, when/if applicable, to determine whether or not it is the case that the States with a greater percentage of their sales coming from Instant Tickets also tend to have greater amounts of Lottery Revenue. It is quite possible that Instant Ticket popularity will be the difference maker in how well a State Lottery pays out, and therefore, the States in which a higher percentage of tickets are instants will have better overall returns, but we shall find out.

With that said, Arizona had 458.1 million dollars in prizes paid out which results in a total loss of 265.8 million dollars in total lottery purchases. Using our population data from the WoO Page, we come to the conclusion that the loss-per-resident on Lottery Tickets (overall) is $41.58/resident based on a population of 6,392,017.

For the State of Arizona, we see a loss of $41.58/resident which reflects a total return to player of 63.282% of all Ticket Sales. To put that in perspective that means that a player would lose about $37 in the event that the player purchased $100 in total lottery tickets for that year.

Arkansas:

That brings us to the State of Arkansas which actually has a fairly detailed Lottery Report with respect to their revenues as sources thereof:

What we see is the State had S409,159,192 in total Lottery Revenues with $334,395, 046 of those coming from Instant Games. Unfortunately, that particular page does nothing to indicate how much was actually paid out by the lottery during that time period and only states the lottery revenues. While that was adequate for the previous page and we simply did an estimate based on 60% Return-to-Player, the purpose of this page is to look specifically at the State Lotteries, therefore, more specific results are going to be required. Unfortunately, we are going to have to go to the 2014 Lottery Sales according to the pdf from the Arkansas Scholarship Lottery and get our information from there:

If we look at Page 35 of the pdf, then we will see that the total Lottery Revenues (which both the State and the Lottery Commission, interestingly enough, report BEFORE considering payouts, while usually a State's tax Department would consider the amount contributed to the Education fund or General Fund, whichever applicable, AFTER payouts) were 410,637,968 (Really close to the 2015 numbers) with $322,415,276 coming from Instant Sales and $87,657,850 coming from Online sales for a total of $410,073,126 in total ticket sales.

The one thing that Arkansas does that I wish every State did is separate the payouts into those derived from Instant Games as well as those derived from Drawing games. The payouts for Instant Games were $229,462,196 (71.17% RTP) while the payouts from Drawing games were $45,487,903 (51.89%) RTP which results in a combined 67.05% RTP and a total loss of $135,123,027 which is (based on a population of 2,915,918) of $46.33/resident.

Arkansas might end up being the standard-bearer for what constitutes a, 'Smart,' Lottery State. The smartest thing for a player to do, obviously, is not to play the lottery at all, but if one must play the lottery, then one would do well to stick to Instant Games which already seem to have a generally better return to player. That also makes sense because the Top Prizes tend to be lower, and of what few Instant Lottery Tickets I've looked at, most of them seem to have a 1 in 4 probability of winning which includes break-even prizes as well as Free Tickets.

California:

That brings us to the State of California which may have lesser Ticket Sales per resident as there are many other legal forms of gambling within the state. Once again, for the previous Article, we did an estimate of what the Lottery Loss per Resident would have been based on the Annual Ticket Sales, because this page is specifically about the Lottery, estimates will simply not cut the mustard and we are going to need specific numbers.

Naturally, that takes us to the State Lottery Report for Fiscal Year ended in 2015. Unfortunately, while the report does a great job of breaking down the source of revenues (what types of tickets were sold) it only accounts for prizes in generic terms, so it is difficult to determine how the prizes were distributed. One fact worthy of note, however, is that, 'Lotto Game,' (read: Drawings) sales were down 13.5% which is pretty substantial, especially when one considers that all other Lottery segments were up compared to the prior year. Actually, I found the breakdown of prizes which is two pages down in the report, so we will be able to take a look at that.

The first thing that we will note is that the Lottery had $5,524,850,593 in total sales of which $3,915,381,412 were Instant Games which reflects 70.87% of total sales. All of the other Lottery Sales would constitute drawing games for these purposes, of course. The Lottery returned $3,501,745,873 in total prizes which represents a Return to Player of 63.38% and a total loss to players of $2,023,104,720 which represents a loss per resident, based on a population of 37,253,956, of $54.31/resident.

What we will notice about California is that the Instant Tickets had a Return to Player of 67.93% based on a total of $2,659,817,449 in total prizes paid out from Instants. This return to player is actually 4% lower than that of Arkansas which, theoretically, could explain why Arkansas sees a much greater amount of their revenue coming from Instant Tickets, at least, on a percentage basis.

From an Economic standpoint, that the average resident of California should lose more on the lottery, at least, compared to a State like Arkansas might come from a greater amount of disposable income. However, we do see that the Percentage Return-to-Player is much in line with a state like Arizona in that it is only slightly higher (while the percentage in Instant Sales is moderately greater) but we know that the Instants return worse in California than in a State like Arkansas.

Colorado:

For the State of Colorado, this is a relatively simple matter of taking a look at the Colorado Lottery's Annual Report. For the other page, once again, we took an estimate based on the State's General Revenue numbers along with a 60% return which actually unfairly benefitted the states for which specific numbers were impractical to get for the purposes of that page. As we can see, most lotteries have an overall percent return to player in excess of 60%, so to estimate using 60% as a basis over-estimated player loss a bit.

The bad news regarding the Colorado Lottery is that if we take a look at this Annual Report. Like a few other States, it only lists the overall ticket sales and the prizes, which makes Colorado useless for the purposes of this study. We will include them in the chart anyway as having $545,030,260 in Gross Ticket Sales and $336,511,493 in prizes for a total Return to Player of 61.74%. The result is a Lottery loss per resident of $41.46 based on a population of 5,029,196.

Of the four States listed so far, the one thing that we notice about Colorado is that the Lottery Loss per Resident is slightly lower than that of the closest State, Arizona ($0.12/resident) and the percentage return to player is 1.5% lower. This seems in line with the theory that lotteries with a better return to player will tend to generate greater losses per resident.

Connecticut:

That brings us to the State of Connecticut which was estimated on the aforementioned page that I did, but again, an estimate is not going to be sufficient in this case. Therefore, we must find the specific Lottery Revenue Reports for the most recent year possible.

The slogan for the Connecticut Lottery is, 'Our Games Benefit Everyone,' I'm guessing that slogan is not meant to include the players. In any case, here is the 2014 Annual Report for the Connecticut Lottery.

The good news is that the pdf breaks down the sources of the lottery's ticket sales for that year, unfortunately, it does not seem to break down the prize distribution other than to give a total amount that was distributed in prizes. In any event, they had $660,230,730 in Instant Game Sales as well as $455,315,831 in sales of all Drawing games including in-state drawing games as well as multi-state drawing games. In total, only 59.18% of Connecticut's sales were in Instant Games.

The lottery returned $668,791,859 in prizes for that year which represents an average return to player of 59.95% which is the lowest of any of the states looked at thus far. The total amount lost was $46,754,702, which based on a population of 3,574,097, results in a loss per resident of $125.00/resident.

This is particularly interesting because it goes against every theory that I have had with respect to the lottery thus far, with exception to one:The only thing consistent about the Connecticut State Lottery is my theory that states that sell a lesser percentage of Instant Tickets will have a lesser overall return, and that has held, as Connecticut has the lowest percentages in both aspects thus far. However, I am at a complete loss to explain how the State Lottery with the highest hold simultaneously blows the other states (so far) out of the water with respect to ticket loss per resident...the best guess I can hazard is just that Connecticut, as one of the more well-to-do states overall, has a lot of disposable income.

Delaware:

Delaware is another opportunity to see how a well-to-do state might perform on overall lottery sales in the event that resident have significant disposable income. Delaware was also ranked very high on the overall gambling loss per resident on the previous page, however, I believe some of their lottery revenues may have been derived from limited license facilities.

Once again, an estimate was done for the aforementioned page, but the most recent Annual Report is from 2013, so we will take a look at that.

The first thing that we will notice from Page 5 is that 71.74% of the contribution to the General Fund came from Video Lottery, which doubtlessly means that Video Lottery (obviously) has a better return than ticket games and saw significantly greater revenue than ticket games. On the other page, this would all count as Lottery Revenue (as it did with West Virginia) so we have to separate this out from ticket sales.

Fortunately, Page 9 of the Annual Report breaks the sales down by game types and shows total Instant Game Sales of $47,451,154 and Online Sales of $96,657,250. This is interesting because that makes Delaware the only state so far to offer both game types yet have lower Instant Ticket sales. I think that is largely due to the fact that they have a Video Lottery which has a greater Return-to-Player, but does not have the jackpot potential of Drawing type games. We can see that the lottery is unharmed in this regard, however, as their Video Lottery generates significantly greater revenues than their other forms of lottery combined.

Total prizes were $99,264,072 against $144,108,404 in sales which represents a Return to Player of 68.89%, unfortunately, there is no separate accounting for the return of Instant Games, yet Delaware has the greatest Return to Player, overall, of any of the States thus far. The result is $44,844,332 in total lottery ticket losses to the players which, based on a population of 897,934 represents a loss per resident of $49.94 on tickets.

We see that California and Connecticut remain an exception to the rule as, even with their Video Lottery, Delaware generates a greater ticket loss per resident than most states with reduced lottery returns. We must also assume that Instant Games either pay exceptionally well, or the drawing games limited to the Delaware lottery pay better than average, or both, as Instant Games represent only a small portion of the sales, yet, Delaware has a better overall return to player than most other states.

Florida:

That is going to bring us to the State of Florida which, again, we estimated the Lottery loss per resident for in the other Article, so we are going to need to get more comprehensive information in this case. Unfortunately, the State Lottery Annual Report.

Only shows general sales of 5.58 Billion dollars and 3.64 Billion dollars in prizes which leads us to an overall return to player of 65.23%. The report does state that Instant games returned 2.68 billion dollars in prizes, and if we go through the list of Instant games (this report looks like an advertisement!) we arrive at less than the total amount of prizes paid out because, again, it appears that the Report does not include all available scratch-off games.

The one interesting thing of note is that Instant Games did account for 73.63% of all returns to player for the Florida Lottery, although, that doesn't give us any specific information about the sales. If all things were equal, based on overall sales of 5.58B, then 410.9B of the total sales would have come from scratch off games. However, we do know that Draw games, generally speaking, have a lower return-to-player than scratchers, so as a result, we cannot use the percentage of the overall return derived from scratchers to determine what the percentage of total sales scratchers accounted for.

The one thing we can do is see that there was a total loss of 1.94B to the Florida Lottery for the year in question, which based on a population of 18,801,310, comes out to $103.10 per resident.

Once again, owing in large part to their demographics, Florida might be something of an outlier state, but then again, it is possible that the lottery losses per resident are in no way related to the returns of the lottery, but we will see. Overall, of the States so far, Florida appears to have a middle-of-the-road return to player, but a ton of loss per resident.

Georgia:

Once again, we used estimates for the State of Georgia in the previous article, so now we are going to attempt to take a more detailed look at the State Lottery numbers. For this, we will look at the Georgia Lottery Annual Report.

Interestingly, Georgia accounts for, 'Tickets Provided as Prizes,' separately whereas most lotteries probably just include those as a break-even prize. However, cash prizes also appear to be accounted for separately, so we are going to use the numbers after tickets provided as prizes have been taken out. This leaves us with $3,739,922,000 in total ticket sales from which there were $2,413,844,000 in prizes for an overall return to player of 64.54%. The result is lottery losses of $1,326,078,000 for the population of 9,687,653, for an overall loss per resident of $136.88.

One thing that we can take away from these numbers is that the loss per player of the State Lottery is likely largely attributable to the fact that the Lottery and Charitable Gambling are the only two legal forms of gambling in the State. We can see that the returns for the Georgia Lottery are very much middle-of-the-road, so there does not appear to be anything there that would tend to improve the loss per resident numbers.

The Georgia Lottery states that Gross sales from Instant Tickets were 2.727 Billion which would compare to Online Sales of 1.295 Billion. Again, that does not account for the tickets returned as prizes which the Georgia Lottery accounts for separately, so the result of that is going to be total ticket sales of 4.022B while the earlier figure had already accounted for non-cash prizes, which most State Lotteries do not tend to account for separately and just include them as overall prizes. In that respect, Instant Tickets represented 67.80% of total ticket sales while Drawing tickets represented 32.2%.

Idaho:

That brings us to the Lottery for the State of Idaho for which the Idaho Lottery's Annual Report.

Was cited on the aforementioned Wizard of Odds Page. The Annual Report shows a lack of enthusiasm for Draw Games which lost sales compared to the year prior while all other types of tickets increased in sales. Idaho actually has the best lottery report of all the states looked at so far because it breaks down the prizes from each ticket type along with the sales for each ticket type. In order to maintain consistency, we are only going to look at Instant Ticket and Online Ticket sales but not TouchTab ticket sales because they do not apply in other states.

The combination of Instant Ticket Sales ($129,822,624) and Draw Ticket Sales ($52,301,390) resulted in a combined $182,124,014 in sales for those two types of tickets. The ticket sales represented would indicate that 71.28% of the sales came in the form of Instant Tickets while 28.72% came in the form of drawing tickets. Instant Tickets also paid out $91,351,995 in prizes for a return to player of 70.37% while Drawing tickets paid out $27,077,998 for a return of 51.77%. The combined prizes are $118,429,993 for an overall return to player of 65.03% on these two types of tickets.

The result is a loss on these two ticket types of $63,694,021 on tickets purchased by players which, based on a population of 1,567,582 comes out to a lottery loss of $40.63 per resident on these two types of tickets. This number would actually be greater if we included Pull Tab and Touch Tab Ticket Sales, which both have a better return to player than the other lottery types, in fact, it would go up to $68,829,069 in Ticket Losses which would be $43.91/resident, but then that would no longer be an apples-for-apples comparison. You could make an argument for including those types of tickets, but then, you might back yourself into a corner because it might become prudent to include Video Lottery Sales for the states in which that is applicable, as well.

Illinois:

That brings us to the State of Illinois for which we just looked at the overall loss per resident without breaking it down any further on the other page. Once again, we want to get into some specifics for these purposes, so it is time to look at the Annual Gambling Report.

We have to go all the way down to Page 73 of the pdf in order to get a handle on how sales are distributed for the Illinois Lottery games. What we see is total revenues of $2,841,400,000 in sales for the Lottery from which $1,821,600,000 come from Instant Games. That represents that 64.11% of the Illinois Lottery sales are Instant Games. The Illinois Lottery stated that $1,699,600,000 was awarded to winners which results in a return to player of 59.82% overall making it the worst-paying lottery of any of the states considered thus far.

The result of that is total losses of $1,141,800,000 to Traditional Lottery Games in the State of Illinois which, based on a population of 12,830,632 is $88.99 per resident.

Unfortunately, what ccannot be gathered from the data is what the overall return is on the Instant Ticket games, however, based on the overall Lottery Return that is the lowest percentage of any state thus far combined with the fact that they are on the lower end of Instant Tickets as a percentage of sales compared to other states, I would suggest that it is probably largely consistent with the other states in that regard.

Indiana:

We are now going to take a look at the Lottery Revenues for the State of Indiana in order to determine how they compare to the others, particularly to the most demographically similar neighbor of theirs, Illinois, whose residents REALLY love to gamble. The interesting thing about Illinois is that they have all of the other forms of gambling available to them combined with one of the lowest lottery returns to player, and yet, the State Lottery still does extremely well on a loss per resident basis.

Once again, we just skimmed the surface with respect to the State of Indiana Lottery in the other Article, so now we are going to take a more in-depth look at how the state performs.

The State of Indiana was kind enough to break everything down for me on Page 4 of this Annual Report.

Which shows that they had Instant Ticket Sales of $759,457,779 and Online sales of $281,206,095 for combined sales of $1,040,663,874. Instant Ticket Sales would represent 72.98% of total ticket sales and paid out $525,052,162 in prizes for a total return of 69.14% on Instant Games while Online Games paid out a total of $145,927,864 for a total return of 51.89% in that regard resulting in a combined lottery return to player of 64.48%.

The total player loss would have been $369,683,848 on a population of 6,483,802 for a total loss of $57.02/resident.

While these are certainly not the staggering numbers we see in a State such as Illinois, it is still curious that Indiana would derive such strong Lottery Ticket Sales losses with so many other forms of gambling more-or-less relatively available to its citizens.

Iowa:

We will now take a look at the lottery loss per resident for the State of Iowa which was only briefly touched upon in the previous page. TheLottery Report for the State is actually done in the form of an Online Book using PageTurn Pro.

The lottery reports total sales of $324,767,416 for the 2015 Fiscal Year on Page 15 of the report. However, these numbers also include Pull Tab tickets which accounted for $16,045,073 resulting in $308,722,343 in what we will call Traditional Lottery Sales. Of these sales, $211,986,968 were Scratchers while $96,735,375 were Drawing Ticket sales. This represents sales of 68.67% for Instant games.

The report goes on to state that $137,660,011 was paid out in Scratcher prizes which represents a return of 64.94% on those, which is actually the lowest of any state so far for which data is available. We also have to subtract the payouts from VIP prize club, Promotional and Pull Tabs to arrive at total payouts of $186,460,520 which means that $48,800,509 was paid out in drawing prizes for an abysmal return of 50.45% in those.

The total payouts reflect an overall return of 60.40% for the Iowa State Lottery and total losses for the year of Traditional Lottery Gamesof $122,261,823 which, based on a population of 3,046,355 represents a loss of $40.13 per resident to the traditional lottery.

This actually represents the lowest loss per resident to the traditional lottery of any of the states which is not entirely surprising given the low returns to player combined with the other forms of gambling available in the state.

Kansas:

That brings us to Kansas which is one of the states with very few available forms of gambling compared to most of the others. For the Kansas Lottery, we took a look at something of a summary for the previous page and based the data off of that. In this case, we want to look as specifically as possible since this pertains to lotteries exclusively.

For this, we can look at the 2014 Annual Report which is the most recent one readily available.

On Page 4, we note total sales of $245,708,290 with total prizes of $138,741,873 which represents an overall loss of $106,966,417 with a return to player, overall, of 56.47%. By far, this is the worst returning lottery of any of the states that we have looked at so far.

It's actually going to get worse, because the lottery includes Pull Tab sales in its general sales figures. Unfortunately, those cannot be removed because the prizes are not broken down by game type anywhere in the report. Needless to say, the Pull Tabs likely pay better than the other forms of lottery which leads one to the conclusion that the Kansas Instant Games almost have to be worse than those of most of the states.

Fortunately, the sales percentages are broken down, but will be denoted with an asterisk on the bottom of the page because they are not going to include Pull Tab sales, and therefore, will add up to less than 100%. I would like to remove Pull Tab sales completely, but unfortunately, the report only gives me the ability to do that on the sales side, but not the prizes side, so I have to leave them in there in order to maintain consistency.

For that year, $122,480,122 was the total for Instant Game Sales which represents 49.85% of the total lottery sales, which could also help explain why the overall return to player is so awful. This leaves $111,666,420 in drawing game sales which represent 45.45% of total sales.

On Page 8 of the report, interestingly, the Kansas Lottery reports that they paid out 56.6% in total prizes, but that is slightly off based on their own numbers from earlier in the report. In any case, I am going to use the specific figures that they provided on Page 4 which, as anyone can do, results in a figure of 56.47% in player returns,The total lost by players was $106,966,417, again, which based on a population of 2,853,118, comes out to $37.49/resident.

This state actually lends a little bit to my original theory that if the returns for the lottery are terrible, less people will be willing to play. However, Kansans may not, on average, have the sort of disposable income that would generally lend itself to playing a lot on the lottery as does a state such as Connecticut or Florida. Though, it is interesting that the revenues per resident are a far cry from those of demographically and gambling law similar Georgia. Is it possibly due to the fact that Georgia has a significantly better lottery return to player?

Kentucky:

Kentucky , Kansas' neighbor in the alphabet, is also a demographically similar state to Kansas, so much like Georgia, it will be interesting to see what impact the lottery returns to player may have on the loss per resident to the lottery. For the previous page, we kind of glossed over Kentucky with the loosest of figures because more specific information was not required for that page as it is for this one. In this case, we are going to look at the full Annual Report of the Kentucky State Lottery.

The Kentucky Lottery is another one that accounts separately for Instant Tickets provided as prizes rather than looking at them as a dollar prize in and of themselves. While that is probably the most accurate and honest way to report that, because as we know, if every Instant Ticket actually WAS worth its face value the lottery wouldn't make any money, Kentucky is one of the few states to do it this way.

In any event, the State of Kentucky did $548,302,000 in Instant Ticket sales after taking out tickets used as prices as well as $338,628,000 in Drawing Ticket Sales for a combined $886,930,000 in total sales. The Kentucky Lottery returned $372,186,000 in prizes on Instant Ticket sales which represents a return to player of 67.88% on that ticket type compared to prizes of $184,090,000 on Draw games for a return to player of an uncharacteristically high 54.36% on those. The combined return is $556,276,000 which represents an overall return to player of 62.72%.

In terms of sales percentages, Instant Tickets represented 61.82% of total sales while drawing tickets made up the other 38.18%. The overall loss on tickets was $330,654,000 which, based on a population of 4,339,367 results in losses of $76.20/resident.

The Kentucky Lottery returns are better than those in Kansas and worse than those in Georgia, on a percentage basis. Both of those states are demographically similar to Kentucky and also very similar to the extent that there are not many forms of gambling available within the state. Along with the returns on the lottery, we also see that Kentucky performs worse than Georgia in terms of loss per resident, but they do perform better than Kansas.

Louisiana:

That brings us to the State of Louisiana which is very dissimilar to the last few states given the wide range of gambling options that the residents of the state enjoy. In this regard, it would not be a surprise if the lottery does not perform extremely well in terms of loss per resident, but on the other hand, Illinois and Indiana have stood out as major exceptions to this rule.

For the previous Article, we used half-year revenues as a basis for the Louisiana State Lottery and did an estimate from there by simply doubling all of the numbers. As opposed to doing that again, we will use the most recent comprehensive Annual Report available for the Louisiana State Lottery which can be found here.

In terms of total sales, we see that there were $448,967,865 on Page 20 after excluding other Operating Revenues and, 'Allowances for Uncollectible Accounts,' whatever that means. In any event, of these sales, $178,925,091 were Instant Tickets and that represents 39.85% of all ticket sales while 60.15% of all ticket sales were Drawing Tickets at $270,042,774.

Of these $448,967,865 in total sales there were total prizes paid out of $237,386,172 which represents an overall return to player of 52.87% which makes it one of the worst states by far representing losses of $211,581,693. The population of the state we used was 4,533,372 which results in Traditional Lottery losses of $46.67 per resident.

Instant Tickets actually returned $101,995,353 to players according to Page 31 of the report, which represents an overall return of 57.00% on those.

What is interesting about these numbers is that Instant Tickets have the worst return of any of the states for which Instant Ticket data is available so far, yet the lottery has a greater loss per resident than states that have higher overall returns, including one State (Iowa) which we know to have a better return percentage on Instant Games. One aspect of this that does make sense, however, is that the sales of Instant Tickets (as a percentage) are lower than any of the other states except one thus far, and they could be because the Draw games pay nearly as well.

Maine:

With respect to the State of Maine, in the earlier study, we kind of glossed over the lottery figures by way of using revenues derived from the State Revenue report. Obviously, we want to go more in depth than that for this study so we will attempt to use the most recent Annual Report from the State Lottery for our information.

The most comprehensive and readily available Annual Report for the State of Maine is that from the 2012-2013 period, so we are going to have to resort to using that. It can be found here.

Unfortunately, that is also the General Fund report which also glosses over the information relating specifically to the lottery. That brings us to the next report which is the liquor and Lottery Commission report for 2013.

This report shows lottery sales of $225,640,604 for that year from which $163,440,385 were Instant Game sales representing 72.43% of all sales while Draw Games accounted for $64,283,261 and 27.57% of all sales. The total prize expense was $142,683,224 which represents a total return to player of 63.23%, making it in line with the average. The return on Instant Games was $109,946,320 which represents a return to player of 67.27% on those.

It is clear that the overall return of the State Lottery for Maine has a lot to do with the fact that such a high percentage of the sales are in the form of Instant Tickets which pay better than others. In total, $82,957,380 was lost to the Lottery which, based on a population of 1,328,361 comes out to $62.45 per resident in Traditional Lottery losses.

While that may seem pretty high compared to other states with similar lottery returns, the best guess i can hazard is that Maine is a huge state with very few casinos, so there might be a loss for any other way to gamble for some residents.

Maryland:

Maryland is a state that, as of recently, has had many other available forms of gambling in addition to the lottery given the legalization and regulation of a few Commercial Casinos. On the other page, we did not go into a lot of detail with respect to the lottery because a comprehensive analysis was not required for that project given that we just needed estimates.

The most recent report available has data from the 2014 Fiscal Year.

On Page 40, we see that there was $1,244,359,000 in Draw Game sales and $479,632,000 in Instant Ticket sales for combined sales of $1,723,991,000 and Instant Sales represented a very low 27.82% of Ticket Sales while Drawing sales were 72.18%. The Lottery paid out $1,022,033,738 in prizes which is a return to player of 59.28% overall. The result is a loss of $701,957,262 on Traditional Lottery products which represents, based on a population of 5,773,552, of $121.58 per resident for that year.

Unfortunately, if there is a section of the report that differentiates Instant Ticket prizes from Draw ticket prizes, I cannot find it. However, it is pretty clear that the low return of this lottery stems from a significant preference of lottery players towards Draw Tickets as opposed to Instant Tickets. One might presume that some of those people who used to purchase Instant Tickets would rather visit one of the casinos as they enjoy a greater return to player on those games compared to Instant Lottery games. With respect to Draw Ticket games, one might assume that those style games compete less directly with casinos for business.

Massachusetts:

The State of Massachusetts is another one that offers pretty nearly the full gamut of gambling activities, as was also the case with Maryland, however, that clearly did not harm Maryland with respect to lottery loss per resident. We shall see if that trend continues with Massachusetts.

Unfortunately, the lottery submits what is called an Annual, 'Statement of Operations,' rather than a comprehensive financial report, so only limited information is available.

In this report, we see that total sales amounted to $4,863,373,000 from which $3,382,841,000 was derived from Instant Games meaning the other $1,480,532,000 came from Drawing games. That means 69.56% of the sales came from Instant Games while 30.44% came from Drawing games.

The State of Massachusetts only accounts for $3,515,623,000 in prizes in this report, unfortunately, it does not break down what prizes came from what games. However, we can note that the Lottery returned 72.29% overall. By far, Massachusetts had the best returning lottery so far in terms of percentages.$1,347,750,000 was lost to the Massachusetts Lottery during the year in question, which, based on a population of 6,547,629 results in a loss per resident of $204.99 to the Lottery in Traditional Lottery products.

By far, Massachusetts has both the greatest return on the Traditional Lottery product line as well as the greatest loss per resident to the State Lottery so far on Traditional Lottery products. While that may be attributable to the fact that it is largely a well-to-do state in which residents tend to have disposable income, it may also well be attributed to the huge percentages that the lottery returns...at least, compared to others.

Michigan:

Michigan is another example of a state that has many legalized and regulated gambling options for its residents as well as visitors to the State, but as we saw with a state such as Massachusetts, that does not necessarily stop people from playing the lottery.

We just did a quick summary of Michigan Lottery Revenues on the previous page, but we will now use the Annual Report for 2015 to get more in depth.

We are going to look at Pages 22-25 of the Lottery Report in order to determine the sales for Traditional Lottery forms in the State. In order to do that, we're going to subtract out Club Games and Other Games from their total as well as other, 'Operating Revenue,' just to get to the ticket sales. The result is $2,022,000,000 in total ticket sales which combine Draws and Instant Tickets. Of these sales, $1,031,700,000 were Instant Game Sales reflecting both Traditional and Internet Instant Games. Therefore, 51.02% of the sales came from Instant Tickets (in all forms) while 48.98% came from Drawing Tickets.

We have to apply the same standard for prizes which can be found on Page 25 and combine only Instant Prizes and Draw Game prizes to arrive at a total of $1,291,800,000 in prizes for these Traditional Lottery types which represents a return to player of 63.89% overall. We also see that Instant Ticket prizes accounted for $721,400,000 which means there is an overall return to player of 69.92% on those.

After all of this we arrive at an overall loss of $730,200,000 on all Traditional Lottery Products which, based on a population of 9,883,640, comes out to $73.88 per resident.

Given the return to player, MIchigan actually has a pretty strong loss per resident to the lottery, especially since so much of their revenue is derived from Draw Ticket sales as opposed to Instant Tickets which, again, tend to compete somewhat with casinos in terms of demographic. What seems to be apparent from the percentage contribution of Draw Tickets (nearly 50%) in the state as compared with other states is that the return of the Draw Tickets must be higher than it is in most other states for Michigan to maintain an average return to player of 63.89% on Traditional Lottery products despite how close Instant and Draw sales are.

In terms of loss per resident so far, Michigan is actually compatible with Kentucky, although Kentucky has a slightly lower overall return to player despite a greater percentage of their sales being Instant Games. Again, I think this is attributable to the Michigan Lottery paying a bit better than average on their Draw Games.

Minnesota:

The State of Minnesota is another for which only loose details were provided in the previous work, so it is time to get more in-depth for this lottery study. Page 6 makes it easy for us to differentiate between Scratchers and Drawing games and shows total sales of $546,900,000 from all Traditional Games with $376,200,000 coming from Scratchers and $170,700,000 coming from Draw Games. The result is that 68.79% came from Instant Games while 31.21% came from Draw Games. This page also shows that $335,200,000 was paid out in prizes for an overall return to player of 61.29% to players.

Fortunately, Page 24 also breaks down the Scratch Ticket sales and prizes in more detail and shows $376,195,747 in Scratch Ticket Sales against $249,885,363 in Scratch Ticket prizes for a return to player of 66.42% on those. While this is not as low on those types of games as a state such as Louisiana, it is certainly on the low end with respect to Instant Ticket return to player.

Ultimately, there were $211,700,000 in losses during the reporting period which, based on a population of 5,303,925 is a loss of $39.91 per resident to Traditional Lottery.

The Instant Ticket returns are not so much worse than other states as to jump out at one immediately, although, for the states for which we have Instant Ticket Return data so far, states with greater Instant Ticket returns to player also tend to have a greater loss per resident.

Missouri:

That will bring us to the State of MIssouri for which we skimmed the Annual Report in the previous page but will take a more detailed look here.

 

Page 16 will be the first source of numbers for us as we see that the state had $1,127,354,806 in total lottery sales and returned $755,428,901 in prizes which leads us to the conclusion that 67.01% was returned to players in overall prizes. This definitely puts MIssouri in the upper half of overall return to player on Traditional Lottery Products, but what remains to be determined is if that is due to a high return on Instant Tickets.

On the next page, we see that Scratchers accounted for $743,764,015 in sales while draw games accounted for $353,699,652, of course, Missouri also has Pull Tabs so we have to reconsider the total returns to player of the Traditional Lottery only. These two lottery types combine for $1,097,463,667 overall which means that Scratchers account for 67.77% of the Traditional Lottery Sales while Draw Tickets account for 32.23%.

Furthermore, we also see that there were $524,877,348 in Scratcher prizes compared to $203,725,703 in Draw prizes which is a combined $728,603,051 in total lottery prizes for Traditional Lottery. The two things that we can take from this are that overall Scratcher returns to player were 70.57% and actually, Draw games also returned comparatively well coming in at 57.60%. The overall losses by players totaled $368,860,616 on Traditional Lottery which, based on a population of 5,988,927 represents a loss of $61.59 per resident.

I would suggest that the loss per resident is partially due to a decent return on the overall lottery inclusive of Draw Games that pay slightly better than average and Scracthers that actually pay better than average.

Montana:

That brings us to the State of Montana which has a small population, but had huge Lottery Revenues pursuant to the earlier study. Of course, the reason for these revenues was the VIdeo Lottery which, much like in West Virginia and Delaware, generates significant revenues for the State. In this case, we want to determine revenues for Traditional forms of lottery only, so in order to do that, we need to look at the Annual Report.

The first thing that we will notice is that Scratch Ticket Revenue is a relatively low $17,531,453 compared to Draw Ticket Revenue of $34,792,457, but that is mostly due to the fact that scratchers compete for many players with the Video Lottery. As we saw based on overall Lottery Revenues for the State...this really isn't a problem for them!

In total, there was a total of $52,323,910 in total Traditional Lottery product sales with Scratchers making up 33.51% of those sales and Draw tickets making up 66.49%.

From the same page we also notice that Instant Ticket prizes totalled $10,475,269 for a player return of 59.75% while Draw tickets paid $18,781,202 for a return of 53.98%. The total in prizes was $29,256,471 which results in an overall return to player of 55.91% on the Traditional Lottery reflecting $23,067,439 in total losses. Based on a population of 989,415, the result is losses of $23.31 per resident to the Traditional Lottery.

When it comes to these figures, I think there are really two factors at play:The first one is that the returns of the Scratch Games are putrid, but the second is the popularity of the Montana Video Lottery, which is a characteristic shared with West Virginia. As we saw from the other project, the overall Montana Lottery takes in a whopping $425.37 per resident, so Traditional Lottery only accounts for less than 5.5% of the overall lottery revenues.

That is a positive development for both the State and the Lottery rather than a negative one because, as we can see from all of the states without a Video Lottery (almost all of them) there is absolutely no way the lottery would do $425.37 per resident without it.

Nebraska:

With respect to the Nebraska State Lottery, once again, we only touched upon that briefly on the previous study, but we will look at the Annual Report in more detail here.

Unfortunately, the Annual Report for the Nebraska Lottery is terrible and does not break down either Ticket Sales or Prizes into Scratchers as opposed to Draw tickets. As a result, the only nearly useless information we have available to us is Ticket Sales and prizes. We see that a total of $159,764,858 in tickets were sold with $94,626,442 paid out in prizes for a total return to player of 59.23%. Being sub-60% puts Nebraska on the lower end of overall Lottery Returns to Player and it shows because the Lottery only won $65,138,416 against a population of 1,826,341 for a loss of $35.67 per resident.

Of all of the states we have looked at so far with exception to Montana (who does HUGE Video Lottery revenues) Nebraska is the state with the lowest loss per resident to the Traditional Lottery thus far. That is hardly surprising given the crappy overall returns for the State Lottery.

New Hampshire:

The State of New Hampshire, again, is one that we just glossed over on the previous project to get an idea of how much there was in Lottery loss per resident.

If we look at Page 49 (Page 59 of the pdf) of the Comprehensive Annual Financial Report, we see that.

New Hampshire is kind enough to break down their sales and prizes for each individual game. The first thing that we will look at is overall sales of $281,131,994 (Total Revenue less, 'Other Revenues') against $176,415,353 in total prizes for a return to player of 62.75% placing it pretty firmly in the middle of the pack.

Of these sales, $208,938,625 were Instant Tickets which means that these contribute 74.32% of total sales meaning that Draw tickets account for 25.68%. Furthermore, Instant Ticket prizes were $141,186,490 which means that Instants had a return to player of 67.57%.

The total lost to the lottery per resident is $104,716,641 which, based on a population of 1,316,470 represents $79.54 per resident.

What we notice about these numbers is that they are actually extremely similar to Kentucky who also suffers for a lack of other gambling options within the state. Personally, I think the New Hampshire Lottery does relatively well due to a pretty good amount of disposable income for its resident combines with a middle-of-the-pack return percentage.

New Jersey:

One State that doesn't suffer for a lack of gambling options is the State of New Jersey, this State was only the second in the country to offer legalized casino gambling and also the first adopter of Online Gambling (in full casino form) so they are pioneers in both regards. Once again, we skimmed over the New Jersey lottery in the previous work, so now it is time to take a more detailistic look. We will start with the most recent complete Annual Report available which is 2014.

There is good news and bad news with Page 40 of this report, the good news is that they do differentiate their sales based on ticket type while the bad news is that they do not differentiate their prizes and just has a line item for overall prizes.

In any event, the overall Ticket Sales came out to $2,901,645,562 of which $1,531,771,568, or 52.79% comes from Instant Games, thus, 47.21% came from Draw games. Total prizes were $1,731,959,514 for a total return to player of 59.69%. Of course, this is slightly on the low end for overall returns, but that probably stems from the fact that a higher percentage than usual (also, slightly) come from Draw games as opposed to Scratchers.

The total losses were $1,169,686,048 which represent, based on a population of 8,791,801, of $133.04 per resident.

New Jersey is similar to Maryland in this regard because, despite the disparity in Traditional Lottery Sales Types, it is a state with many legalized and regulated forms of gambling, yet similar returns on the lottery per resident as well as a high number of lottery losses per resident.

New Mexico:

New Mexico is another state with a plethora of legalized forms of gambling, including a lottery, and we did some non-specific information in our previous study. We definitely want more specific information for this study so, once again, we will turn to the Annual Report for the state.

Page 11 of the Report (Page 17 of the pdf) is particularly useful as it breaks down the total sales and prizes for each of the lottery types. We see that Net Ticket Sales were $137,016,723 of which $79,956,236 were attributable to Instant Ticket Sales, or 58.36% which means 41.64% were attributable to Draw Games.

The overall return to player of the Instant Tickets was $45,678,174 which is a return of 57.13%. Interestingly, Draw Tickets returned $29,914,151 against sales of $57,060,487 for an overall return of 52.43%. That is actually partially due to the fact that Monopoly Millionaires Club (somehow) paid out in excess of 100% for the players that year.

In total, sales were $137,016,723 against prizes of $75,592,325 for an overall return of 55.17%. This definitely puts New Mexico on the low end of overall lottery returns and represents losses of $61,424,398 which, based on a population of 2,059,179 is a loss per resident of $29.83. This definitely goes along with an emerging trend that extremely low lottery returns to player result in reduced losses per resident.

New York:

That brings us to the State of New York which has both VLT's and Traditional Lottery Games. This is another state that was glossed over in the last project, so we are going to take a more in-depth look at it this time using the Lottery Annual Report.

If we go to Page 7 of the above report, we see that New York had $7,251,000,000 in Traditional Lottery Revenues of which $3,760,000,000 came from Instant Tickets for a contribution of 51.85% while Draw Tickets would have come in at 48.15%. These estimates will suffice for overall revenues since we are dealing in the billions and result in a loss of $2,854,054,000 to all the players which, based on a population of 19,378,102 results in $147.28 in Traditional Lottery losses per resident. The overall percentage return to player is 60.64%.

We will now look at specific data for Instant Tickets which represent $3,760,139,000 in sales against $2,572,353,000 in prizes for a total return of 68.41%.

The Traditional Revenues derived from the New York Lottery are huge, but due to its population combined with population density, it is very difficult to compare it with any other state. If nothing else, the overall Lottery Returns to player might be slightly low while Instant Tickets are about expected. Of course, Draw Tickets are also nearly 50% of the State Lottery revenue, so New York simply seems to be full of people who want to take their shot at the big money.

North Carolina:

The State of North Carolina is one of the least gambling friendly states as our earlier study would suggest, and again, we gave very limited information with respect to Lottery Revenues, which we will now look at more specifically by way of the Annual Lottery Report.

This report suggests that you are, 'Lucky to be in North Carolina,' which may or may not be true in the general sense, but is likely not so much the case if you are one of the players. Page 13 of both the pdf and the Annual Report breaks down the Lottery Revenue by game into both percentages and by game types. Overall revenues were $1,839,000,000 which is inclusive of $1,170,000,000 in Instant Games representing 63.62% of the revenue leaving 36.38% for Draw Games.

This page also states that $1,140,000,000 in prizes were awarded for an estimated loss of $699,000,000 for an overall return of 61.99%, placing the state in the middle of the pack. Furthermore, based on the loss and population of 9,535,483, we arrive at losses of $73.31 per resident. This makes it similar to either Michigan or Maine, but I would lean towards Maine due to the limited gambling options which are not the case in Michigan. Of course, Maine has a slightly greater return to player and a slightly lower loss per resident caused by increased Scratcher sales percentage (compared to Draw) as opposed to North Carolina.

In terms of specific Scratcher numbers, sales were $1,170,248,000 compared to prizes of $794,282,000 a return of 67.87% on those. Again, this puts North Carolina in the middle of the pack as compared to other states for which we have specific Scratch Off return to player data.

North Dakota:

That will bring us to North Dakota which is roughly similar to North Carolina in terms of gambling options, but perhaps has a few more choices. In any event, we did a quick analysis of the Lottery in our previous study and will now look at the Annual Report for a more in-depth look.

With respect to the North Dakota Lottery, they do not seem to actually have any Instant Ticket Games as all of their games on their Annual Report appear to be individually listed and, after researching each game type, are all tied to some sort of drawing game. In that sense, they had total sales of $27,010,263 and prizes of $13,978,818 for a total return to player of 51.75%, entirely Draw Tickets.

The losses of $13,031,445 against a population of 672,591 result in losses of $19.37 per resident. These pathetic loss per resident numbers are due, almost exclusively, to the fact that they do not have any Instant Games whatsoever and are preventing themselves from garnering any of the revenues from the, 'Instant Gratification,' segment of the market. On the other hand, given their population, North Dakota might be of the impression that there is simply no profitable way to offer Instant Tickets.

I would obviously disagree with an assessment like that and point to a comparable (demographically) state such as Montana and not just the fact that they do slightly better on overall Traditional Lottery revenues, but also the fact that their Video Lottery is absolutely killing it! In fact, I would even be inclined to suggest that North Dakota might not waste its time implementing Instant Games and simply establish a Video Lottery presence instead.

Ohio:

That brings us to the State of Ohio which, in recent years, has opened itself up to all forms of gambling which exception to Tribal simply because there are not any Tribally-Owned lands that have attempted to establish a casino. As with the other states, only a limited amount of information was given about the Ohio Lottery in the previous study, so we are now going to take a more detailed look at the Annual Report.

Pages 23-24 break down the Ticket Sales by product type and show $2,892,043,000 in total ticket sales with $1,550,962,000 of those sales being Instant Tickets which represent 53.63% of total ticket sales with Draw Tickets representing 46.37%. The total awarded in prizes was $1,875,258,000 which represents an overall return to player of 64.84%.

The Ohio Lottery is on the high end of the mid-range states in terms of the total lottery return to player, and the player losses of $1,016,785,000 against a population of 11,536,504 represent $88.14 per resident in Traditional Lottery Revenues.

Unfortunately, on Page 25 of the report (page 27 of the pdf) the Report put the TOTAL prizes in the spot where just the INSTANT prizes should have went, either that or Instant Tickets paid out substantially more than they took in, but I tend to doubt that. As a result, however, it is impossible for us to determine how much was actually in Instant Ticket prizes.

Fortunately, Page 51 of the Report, which is Page 53 of the pdf does have the correct prizes for Instant Tickets at $1,116,800,000 which results in a return to player of 72.01% on those.

This makes Ohio one of the best states in terms of returns on Instant Tickets and it shows in the form of a strong loss per resident performance on the Traditional Lottery Products. What is especially impressive is the Instant Tickets are also competing with Ohio Casinos and Racinos for revenue, though there is not quite as much competition there as there would be with a Video Lottery as the Ohio Casinos and Racinos are somewhat spread out across the State and are not convenient for many of the residents.

Oklahoma:

The State of Oklahoma is another state that has a few different forms of gambling and a demographic comparable to that of neighboring Kansas. We did a brief look at the Oklahoma Lottery on the last page, so now it's time to go a little deeper into the Annual Report.

Having a look at Page 5 of the report, which is Page 7 of the pdf, we see that the Oklahoma Lottery had $171,633,476 in overall revenues and paid out $87,782,927 in total prizes for an overall return to player of 51.15%. These losses of $83,850,549 represent, based on a population of 3,751,351 represent losses of $22.35 per resident to the traditional lottery.

There are some similarities to Kansas, New Mexico and North Dakota here in that the returns to player absolutely suck and so do the losses per player (potential profits) for the state in question. Page 10 of the pdf breaks down revenues by type and shows sales of $81,600,192 for Instant Tickets which is 47.54% of sales leaving Draw Tickets with 52.46%.

Furthermore, of those $81,600,192 in Instant Ticket sales, only $44,669,301 is returned in prizes which represents a 54.74% return to player on those. Again, this is worse than any other State so far and only goes to show that the players can recognize if they are being absolutely fleeced...and there is no question that they are.

Oregon:

The State of Oregon is another State with varied forms of gambling, mostly due to widespread Tribal Casinos as well as Video Lottery which, as we have found, tend to detract from Traditional Lottery loss per resident but are a huge plus for Lottery Revenues overall. Given that our previous study included all Lottery Revenues, we are now going to use the Annual Report to separate out data related to Traditional forms of Lottery.

As we can see from Page 21 of the Report, which is Page 27 of the pdf, the Video Lottery revenues account for a huge percentage of the overall revenues for the Oregon Lottery, but after subtracting those out, we are left with $318,659,593 from which we must also deduct, 'Other Revenues,' and then arrive at $318,277,155 in Traditional Lottery Sales.

Of these $318,277,155 in Traditional Lottery Sales, $119,578,108 are in Instant Tickets which represent 37.57% of Traditional Lottery Sales with Draw games making up the other 62.43%. The total in prize payouts is $211,444,280 which represents 66.43% in return to player on Traditional Lottery Games. That actually makes Oregon one of the better states in this regard.

The overall loss by the players to Traditional Lottery is $106,832,875 which, based on a population of 3,831,074 represents a Traditional Lottery loss of $27.89.

Again, the low percentage of Instant Ticket Sales along with low Traditional Lottery revenues overall is hardly surprising coming from a State with a Video Lottery. This is proven by the fact that Oregon (as per the previous study) was in the Top 10 with respect to overall Lottery revenues.

Unfortunately, the report does not appear to differentiate Instant ticket prizes from Draw prizes and lumps them all together. Needless to say, Oregon does still appear to be one of the better returning lotteries overall, so the Instant Tickets are probably consistent with that trend.

Pennsylvania:

With respect to gambling, Pennsylvania is most comparable with Ohio in terms of the types of gambling allowed along with the distribution of casinos compared to both the population and geographically dense areas with respect to population. As a result, it would hardly be a surprise if the Pennsylvania State Lottery did somewhat comparably with Ohio in terms of Traditional Lottery Revenues. Again, we glanced at the information for this lottery in our other study, so we will take a more detailed look at the Annual Report now.

Conveniently, the report breaks down the percentages in terms of Lottery types, but does not seem to differentiate prizes between one form of traditional lottery and the other. Sales were $3,819,642,911 for the year with $2,591,597,309 of those, or 67.85% of those coming from Instant Tickets as opposed to 32.15% for Draw tickets.

The overall prizes for the lottery were $2,411,651,816 which results in a return to player of 63.14% and total losses of $1,407,991,095 for a total loss per player, based on a population of 12,702,379 of $110.84. Much like Ohio, this is on the high end of the losses per player even though the returns to player are pretty average. It is really difficult to pinpoint a reason for this, but if I had to hazard a guess, I might suggest that some of the casino-goers who do not live close enough to one of the casinos to make it convenient occasionally by a Scratcher to, 'Scratch the itch,' if I may.

Rhode Island:

That brings us to Rhode Island which is a gambling friendly state, although, there are only two casinos. Of course, as we all know, Rhode Island is quite geographically small, so two casinos might be all that is needed. As with many other States, we took a quick look at the Lottery Revenues on our previous project, so we will take a more comprehensive look at the Annual Report now.

Before we delve too deeply into it we will recall that Rhode Island is another Video Lottery state, and therefore, we will have to differentiate Video Lottery revenues from Traditional Lottery Revenues.

Page 21 of the Report, which is Page 26 of the pdf has what we need with respect to determining the revenues from the Traditional Lottery types which include $152,565,645 in Drawing games along with $90,526,129 in Instant Games. The total is $243,091,774 in Traditional Lottery sales with 37.24% coming from Instant Games and 62.76% coming from Draw games.

Page 30 of the Report, which is Page 35 of the pdf combines Instant and Draw Ticket prizes into one figure which is $150,062,564 which represents a return to player of 61.73%. The losses would then be $93,029,210 which, based on a population of 1,052,567 of $88.38 per resident.

On Page 62 of the Report, which is Page 69 of the pdf, we see that Instant Tickets paid out $61,474,504 which represents a return to player of 67.91% on those. Of course, the overall return of the total Traditional Lottery is still very mediocre because Instant Tickets represent a small percentage of sales compared to Draw games due to competition with the Video Lottery.

Either way, we see similar numbers from Rhode Island that we do from other states, such as Pennsylvania and Ohio (mainly Ohio) with other forms of gambling comparable to those of Rhode Island.

South Carolina:

South Carolina probably only begrudgingly has a Lottery as the state is extremely hostile towards most forms of gambling. I was pretty thoroughly disgusted with the state when I did the earlier project, so I highlighted their Lottery Revenues as briefly as possible. Clearly, a more in-depth look is going to be required, and for that, we'll need to look at the Annual Report.

Fortunately, I cannot argue with the breakdown on Page 4, which is Page 10 of the pdf, as it gives me exactly the information that I want all in one place. We see that the total revenues for the State Lottery were $1,401,700,000 which are inclusive to $1,002,500,000 in Instant Game Sales and $399,200,000 in Draw Games.71.52% of the revenues were from Instant Sales while only 28.48% were from Draw tickets.

The total prizes were $924,100,000 representing $727,100,000 in Instant Ticket prizes and $197,000,000 in Draw Ticket prizes. Instant Tickets returned 72.53% while Draw Tickets returned 49.35%. The overall returns were 65.93% which represents a high proportion of Instant Ticket Sales for this state which also has the best return on Scratchers thus far. For a state so generally hostile to gambling, they sure try to give players a chance on those scratchers!

Overall, losses were $477,600,000 which, based on a Population of 4,625,364 are $103.26 per resident. Personally, I attribute these Lottery Returns to the fact that the Scratcher Returns are so good compared to other state lotteries and players continue to, 'Buy back in,' figuring they have a reasonably good chance of winning. Of course, a Video Lottery would nullify this effect somewhat, but it would make so deliciously much more money.

South Dakota:

South Dakota is another example of a State that is pretty open to gambling and allows for just about all forms of it. Once again, the information on the South Dakota Lottery was not too specific in our previous study, so we are going to seek to rectify that here by taking a harder look at their Annual Report.

The first thing that we will notice is that South Dakota is another Video Lottery State and the performance of the Video Lottery is absolutely unbelievable. It is because of this Video Lottery that South Dakota is one of the Top Ten Lottery States in the country by revenue per resident. Aside from that, Page 5 of the Annual Report, which is the right side of Page 3 of the pdf, gives us exactly what we are looking for.

Instant Ticket sales were $25,839,734 and Draw Ticket Sales were $25,340,133 which combine for a total of $51,179,867 in total sales of which Instant Tickets account for 50.49% while Draw Tickets account for 49.51%.

Instant Tickets had $16,929,551 in prizes compared to $12,814,156 in prizes for Draw Tickets. As a result, the total return to player was $29,743,707 for 58.12% overall with Instant Tickets returning 65.52% compared to Draw tickets returning 50.57%.

In both cases ,these returns are somewhat on the low end and with total losses of $21,436,160 against a population of 814,180, losses were $26.33 per resident.

Again, these low revenue numbers are hardly surprising when we consider that South Dakota has a Video Lottery whose revenues are through the roof and, taken alone on a loss per resident basis, would utterly destroy the Lottery Revenues of most other states.

Tennessee:

That will bring us to Tennessee who, but for the fact that they deign to have a State Lottery, would be one of the least gambling friendly states out of all of them, up there with the likes of Utah and Hawaii. Before briefly describing the lottery revenues, I sarcastically pointed out that even Charitable Gambling is illegal in Tennessee because all forms of gambling are, that's what the law says, so they evidently do not consider players buying State Lottery tickets to be gambling.

Let's get to the Annual Report before this state upsets me all over again.

In their non-comprehensive joke of an Annual Report, we see that Tennessee had $1,475,000,000 in total sales with $981,400,000 in total payouts reflecting a return to player of 66.54%. Of this, $1,220,122,000 came from Instant Games which reflects 82.72% of total revenues with Draw games garnering 17.28%.

As much as I hate to admit it, this Lottery actually pays relatively well, at least, slightly above average overall but that is likely due to the huge proportion of ticket sales that are Instant Games. Unfortunately, the State does not break down the prizes by type, so that will lead us to our overall losses to players of $493,600,000 against a population of 6,346,105 which results in a loss of $77.78 per person.

Compared to States with similar gambling options (Read: None) I would attribute this loss per resident to the fact that the returns of this lottery are actually pretty good, furthermore, residents also seem to understand that they are getting a better deal with the Scratchers than they would be with the Draw tickets.

Texas:

Texas is generally an unfriendly state to gambling despite one of the most well-known Poker Games (with Draw Poker as, perhaps, an exception) Texas Hold 'Em being named after the state. Anyway, we did a really quick summary of the Texas Lottery for our previous project, so now it is time to get more in-depth by looking at the Annual Report.

They say, 'Everything's bigger in Texas,' but if my previous study on the Texas Lottery is correct, they have a fairly mediocre loss per resident.

Page 29 of the Report, which is Page 32 of the pdf, shows $4,529,700,425 in Lottery Ticket Sales with $2,858,319,408.66 paid out in prizes which we will just round up to the nearest dollar. As a result, the overall return to player was 63.10% which places the state pretty firmly in the middle of the pack on overall return. The losses for the players of $1,671,381,016, based on a population of 25,145,561 come out to $66.47 per resident which is also somewhat middle of the pack in that regard.

Unfortunately, unless I am missing something, nothing in the report seems to differentiate between Instant prizes and others, but Page 12 of the report, which is Page 15 of the pdf, would indicate that $3,280,000,000 of the sales came from Scratch Ticket Games which would represent 72.41% of total sales with the remaining 27.59% going to Draw Games.

Vermont:

We will now take a look at Vermont which is not a terribly gambling friendly state, the first thing that we will notice is not that many forms of gambling are allowed by the state, but based on the previous study, the lottery returned about 65% to the player overall and had a reasonably decent loss per resident. The numbers were actually pretty close to those of Texas. With that said, the time has come to take an in-depth look at the Annual Report.

The total sales were $111,754,881 of which $85,510,664 were Instant Game Sales according to Page 3 of the pdf. This represents Instant Game Sales of 76.52% leaving Draw Tickets to account for 23.48%. Total prizes were $72,710,332 which represents an overall return to player of 65.06%.

The total lost by players would then be $39,044,549 which, based on a population of 625,741, is $62.40 per resident.

On Page 12 of the pdf, we see that Instant Ticket prizes were $58,333,653 which would result in a return on those of 68.22% which is a little better than average.

Virginia:

The next state up is that of Virginia which has not proven to be a terribly gambling friendly state in the past, although, they were one of the first states to decide to formally legalize and regulate Daily Fantasy Sports. In any event, we have to go the full Annual Report to get the data we need for that state.

Page 5 of the pdf breaks down the sales into different types of sales for us which saves me a little bit of work. The State did $1,810,820,000 in sales with $988,590,000 coming from Scratchers for a total of 54.59% from those and 45.41% from Draw Tickets. The Lottery paid out $1,082,470,000 in prizes for a total of 59.78% return to player, largely due to the somewhat low proportion of scratch off tickets sold.

In any event, the lottery won $728,350,000 from players that year which, based on a population of 8,001,024 would be $91.03 per resident. The Annual Report does not appear to differentiate between prize types.

Virginia is one of the cases where my theory on better returning lotteries generating better losses per player kind of breaks down, although the theory still seems to hold water in demographically similar states with hugely disproportionate lottery returns. The only thing I can say about Virginia is that these numbers put them in a class of their own.

Washington:

Washington is something of a unique state in that it has card rooms as well as Tribal Casinos but does not have any form of slot machines in their licensed and regulated card rooms while the machines at the Tribal Casinos are Class II VLT's, which are also known as Electronic Bingo machines. Once again, we skimmed over the lottery data on the last project because all we needed was an average loss per resident, but now we can look at the Annual Report in a more detailed way.

Page 18 of the report, which is Page 22 of the pdf actually breaks down the information we want rather nicely. The first thing we will notice is that Instant Ticket Sales are $404,100,000 and Draw tickets are $196,300,000 for a total of $600,400,000 of which Instant Tickets account for 67.31% while Draw Tickets account for 32.69%.

Instant Tickets accounted for $267,400,000 in prizes for a return of 66.17% on those while Draw Tickets accounted for $98,500,000 in prizes for 50.18%, total prizes were $365,900,000 for an overall return of 60.94%.

Total losses were $234,500,000 for players which, based on a population of 6,724,540, is a low $34.87 per resident.

What we will notice about this state is that the overall returns of the lottery tend to be pretty low as well as the total lost by players.

West Virginia:

The State of West Virginia is another state that is known for its extensive Video Lottery operations and that is one of the reasons that Lottery Revenue was so high for this State. Furthermore, casinos also fall under the jurisdiction of the State Lottery as there is no separate Gaming Division or anything along those lines. Obviously, we barely mentioned Traditional Lottery Sales for the state in the previous page because, in and of themselves, they simply were not relevant for that study. With that, we go back to the Annual Report.

Fortunately, Page 20 of the Lottery Report, which is Page 34 of the pdf has everything we need to determine the figures for Traditional Lottery Sales and prizes. We will start with sales which were $103,276,000 for Instant Games and $76,724,000 for Draw Games for a total of $180,000,000 of which Instant Games accounted for 57.38% leaving Draw Games to bring up the other 42.62%.

Total prizes for Instant Games were $68,314,000 which resulted in a return to player of 66.15% on those and a return to player of $38,162,000 on Draw Games for 49.74% there. Overall, prizes were $106,476,000 which is 59.15%.

In total, players lost $73,524,000 to Traditional Lottery games for a total, based on a population of 1,852,994, of $39.68 per resident. These low figures are attributable largely to the State's Video Lottery proceeds which represent a significantly greater source of revenue due to their extremely widespread availability and popularity.

Wisconsin:

Finally, that brings us to Wisconsin as the Wyoming data is not available online. We briefly looked at the state in the previous Article and will now take a more in-depth look at the Annual Report.

Page 4 of the report, which is Page 10 of the pdf breaks down the ticket sales which were $568,800,000 total representing $339,000,000 in Instant Games and $229,800,000 in Draw Games. In this case, Instant Games accounted for 59.60% of sales while Draw Games made up 40.40%. The Lottery returned $336,700,000 in prizes which is a return to player of 59.19% overall.

In total, players lost $232,100,000 to the lottery which, based on a population of 5,686,986, is a loss of $40.81 per resident.

The Lottery paid $220,600,000 in Instant prizes according to Page 23 of the Report, which is Page 29 of the pdf, which is a return of 65.07% on those.

Conclusion

*Based on 41 States, Three States not Available
**Based on 41 States, Three States not Available, results do not add up to 100% based on other exclusions for other lottery games.
***Based on 27 States, 17 not available.

Some lotteries perform much better than others

The first conclusion that we can draw is that there is no one factor that explains why some lotteries perform exceptionally well and not others, Virginia is one lottery, for example, that it would be very difficult to explain as it has a slightly below average return to player (99.07%) but absolutely dwarfs the average State in Traditional Lottery Revenues (134.8%). The best way to even conceivably account for Virginia would be to suggest that players are simply drawn to the lottery given that there are not many other types of gambling available readily. That would seem to be the case in similarly gambling situated states such as South Carolina and Tennessee.

In that sense, one conclusion that we can reach, and perhaps an obvious one: Lotteries compete with other forms of gambling within the borders of their own states. In some cases, lotteries even compete with themselves in the sense that Traditional Lotteries are jockeying to maintain a share of the overall Lottery market in states that have Video Lotteries.

The one take away that we have from Draw Games is that, while they may represent wildly varying percentages of Traditional Lottery Revenue on a state-by-state basis, there is largely a market for them and will continue to be a market for them. This is especially true when one considers Multi-State Lottery Games such as PowerBall and Mega Millions which give players a chance (albeit small) of nearly inconceivably large jackpots for a purchase of a buck or two per ticket. These sorts of games are not only popular, but they are also remarkably efficient as they just require the network, some printers, some paper and some ink. Furthermore, people who are going to play these types of games, for the most part, will continue to play them regardless of what else is out there because this is the sort of game they want.

Furthermore, it is no surprise that there would be a market for such games. Even though the hold on the tickets is extremely high, those numbers, up until the drawing, represent a dream of unbelievable fortunes for many people. Furthermore, while many (including myself) obviously consider those tickets a bad bet, they actually have a really low Expected cost per hour. Consider a player who buys his/her ticket 36 hours before the drawing, while that player may be losing roughly $0.50 per dollar bet, that actually represents a loss of less than $0.02/hour, which would be the loss per hour of an unbelievably good Video Poker game!

I am certainly not suggesting that these tickets are a smart bet for this reason, they are not a smart bet at all, I'm rather suggesting that I can understand why people might be drawn to these sorts of tickets. It is a really cheap fantasies that, unlike many fantasies, has a very outside chance of becoming a reality and has, for many. Of course, those realities have also turned into nightmares in many cases.

Scratchers

With respect to the Scratchers, the interest in them is really difficult to understand, and for the most part, seems to wane when there are casinos and, most especially, Video Lottery games within a given state. Of course, the Expected Loss Per Hour while playing the scratchers is insanely high, yet if you go to enough gas stations in lottery states, you'll eventually run into somebody holding up the line buying and/or cashing them by the dozens...sometimes with 98%+ Video Poker within a mile or two of him/her! It's a really bizarre form of gambling and among other things I have seen, I have noticed that some players will only scratch off the bar code and then scan the ticket to determine if it is a winner rather than scratch of the symbols, Bingo or Crossword Puzzle, whatever the case may be. This is interesting behavior to me because it makes it abundantly clear that the player is just hooked on the act of gambling on these sorts of tickets and doesn't actually care about the, 'Game,' aspect.

However, one way that scratch off tickets will eventually go the way of the dodo bird, at least to a large extent, is by the implementation of widespread State Regulated Video Lottery in all of the Lottery states. As we saw from the related work on the other page concerning state-by-state gambling friendliness, there is an unbelievable amount of revenue to be had by states that have not yet implemented a Video Lottery. In my opinion, it is insane for any state not to do it because of the crazy revenues that are generated by these machines!

Getting back to Scratchers for a second, while they are definitely not a smart play, it is clear from the Scratcher returns and overall revenues for some of the states that players know when they are getting absolutely taken to the cleaners on the Scratchers and will quit playing. Just look at the above chart and you will clearly see that most of the states with the lowest returns on Instant Tickets also have some of the lowest losses per resident.

I do not believe that this is a complete coincidence. Imagine if you had a game such as 9/6 Jacks or Better v. 9/5 Jacks or Better, without going to a gambling website or talking to a friend, many Video Poker players do not even know what the difference between these two games is, and quite frankly, the disparity in what a player playing one game as opposed to another will experience in terms of overall loss (over a relatively short number of plays) is not so great that the player will immediately notice. For my part, I firmly believe that an Instant Lottery player intuitively knows that a set of Instant Game sucks compared to others when one set of games pays in the mid-high sixties and another set pays in the low-mid fifties. There really is enough of a difference in those sets of games that it likely can be noticed within a reasonably small number of plays.

With that I would encourage all of the states with horrific returns on Instant Games to stop being so greedy! Take a look at Massachusetts with their leading losses per player in Traditional Lottery products and realize that their games, in total, pay more than 70% overall! You're trying to slaughter the calf right now as opposed to milking it for a lifetime and it really isn't working for you, the players know that your games absolutely suck and I hope they stop playing until you change that and issue a formal apology.

In terms of factors beyond the presence of casinos, Video Lotteries and Instant Game Returns, it is difficult to speculate what the difference is between one state lottery and another. I think one aspect that could make a difference is simple demographics as we see in some of the states that would tend to have fairly high disposable incomes and strong lottery returns to go with them. Aside from that, it also seems like some of the states that are not otherwise big on gambling have decent lottery losses per player, probably for lack of any other way to gamble. However, I would also accept the possibility that some State Lotteries simply have better advertising departments than some others and that could make a difference.

Every single state without a Video Lottery could do so much better, though, by having a Video Lottery and that is a point I cannot stress enough. This is especially true of states that have border states in which the neighbor has a Video Lottery and you don 't, I can all but guarantee that millions of dollars are being lost to that other state! The opportunity to implement a Video Lottery is at your discretion (or perhaps that of the Legislature rather than the Lottery Department) but it is definitely something all of the States need to look into if they haven't already.

Convenience Gambling Makes Big Bucks

I have said this many times before: Convenience Gambling Makes Big Bucks, it really is that simple. If you want a player to play one of your Video Lottery terminals, then simply do everything you can to make sure there are a number of them available within a mile of him if he lives in a reasonably populated area. I can absolutely guarantee that with very few (or perhaps no) exceptions that, 'If you build it, they will come,' to quote field of dreams. The proof is in the pudding and the pudding is in the bowl! If you tried to show me a Video Lottery state that is not in the Top Ten in losses to the Lottery Department on a per resident basis you would not be able to do it because all such states absolutely KILL in lottery revenues.

The Video Lottery is an unstoppable force in the states that have implemented it and represents the single biggest, 'Tax on the willing,' that is out there. In the meantime, they are also capable (and always do) offer greater returns to player than the traditional lottery while simultaneously generating employment and small business ownership! Convenience Gambling is a win-win situation for the State because the State does not even really manage it, unlike the Traditional Lottery. All the State has to do is the audits to ensure that they are getting paid their percentage of the revenues after payouts have been made.

Granted, if a State that did not previously have one were to institute a Video Lottery, then that State would effectively be competing with itself because the numbers in the chart above bear out the theory that the State is effectively using the Video Lottery to compete with itself on Instant Ticket Sales. However, this fact is completely irrelevant because the Video Lottery will win that competition by a TON and the State will derive revenues that it had previously never dreamed of. Furthermore, since most Video Lotteries are run by operators (parlors/bars/private clubs) that otherwise have nothing to do with the State, the State's costs are relatively minimal when offering this type of lottery.

In fact, not only do most of the States take in a percentage of the overall revenue from these machines, but they also charge licensing fees in some cases which can also be a significant source of revenue. Furthermore, States might also charge a flat fee per machine as well as taking a percentage of the revenue. These fees are fees that the operators are going to be more than happy to pay because they know that they will generally make money in the long run provided that they can compete successfully with the other Video Lottery operators in other regards.

For instance, the Video Lottery is so widespread in West Virginia that it is a rarity to see a tavern or private club without the red sign stating, 'West Virginia Lottery Products Available Here,' in fact, there are even restaurants (such as Perkins, a major chain) as well as pizza places that have Video Lottery terminals in their establishments. The Video Lottery is an unbelievable source of revenue and it is difficult to come up with any logical conclusion as to why a state would not want to offer it if the goal of the state is to maximize revenue. In my opinion, that should be the goal of the state because fiscally successful states are run in much the same manner as businesses, and it should be the goal of any successful business to try to achieve new means of deriving profits.

In the meantime, the States with laughable lottery returns to player should take a look at the above chart in an effort to determine if they might not generate more revenues by way of being a little bit more reasonable with respect to their return percentages. I think they would be surprised by the type of...I don't want to say loyalty, but....the type of repeated play that can be fostered by simply giving the players the illusion that they have a chance of winning. It is that very illusion that works in casinos every day with exception to Advantage Players, of course. It is also the illusion of life-changing money, which actually becomes a reality for very few, that keeps people purchasing those Draw tickets for extremely long-shot jackpots like Mega Millions and Powerball.

With respect to other types of Draw Games, such as Pick 4 or Pick 3, it is difficult to say without doing a research page specifically on those whether or not a better return to player actually makes much of a difference. In the cases of those games, unlike Instant Tickets, a greater payout does not necessarily improve one's chances of winning something on one such ticket. The player is still simply picking three or four numbers straight or box, so losing on a good many of them in a row is something that the players largely expect...and those are the ones who like such tickets.

That actually brings us to another fundamental point with respect to the mentality of the long-shot type lottery players, and that is the mantra of, 'Hope to win, expect to lose.'Powerball players, for the most part, do not expect to do anything except lose and the expect to lose almost constantly. You'll often hear someone purchasing a PowerBall ticket joke, 'There goes two dollars,' as soon as they have completed the purchase. I do not think that this sentiment is necessarily shared by Instant Lottery players who, by and large, fully expect to win sometimes. Again, fleecing these players with pathetic returns that any casino or reasonable individual would be embarrassed to offer is not going to be a successful means of getting repeat business.

Ultimately, I hope this page will be a useful tool for people to understand the State Lotteries and to make sense of what their lotteries might be able to do to improve, or alternatively, serve as an example of what their lotteries are getting right. For those who are not overly concerned with the lottery's performance in their state, then I just hope that this thoroughly researched page makes for some interesting reading. If you have any questions or suggestions for further study, then come find me on WizardofVegas.com and set up a Membership (if you don't already have one) and PM Mission146. As always, thank you for reading and make sure to encourage your Congressman or Congresswoman to institute Video Lottery in your state as it will be an unbelievable source of revenue!

Written by: Brandon James