Despite last month's record Powerball jackpot spiking sales in Oklahoma, lottery officials Tuesday approved a revised budget that shows education in the state will receive nearly $500,000 less than estimated earlier.
Latest estimates now show education getting $64.3 million from the lottery, down $433,650 from the $64.7 million figure lottery trustees approved in June.
“We're expecting sales to be down because of the prize payoffs on the instant tickets,” said Rollo Redburn, the lottery's executive director.
State law requires 35 percent of lottery earnings to go to public schools, higher education, the teachers retirement system and the school consolidation fund.
The amount for public education in the state is still about $3.7 million more than originally estimated, he said. Lottery officials originally projected education would receive $60.5 million in the 2013 fiscal year, which began July 1.
Earnings overall drop
Overall earnings for the lottery are projected to be about $183.7 million for the 2013 fiscal year, which is down from $199.9 million a year ago. Sales of instant tickets, also called Scratchers, have been lagging. They're projected to bring in about half the revenue this fiscal year for the Oklahoma Lottery Commission.
Sales of Powerball tickets sold at a frenzied pace in Oklahoma the two weeks before last week's record jackpot was won by two players: one who bought a ticket in Missouri and another who bought a ticket in Arizona, Redburn said. Half the Powerball ticket sales in Oklahoma go into the prize pool, and the other half goes to the Oklahoma Lottery Commission to pay for its expenses.
Jay Finks, director of marketing and administration for the lottery, said Powerball ticket sales normally run about $1 million a week in Oklahoma.
Powerball sales for the two weeks before last week's winning drawing were about $11 million, he said.
Redburn said the Oklahoma Lottery can't depend on record jackpots. The lottery was helped during the last fiscal year when Megamillions had the biggest payout in U.S. history. In March, the prize hit $640 million, and the winnings were shared among three ticket holders in Illinois, Maryland and Kansas.
Expenses hurt prizes
Increasing operating expenses, along with the state requirement that 35 percent of Oklahoma lottery earnings go to education, have reduced the amount of prize money and the frequency of winnings for the Oklahoma lottery games, he said.
Sales of Scratcher tickets are declining mostly because the prizes haven't increased, he said.
“If prize payouts remain the same or prize payouts go down, then your sales are going to go down and your profits are going to go down,” Redburn said. “We predicted this year but who could predict a world record Megamillions jackpot? Megamillions kind of bailed us out a little bit last year. Powerball's bailing us out a little bit this year.
“But the Scratcher tickets are already taking it a little bit on the chin,” he said. “They're already showing a decline.”
Trustees encouraged Redburn to talk with lawmakers about removing the 35 percent requirement. Such a move would allow the lottery to offer higher prizes and as a result generate more money for education, Redburn said.
Trustees approved an estimate of $58.8 million that the lottery will provide to education in the 2014 fiscal year. The lottery provided $70.2 million to education the previous fiscal year.
Redburn said the downward spiral will continue. The Oklahoma Lottery could see the rate it pays to vendors for instant and online gaming services nearly double when a new contract is awarded in August.
The Oklahoma lottery has avoided reducing the prizes it offers for its games by reducing operating expenses, Redburn said. The number of employees has dropped from 38 to 28 in the past three years and it has reduced its annual advertising expenses from $5.8 million to less than $2 million during the same time period.
Lowering prizes will cause those who play Oklahoma lottery games to wander off to other attractions, such as casino gaming or sports betting, he said.