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.