Your Opinion: Lottery director responds
Sunday, March 20, 2011
I would like to respond to your editorial on March 10 regarding the Missouri Lottery’s advertising budget. The Missouri Lottery is 100 percent self-funding. Money for Lottery operations comes from ticket sales, not taxes or General Revenue. If the Lottery doesn’t receive legislative approval to use $8 million for advertising, that $8 million isn’t sitting in a fund to be transferred elsewhere. Appropriating $8 million in Lottery advertising does not take money away from other programs or General Revenue.
Conversely, spending the $8 million from sales we generate creates up to three times that amount for public education. We know advertising dollars create this 3 to 1 return based on our historical weekly sales tracking. We can easily see that advertising is working. Scratchers sales alone are expected to rise from $638 million to nearly $660 million this year.
During the past few years, Lottery sales have been flat. The reasons include: the Great Recession; high unemployment; competition from new lotteries in contiguous states; gas prices; the trend to pay at the pump; and a lack of sufficient advertising to promote new games.
Advertising is a “best practice” for any business, especially one that competes at retail with other consumer goods. Even at $8 million in FY11, the Missouri Lottery’s advertising media budget as a percentage of sales is the lowest of any contiguous lottery state and is one of the lowest in the nation.
Lottery profits have not reached the point of diminishing returns, and the Lottery’s advertising certainly has not. Annual Lottery profits have declined four of the past seven years and were expected to decrease to $235 million in FY11 without any additional advertising dollars. Lottery advertising plays a key role in helping offset losses from things like higher gas prices and a struggling economy. The Lottery, like any billion-dollar business, must continue to advertise to help grow its customer base.
I have no doubt sales so far this year would be drastically lower, if not for the additional advertising money. The sole reason the Lottery exists is to raise money for public. It does not make sense to limit our ability to increase those revenues by reducing our ability to advertise.