Lottery Retailing


Many ancient documents document the practice of drawing lots to determine the ownership of property. In the late fifteenth and sixteenth centuries, this practice became widespread throughout Europe. In 1612, King James I of England started the first lottery to provide money for the settlement of Jamestown, Virginia. Other public and private organizations soon began using the funds from the lottery to fund towns, wars, colleges, and other public-works projects. Today, over half of the U.S. population participates in a lottery.

According to a study, about half of lottery players play more than once a week. Another fifth play a few times a month or less often. In South Carolina, those who are frequent lottery players are high-school educated men from middle-class families. It is important to note, however, that the NGISC’s final report does not provide any evidence that lottery officials target poor people. After all, marketing to the poor is unwise from both a political and business standpoint. In addition, people are most likely to purchase lottery tickets outside of neighborhoods where they live. Unlike low-income areas, high-income residential areas generally have fewer stores, gas stations, and lottery outlets.

A few decades after the Civil War, lottery sales in the South increased in the aftermath of the war, especially in the southern states. The Louisiana lottery became so popular that the state legislature granted exclusive provider status to the Louisiana Lottery Company. In exchange for a promise to donate $40,000 a year to a local charity hospital, the lottery company was able to keep the revenues. The lottery company did not pay taxes on the lottery revenue, making it a profitable business for the Louisiana lottery operators. The lottery company brought in about 90 percent of its revenue from outside the state, leaving a 44 percent profit for the operators.

In addition to the commissions that retailers receive on each ticket sold, the lottery retailers also receive incentive-based incentive programs. New Jersey’s lottery recently introduced an Internet-based portal for lottery retailers where they can read game promotions, ask questions, and view individual sales data. And Louisiana introduced a lottery retailer optimization program in 2001. Through the program, lottery officials provide retailers with demographic data that help them improve their marketing and sales. In many states, lottery retailers do not have to have a website, although it is possible to find some lottery retailer websites that offer this service.

In FY 2006, the United States government allocated more than $17 billion in lottery profits to different causes. The most popular beneficiaries included the education sector. With New York topping the list with $30 billion in education profits, California and New Jersey followed. In 2006, New York had the highest lottery profits at nearly $17 billion. The percentage of return was about one-fourth of the national average. In addition, New Jersey and Massachusetts each received more than $1 billion in total cumulative prizes.