FY 2008 RESULTS: LOTTERY RAISES $57.2 MILLION
FOR STATE PROGRAMS

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Storm Damage, Flooding and High Fuel Prices Impact Lottery Revenues Late In Year

DES MOINES, Iowa - Strong sales of instant-scratch and Powerball tickets helped the Iowa Lottery raise more than $57 million for state programs in its latest financial year, but record-high fuel prices along with widespread storm damage and flooding dampened lottery sales in the final months of the period.

Preliminary figures released Tuesday show that lottery sales totaled $249.2 million in fiscal year 2008, which ended June 30. That mark is the highest combined sales total for lotto, instant-scratch and pull-tab games since the lottery's start in 1985 and is a 6 percent increase from FY 2007's lottery sales total of $235 million.

The unaudited figures show the lottery raised more than $57.2 million in profits for state programs during FY 2008, down about 1.6 percent from the lottery's profits total in the year before. A large portion of lottery profits in its latest fiscal year came from instant-scratch games, which have smaller profit margins than lotto games. Lotto games had accounted for a greater percentage of lottery sales in FY 2007 than in FY 2008, resulting in higher profits in the earlier period.

Record fuel prices and storm and flood damage across much of the state also impacted lottery sales in the final months of FY 2008.

Driven by strong performances from Powerball and instant-scratch tickets, lottery sales had jumped out to an 18 percent lead over the previous year's total by early September. But as the fiscal year continued, the pace of lottery sales slackened, particularly in June, when more than 80 of the state's counties had been declared disaster areas and the average price of mid-grade ethanol-blended gasoline had risen to $3.86 in Iowa. Five of the lottery's products, including the Powerball and Hot Lotto games, saw sales decreases in June compared to the same month a year earlier.

Ken Brickman, acting chief executive officer of the Iowa Lottery Authority, noted that Iowans have had to make tough, real-world decisions in recent months while they battled to save their families, homes and communities from weather-related disasters.

“No one would expect folks to be concerned about buying lottery tickets with such weather extremes impacting our state,” Brickman said. “Our concerns remain with the multitude of people whose lives have been affected by this year's devastation. We will continue to do our best to raise money for state programs and in that way help Iowa recover from these hardships.”

Sales of instant-scratch tickets, the first product introduced by the Iowa Lottery and always one of its top-selling items, rose 10 percent to a record $137.9 million in FY 2008. The lottery's previous record for instant-scratch sales had been set in FY 2007, when $125.1 million in scratch tickets were sold.

Powerball sales continued at a strong rate in the lottery's latest year, increasing 3.6 percent to a total of $63.7 million. Hot Lotto sales, however, fell nearly 19 percent to $11.7 million for the year. Sales in Hot Lotto, which offers Powerball-style play but with easier odds, had been driven in FY 2007 by a $19.97 million jackpot, the largest ever offered in the game since its start in 2002. That jackpot was claimed February 2007 by John Hall, a small-business owner from Indianola.

Sales of pull-tab tickets, another big sales category for the lottery, rose 1.7 percent to $21.4 million for FY 2008.

Lottery equipment and tickets were damaged or destroyed by storms and flooding in about 30 of the 2,600 Iowa Lottery retail locations late in FY 2008 and the lottery continues to work with its retailers and the state auditor's office to determine appropriate loss adjustments. Lottery executives anticipate that sales may be impacted moving forward by the temporary or long-term closing of retail locations that were impacted by storms and flooding.

Brickman noted that the weather extremes and spiking fuel prices in particular impacted sales in “Iowa's Million Dollar Raffle,” the lottery's first cash-raffle game. At the same time that raffle sales began in April, parts of eastern Iowa began to experience flooding. That was followed by the tornado that destroyed much of Parkersburg and damaged other sections of northeastern Iowa, massive flooding that deluged much of the state and another huge tornado that destroyed property and took lives near Blencoe in western Iowa.

More than 71,000 of the 120,000 tickets available in the cash raffle game were sold, allowing the lottery to cover the cost of the game's prizes and clear some funds beyond that. But raffle sales did not meet the lottery's initial expectations.

Brickman pledged, however, that the lottery will continue to investigate new game ideas to offer a variety of products to its players.

“Variety is a cornerstone of the entertainment we offer and that will continue to be our focus to ensure strong lottery profits for the programs that benefit all Iowans,” he said.

Since its start in 1985, the Iowa Lottery has provided entertainment and prizes to its players while at the same time raising more than $1.1 billion for the state programs that benefit all Iowans. Through the years, lottery funds have been used for a variety of initiatives, including projects to create new recreation areas, support research at Iowa's public universities, develop new products and techniques for agriculture, and promote tourism in Iowa.

Iowa Lottery profits currently are deposited in the state general fund, where they are used to pay for a variety of programs. Some of the programs that receive money from the general fund include education, natural resources, health and family services and public safety.