Lotto sales set records in Va., Md.

Virginia Lottery sales totaled more than $1.4 billion in the last fiscal year and Maryland’s topped $1.7 billion — both new records for the states — with nearly half that money, a total of about $1 billion, ending up in the states’ coffers.

With the lingering recession dragging down more traditional sources of revenue for state and local governments, like the real estate and income taxes, public officials are finding that lotteries are not only far less painful than tax increases but produce better than those more traditional sources in lean times.

“It seems that legislators, more than ever, have wanted to fill state coffers with lottery revenue,” said Alicia Hansen, staff writer for the nonpartisan Tax Foundation in Washington.

At a time when many people are struggling financially, lottery officials are pushing hard in many states to lure people to play more often, and to expand their reach with video lotto terminals and by merging Powerball and Mega Millions, Hansen said.

Beyond the D.C. region, lotteries across the country generated more than $70 billion in gross sales in the last fiscal year, about $1 billion more than the year before, providing $21 billion for government programs and services, according to the North American Association of State and Provincial Lotteries.

Lotteries have been used by states to help pay for services since New Hampshire adopted the first one in 1964. The earliest games often drew opposition and prescient warnings that the lotteries’ easy money would lead to an expansion of state-sanctioned gambling — such as off-track-betting parlors in Virginia and slot machines in Maryland — but with the proceeds often being used to pay for critical services like schools and police, those complaints faded with time. Forty-four states now have lotteries.

“Even those who don’t play often benefit from lottery money projects,” said David Gale, executive director of the North American Association of State and Provincial Lotteries.

In Virginia, officials introduced Powerball this year and added more self-service terminals in accessible places like groceries to help boost sales, said lottery spokesman John Hagerty.

“We’re constantly introducing new games,” he said.

In Maryland, 2010 marked its 13th straight year of record sales. Lottery Director Stephen Martino noted the strong mix of games that includes instant tickets, keno, and jackpot games, helps keep the bottom line afloat even if one area slips.

“We’re a form of entertainment that has low price points,” he said.

Not all lotteries are doing as well as Virginia and Maryland, however. The District’s 2010 gross lottery sales are trailing the $245 million it took in last year, said D.C. Lottery Executive Director Buddy Roogow, a former Maryland Lottery director.

Among other problems, the District actually lost Powerball sales to Maryland and Virginia when those states added it earlier this year, Roogow said.

“This is a perfect example of where we’ve been hurt,” he said.

Ever-increasing payouts for prizes are also cutting into profits; Virginia’s prize expense total of $852.7 million last year was also a record. Maryland’s profits on lottery proceeds have gone up and down over the last three years while Virginia’s have actually gone down in the last two years.

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