Massachusetts Lottery Profits Slumped In July Due To Flood Of Prize Payouts

STATE HOUSE, BOSTON, AUG. 25, 2020...(State House News Service) - The Massachusetts Lottery saw a decent bump in sales last month, but a surge of pent up winning tickets that were turned in as the Lottery reopened its claims centers helped drive monthly profits lower than in July 2019.

Sales of $426.9 million in July were up $34.2 million or almost 9 percent from July 2019 sales, Executive Director Michael Sweeney told the Lottery Commission on Tuesday, aided by a nearly 15 percent increase in scratch ticket sales last month.

Instant ticket sales have rebounded to pre-pandemic levels and Sweeney said Massachusetts is not the only state lottery seeing strong demand for the tickets. He predicted that the Mass. Lottery is going to see strong instant ticket sales through the first half of the fiscal year as players feel comfortable about going to a store to buy a ticket, but might not have other gambling options.

"Consumers are looking for an appropriate place to engage in this type of behavior. A lot of the other gambling world is curtailed or shut down; we've seen that again with the recent changes to college football, for example," Sweeney said, suggesting that the pandemic-influenced sports calendar means fewer people will be betting on sports this fall. "That causes consumers both here in Massachusetts as well as our surrounding states to seek viable alternatives they find appealing."

But those instant tickets sales also contributed to the fact that the July profit of $65.2 million was 18.6 percent lower than July 2019's monthly profit of $80.1 million. Sweeney said Lottery players claimed $22 million worth of instant ticket grand prizes in July 2020 compared to $13 million in July 2019.

The Lottery had been processing about 4,000 prize claims each week before the pandemic upended consumer habits and Lottery operations. After plummeting to near-zero the week of March 28, prize claims inched up to 1,500 per week by late June.

In early July, shortly after claims centers began to reopen with some restrictions, prize claims spiked, topping 8,000 claims the week of July 18. As of the week of Aug. 15, the most recent week with data made available by the Lottery, weekly prize claims had fallen back to about 4,500.

Combined with what Sweeney described as "an overall increase in prize claims since our claim centers reopened," the spike in instant ticket claims drove the percentage of monthly sales revenue that the Lottery paid out as prizes up to 77.85 percent, well above the 72.47 percent mark recorded last July. Treasurer Deborah Goldberg, who oversees the Lottery, said Tuesday she can't remember ever seeing a monthly prize payout percentage that high.

"Part of this is that we've seen an increase in the normal amount of cashing because of the closure period that took place during the pandemic. Even though we were able to catch up to some extent, we did see a higher than normal cashing period during July," Sweeney said. "The treasurer is right, that's abnormally high for the month, any month."

Sweeney is still closely watching a trend that caught the Lottery's attention before the pandemic took hold -- jackpots for the multi-state draw games that tend to be among the most profitable for the Mass. Lottery, Mega Millions and Powerball, have not grown large enough to entice huge swaths of casual players to buy tickets as often as in previous years. In the fiscal year that ended June 30, that trend was blamed in Massachusetts for a 51 percent drop in Mega Millions sales and a 47 percent drop in Powerball sales.

Through 120 Mega Millions drawings between May 8, 2018 and June 30, 2019, the game's jackpot swelled to $400 million or greater 13 times and once climbed as high as $1.6 billion. During the same time period, 120 drawings of Powerball yielded nine jackpots greater than $400 million and a high of $768.4 million, Sweeney told the Lottery Commission at Tuesday's meeting.

Through 120 Mega Millions drawings between July 1, 2019 and Aug. 21, 2020, Sweeney said, the jackpot surpassed $400 million once, when it hit its high of $410 million. The 120 Powerball drawings during the same timeframe did not once generate a jackpot greater than $400 million. Its highest jackpot was $396.9 million. During some of the period in question, Mega Millions and Powerball had implemented pandemic-related changes to the formula used to determine the jackpot amount.

Sales of Keno -- a game often played in bars, restaurants and convenience stores -- totaled $70.6 million in July, down about 10 percent from a year earlier. With restaurants operating with limited capacity and bars closed until there is a vaccine and/or reliable COVID-19 treatment, Sweeney said the loss of Keno sales will demand significant attention from the Lottery.

(© Copyright 2020 State House News Service)