Lottery gamble starts to pay big

July 11, 1994|By John W. Frece and Marina Sarris | John W. Frece and Marina Sarris,Sun Staff Writers

Using a whistle and a bullhorn, keno coach Vicki Nailor rallied her "team" at a smoky tavern in Joppa to drop yet another buck on Maryland's fast-growing lottery game.

After handing out door prizes and revving up the crowd, the state-salaried coach glided from table to table last week for some one-on-one instruction.

"You sound like a pro," Ms. Nailor said, flattering one woman even as she collected dollar bills for more keno games from several other players, whom she called "my girls."

Such aggressive promotions, this one designed to teach novices how to play the somewhat complicated keno game, are helping to reinvigorate the Maryland lottery, the state government's third-largest source of revenue.

After a half-dozen years of disappointing results -- flat revenues, losing games, contested contracts and controversial statements by the former lottery director -- things are looking up.

Lottery officials say the fiscal year that ended June 30 was the best in the lottery's 21-year history. Total sales neared the $1 billion mark for the first time and were more than $100 million higher than the year before.

What's more, net revenue -- the amount that goes into the state treasury -- was up by nearly $60 million, or 19 percent -- good news to a state expected to face budget problems for the remainder of this century.

"I think, overall, things are great," said new lottery Director Lloyd W. Jones.

Keno coaches and other promotions have helped turn the situation around, but Mr. Jones said they are only a small part of the overall story. A variety of factors, including luck, have helped boost lottery sales from $882 million in fiscal 1993 to $987.5 million in fiscal 1994.

* One of the first things Mr. Jones did after taking over from former director William F. Rochford -- who was fired in December for saying the governor ordered him to exaggerate keno's potential for raising money -- was to get hundreds of lottery terminals out of a Columbia warehouse and into stores and taverns to generate revenue.

When Mr. Jones moved into the job, there were about 2,800 lottery terminals in the field. Now there are about 3,500. The lottery computer system has a capacity for 4,000 terminals.

"By the middle to late summer, there won't be any [terminals] in the warehouse," he said.

* Once in the field, the terminals are earning their keep, he said.

Keno, the controversial electronic numbers game the state began installing in bars and restaurants in January 1993, finally seems to be catching on. In February, keno sales hit $4 million a week for the first time and have regularly topped $5 million a DTC week since April. In June, keno sales exceeded $23 million, a 46 percent increase over the sales volume in June 1993.

* Sales of instant "rub-off" tickets also are booming, up 24 percent, in part because of the popularity of a new multiple-play "bingo" instant game and also because the state installed 300 instant ticket vending machines in supermarkets and elsewhere.

The machines are believed to appeal to players who might not otherwise frequent locations where lottery tickets are sold and to those who may be too timid to buy a lottery ticket over the counter. An additional 500 machines are on order.

* Gamblers flocked to buy Lotto tickets in larger than usual numbers three separate times during the budget year as jackpots grew to $21 million in December, $9 million in March and $18 million in May.

* Finally, the state's economy has improved, providing lottery players with more discretionary money to bet.

William S. Ratchford II, the chief budget adviser to the General Assembly, said the results clearly are good for the state, but that luck plays a part. He said the lottery is such "a fluctuating revenue source" that the state cannot necessarily expect its success to be repeated next year.

For example, he said the state's winning percentage on the oldest and biggest of all lottery games, the daily Pick 3 game, can vary considerably from one year to the next. This past year, the state won about 2 percent more often than the players, which, on sales of $350 million, meant the state picked up about $7 million more than it had expected.

"That's luck, nothing that anyone controls," Mr. Ratchford said. "It ebbs and flows."

Mr. Ratchford also noted that Mr. Jones, who worked for Gov. William Donald Schaefer when Mr. Schaefer was Baltimore's mayor and ran the Maryland Deposit Insurance Fund and then the Department of Assessments and Taxation, has "always had a reputation as a good manager."

Selling a product

Mr. Jones said he views his job as selling a product, and he and his staff have attempted to diversify that product to appeal to as many different players as possible. He uses a financial term, "portfolio," to refer to the array of games now offered.

"The thing about the lottery is it must constantly stimulate interest among the players," Mr. Ratchford said.

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