Maryland's $1 billion lottery

July 22, 1994

This time next year, Maryland officials will most likely announce with pride that their state lottery operations have exceeded $1 billion in annual receipts for the first time. They will hail it as a landmark event.

That's not pie-in-the-sky optimism from lottery officials, either. They closed the books on the fiscal year ending June 30 with sales of $987.5 million, a huge boost of over $100 million from the prior fiscal year. And more important, the profits for the state rose by $60 million. With a $1.2 billion cumulative deficit expected over the next four years, that extra lottery money is indeed welcome.

Why did the agency have such a good 12 months? Attribute much of it to luck. Lottery winnings are an unstable source of state revenue. Some years, the players get hot and the state agency doesn't do so well. Other years, the players don't hit it big as often and the state benefits. That's what happened in fiscal 1994.

The state agency also benefited from a determined effort by new director Lloyd Jones to move more than 1,000 Keno machines sitting in a Howard County warehouse onto the streets, so to speak. The popularity of instant lottery vending machines helped as well (more are on order). So did improved promotional efforts to instill some new life into the lottery games.

But the biggest reason for this upswing had nothing to do with the antics of lottery officials, or their efforts to cram Lotto machines into every tavern and restaurant from Frostburg to Snow Hill. No, the enhanced lottery sales are a direct result of Maryland's improving economy. As Marylanders feel more secure in their jobs and as their incomes start to increase, they feel better about spending more of their discretionary money on a few lottery tickets. That points to good days ahead for the lottery in Maryland, though future increases are likely to be much more gradual.

Gov. William Donald Schaefer made the mistake of pinning too much faith on the lottery's ability to reap bigger and bigger profits. He got badly burned during the recession. He also failed to recognize that Keno might not be an overnight success in Maryland. Future governors should learn from Mr. Schaefer's missteps.

In fact, most of the gubernatorial candidates have had harsh words to say about the state's over-reliance on lottery revenue. Some, such as Prince George's County Executive Parris Glendening, have even stated strong opposition to a further expansion of legalized gambling of this sort in Maryland. The sharp fluctuations in lottery sales from year to year make it dangerous for state officials to base budget plans on lottery growth.

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