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Tennessee may get Mega Millions lottery game

6:02 AM, Oct 27, 2009   |    comments
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By Bonna Johnson, The Tennessean
 

Lottery player Ben Galloway doesn't care if a winning ticket comes from the Powerball game or another multi-state drawing called Mega Millions. All that matters to the self-employed heating and air system installer is being able to retire in the Bahamas.

"I just want to win big," said Galloway, 62, of Madison, who was cashing in a prize-winning Powerball ticket at Cardwell Market near downtown Nashville. He had just won $6.

A plan by the Tennessee lottery to add the Mega Millions game to its lineup, possibly by early next year, is expected to increase the frequency of large jackpots and funnel more money to education in the state, said Rebecca Hargrove, CEO and president of the Tennessee Education Lottery Corp.

Overseers of the lottery will vote next Monday on joint sales.

Bringing Mega Millions to Tennessee would create an additional $30 million to $40 million in annual lottery sales, Hargrove projected, channeling an extra $10 million to $15 million to educational programs in a year's time.

That would bump lottery profits up about 5 percent at a time when the lottery has experienced a slight decline in annual revenues. This fiscal year, though, first-quarter profits are up about $2 million over the July-September period last year, Hargrove said.

At Monday's vote, the Tennessee lottery board will be one of the first states to formally address the issue of cross-selling tickets. Already, officials in Michigan, Indiana and Massachusetts have said they plan to cross-sell tickets to both games, but none of those states needed legislative or board approval to take that step.

The lottery is always searching for new ways to keep its offerings fresh nearly six years after gaming became legal in Tennessee, officials said.

"The expectation is that they (Powerball and Mega Millions) would compete against one another, but it would also lead to some growth in the market," said Matthew Landry, vice president of strategic consulting for the Innovation Group, a gaming consultant.

Currently, 33 jurisdictions sell Powerball tickets and 12 states play Mega Millions. The games are very similar, but selling tickets for both games in one state had been prohibited by the groups that oversee the two games until a new deal was struck earlier this month to permit cross-selling.

Casual players targeted

"What offering both games allows us to do is not have so long between cycles when you bring in the casual player who only plays a big jackpot," Hargrove said, noting that casual players start buying tickets once jackpots hit $100 million, $200 million or $300 million.

Although sales were up for fiscal year 2009 over the previous year, net profits were down 2.5 percent.

A national group that opposes predatory gambling says the allure of more giant prizes could turn some casual players into all-too-frequent players. It opposes the move to broaden the lottery here and elsewhere.

"They want to get that casual player to become hard-core players," said Les Bernal, executive director of the Washington, D.C.-based Stop Predatory Gambling group. "Then instead of just buying Powerball tickets, they end up buying scratch tickets. The addicted and out-of-control player is their backbone."

It's the wrong thing to do, especially at a time of economic hardship, Bernal said.

"A new study shows that 21 percent of Americans think the best way to get long-term security in this country is to play the lottery," Bernal said. "That's a perversion of the American dream."

Small net gain predicted

About 70 percent of lottery sales in Tennessee come from instant scratch-off tickets. The rest comes from Powerball and smaller jackpot games: Lotto Plus, Pick 5, Cash 3 and Cash 4. Adding Mega Millions would increase sales by 22 percent for those non-instant ticket games, Hargrove said.

"We anticipate the regular Powerball player would still continue to play Powerball in the same pattern they normally play," Hargrove said, but they would also play Mega Millions once that jackpot reached triple-digit levels.

Tennessee players who now cross state lines to Georgia or Virginia to play Mega Millions could start playing here. At the same time, players from those other states who now travel to Tennessee to buy Powerball tickets could stay home to make their purchases.

Virginia's lottery board has already approved selling Powerball there, Virginia Lottery Executive Director Paula Otto said.

"We know we will lose some Mega Million sales because we do have people who come across the border," she said. "But we will gain Powerball sales. We know it will be a net gain, but it will be fairly modest."

Some Nashville-area lottery players said their buying patterns are likely to remain about the same.

"I think I would stick with what I'm used to," said Tim Rowland, 49, a building inspector from Bellevue, who buys Powerball tickets once a week. But if the Mega Millions' prize money rose to $300 million or so, Rowland said, he wouldn't pass up the chance to win it.

National game possible

In addition the possibility of increasing sales, cross-selling Powerball and Mega Millions tickets is a step toward a national game, which has been discussed for years, Hargrove said.

"We're looking at all kinds of options," said Hargrove, who is chairwoman of states with Powerball. Drawings in a national game could be weekly, monthly or even quarterly; ticket prices could be higher than the $1 for Powerball and Mega Millions and could even be tied into a television game show.

New innovations aren't a reaction to the economic downturn, Hargrove said. "Whether it's a recession or not, you're always looking at what is the next product you want to introduce," she said.

Indeed, the recession has affected states differently, with about half experiencing increased sales and the other half seeing declines, Hargrove said.

Stephanie Hammonds, 54, the head cook at Cardwell Market, plays Powerball every week hoping to win a big prize. She can't wait for Mega Millions to come to Tennessee.

"I'd play them both," Hammonds said. "If you don't play, there's no chance to win."

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