PA Lottery loses US$95m due to unregulated games

The state lottery has lost US$95 million in annual revenue due to unregulated gambling games.

US.- Pennsylvania Lottery Executive Director Drew Svitko reported on Tuesday that a new type of game is expanding in the state and causing problems for the lottery. The director estimates that the games operated by private companies have cost them approximately US$95 million in annual revenue.

“[Skilled games] are a direct competitor with the lottery,” Svitko told the state Senate Appropriations Committee. “It represents a long-term risk.” The Pennsylvania Lottery hired a team of economists that determined that sales of scratch-off tickets decreased in locations where games of skill are also offered. Scratch-off games are worth 17% of the Lottery’s annual revenue, Svitko said.

“They’re an impulse item. They depend on people having discretionary entertainment dollars. There are only so many discretionary entertainment dollars to go around, Svitko said and added that the number of retailers offering skilled games has doubled in the last year alone, as 18% of them offer at least one skilled game kiosk.

Moreover, the economists estimate that the Lottery’s revenue will keep suffering as skilled games increase their domination in the gambling market, Pennsylvania Capital-Star reveals.

Sen. Wayne Langerholc asked the Lottery director why the growing advertising budget hasn’t stopped the falling sales figures. The agency spent US$54 million in advertising its products last year, a $3 million increase over the previous two years. Svitko explained that businesses selling an impulse item have to compete for consumers that have limited attention for entertainment, and that everything from movies to video games should be considered competition.

Langerholc said that the Lottery is the only business of its kind in Pennsylvania and added: “I’m not buying it.”