Despite economic downturn, New York Lottery on uptick

By Joseph Spector
Albany Bureau

ALBANY -- Buoyed by strong sales of high-priced scratch-off games and the growth of video lottery terminals at Yonkers Raceway, the New York Lottery has had a 4 percent increase in revenue this fiscal year despite the sputtering economy.

The biggest surprise has been at Empire City at Yonkers Raceway, the state's largest video-lottery parlor with nearly 5,500 machines that has struggled to meet expectations since opening in October 2006.

The racino saw a 30 percent jump in revenue, or a $28 million increase, from April through June compared to the same period in 2007.

Track officials Friday attributed the growth in part to better marketing and a full year in operation. Some experts said that with the high price of gas, gamblers are staying closer to home -- making Yonkers, close to New York City, a more attractive option.

"Basically what we are seeing is the impact of $4 gas," said Bennett Liebman, an industry expert and head of the Racing and Wagering Law Program at Albany Law School.

"We are seeing significant declines in Atlantic City and the Connecticut casinos, and we're just seeing more and more people realizing how convenient Yonkers is."

Of the state's eight video-lottery venues, only Monticello Raceway failed to see revenue growth in the first quarter. The eight facilities grew revenue by nearly 17 percent.

The ability of the state lottery to grow revenue in troubled economic times, despite concerns about its social ills, is critically important to the state's fiscal health.

In the fiscal year that ended March 31, the state lottery added $2.6 billion in revenue to the state -- a 10 percent increase from the previous fiscal year. The money helped pay for about 13 percent of state aid to education, lottery officials said.

So far this fiscal year, which started April 1, the lottery's 4 percent growth has meant about $82 million in additional revenue for the state's coffers.

Lottery officials attribute the growth to better results at the state's video-lottery terminal facilities, the first of which opened in 2004. While the racinos had early struggles, they have seen improvement after the state provided more aid for marketing in recent years.

Revenue from the machines shot up 67 percent from the 2006-07 fiscal year to the 2007-08 year, to a record $875 million in state income.

"Video gaming is the newest and currently the most popular game and the fastest growing," lottery spokesman John Charlson said.

But other lottery games have also seen improvement this fiscal year, state records show. Sales of Mega Millions lottery tickets jumped 40 percent in the quarter, largely because of some recent high jackpots.

Revenue from high-priced instant-lottery games that sell for $10 and $20 a ticket soared by 26 percent in the first quarter.

Overall, instant game sales make up about 50 percent of all state lottery revenue.