Lottery revenue drop worries officials

The Massachusetts State Lottery, after years of increasing sales of scratch tickets and other games, is experiencing a substantial decline in revenue , setting off deep concern on Beacon Hill.

According to figures filed with the governor's office, revenues fell $71 million, or 3.8 percent, during the first five months of the fiscal year.

State Treasurer Timothy P. Cahill is expected to brief legislative leaders today on the most recent sales figures.

But some lawmakers already worry that Massachusetts residents are too tapped out by fluctuating gas prices to continue their regular lottery habit.

The state lottery has been one of the most successful in the nation and has generated billions of dollars for cities and towns. Municipal officials are especially alarmed by the revenue decline.

"This is critical funding," said Senator Karen E. Spilka, a Democrat who represents Framingham, Natick, and five other towns. "My communities are hurting. . . . I don't want there to be a deficit and then for us to have to tell our cities and towns the funding isn't there."

Through November, sales were down for all lottery games except Keno, which was up 3.5 percent from the same time last year. The sharpest decline was in MegaMillions sales, which were off 47.7 percent. A former official attributed the decline to smaller jackpots; last year there were three $100 million prizes.

Sales of instant games, the lottery's biggest seller, were down 3.6 percent, or about $46 million; the Numbers Game was off 1.2 percent; and Mass Cash was down 6.3 percent. Through the first five months of the fiscal year, sales had slipped to $1.801 billion, down from $1.872 billion through the same period last year.

Sales have dipped during previous years, only to rebound by year's end, a former official said.

A week after the November figures were released, Cahill changed leadership at the lottery, naming Mark Cavanaugh to succeed Joseph C. Sullivan.

If lottery revenues don't rebound, it will make it even more difficult for Governor Deval Patrick to close an estimated $1 billion deficit in the next fiscal year's budget. Yesterday, Patrick asked each of his agencies to identify 5 to 10 percent in savings within their budgets.

Communities are already counting on this year's lottery aid; it's unclear whether the state would have to make up any shortfall.

"The lottery right now is extraordinarily important to cities and towns," said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association, which represents communities across the state. "We're hoping that the lottery sales rebound. It's something we're watching very closely.

But he said communities shouldn't assume the lottery will continue to grow indefinitely.

"The lottery is one of the most successful, if not the most successful, in North America," Beckwith said. "I don't think we can continue to count on it ranking number one and always hitting its growth target.

"This is one of the reasons we're advocating for diversified local aid, for example, a local options meals tax and revenue sharing," he said.

Michael Widmer, president of the Massachusetts Taxpayers Foundation, called declining lottery sales "a serious short- and long-term problem facing the state and cities and towns."

"To have this major source decline after years and years of growth adds further to the dilemma facing the state's political leaders," he said. "I've looked at the numbers, and the shortfall has been steady month to month. Every month I've seen a shortfall."

According to data compiled by the North American Association of State and Provincial Lotteries, a group that represents most lotteries, Massachusetts trailed only New York in total lottery sales in each of the past three years. It was fifth in per capital sales in the last fiscal year, according to unofficial numbers compiled by the association.

Several states, including New York and North Carolina, are reporting weaker lottery sales this year.

Yesterday, Patrick did not mention any specific policies, programs, or practices he would like to see eliminated or cut back. Aides said the governor will review the proposals the department heads offer next week when they submit their spending plans for next year.

During the campaign, Patrick pledged to find $735 million in annual savings by limiting legislative earmarks, controlling healthcare costs, closing corporate tax loopholes, and ending pension abuse.