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Scratch That Itch!: The California Lottery Was Limping Along Until It Changed the Game 

Tuesday, Sep 30 2014
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Despite the financial success, the marketing blitz may not have worked exactly as intended.

The Lottery collects demographic data about its players, as state law requires. Since the launch of the $20 game, its surveys indicate that it may have only partially reached the target demographics. Nearly 5 percent of adults in California said they had played a $20 scratcher, according to the Lottery, including about 3 percent of Asians. Lopez notes that "Asians have traditionally had lower rates of Scratchers play than Californians overall." Lopez didn't respond to a question about whether or not the Lottery considers the targeted marketing towards Asians a success.

In the survey data, players of the $20 scratcher emerged as younger, male, and more likely to be Hispanic or African-American than the population at large; the Lottery no longer collects information about the education level of its players.

By mid-September 2013, more than 22 million $20 scratchers had been sold.

All the effort put into the $20 scratchers — the fatter jackpot and higher ticket price, the design decisions and the highly targeted marketing — has paid off, at least for the Lottery. But that success may come at the expense of vulnerable people.

Erik Owens, the Boston College ethicist and editor of the book Gambling: Mapping the American Moral Landscape, says that for lottery players, "the less education you have, the more likely you are to spend more money."

It is "deeply ironic that lotteries are pitched to consumers and voters who consider them as education lotteries, or that they're somehow improving education," Owens says. "Because the simple fact is if they work, if they improve the education of the people in that society, they would buy fewer lottery tickets. And that would sink the whole ship."

For the 2012-2013 fiscal year, the most recent full year for which data is available, the California Lottery contributed $1.3 billion to public education and spent $2.7 billion on prizes. About 60 percent of revenue goes to prizes, 28 percent goes to public education, and 12 percent goes towards administrative expenses.

Which means that in the last school year, the lottery contributed just over $1 billion to K-12, through the Department of Education (about $250 million went to higher education and other programs). That contribution has ticked up in recent years, but it's not much higher than it was in 2007. Lottery funding makes up only 1.5 percent of the DOE's massive $70 billion budget.

"We supplement, not supplant, public education's budgets," and make "modest contributions" to education funding, Lottery spokesperson Lopez says in an email. "We don't sell our Lottery as a 'solution' to education's budgetary issues, nor do we claim that our contributions to public education are responsible for improving schools."

"Any kind of additional funding that a school in California can receive is a meaningful source of funding," says Department of Education spokesman Giorgos Kazanis about lottery funding. But he adds, "in reality, it's just a fraction of the schools' actual funding. That's the biggest misconception."

At Lucky Day, scratchers arrive in inconspicuous white UPS packages. Li, the owner, activates them by scanning a barcode. Until he does this, the $20 scratchers are worthless.

Li doesn't spend much time thinking about the efforts that went into the design of the scratchers below his counter at Lucky Day. Asked about the different colors, he shrugs. Sales are "almost the same, every game. Just depends on the people." Not all customers at Li's Chinatown store are Asian. White, black, and Hispanic players come here from nearby neighborhoods and downtown jobs.

On this weekday morning, James Salazar walks into Lucky Day. It's his second visit today; he's here to redeem the $20 scratcher he bought earlier. His winnings: $20.

Salazar doesn't think much about the color of scratchers either. He's a regular player who says he chases "the green color" — money. He's never noticed a hologram on the ticket before. He pulls one out and stares at the shiny surface. "No, nothing like that. Looks don't attract me."

Salazar says he's come out ahead playing scratchers, and won $5,000 last year. He hasn't heard of AB 142 or the changes in Lottery regulations, and seems surprised to learn more than half of Lottery revenues go towards prizes. His view of the Lottery is dim: "I tell you this, the California Lottery is a kind of rip-off organization," he vents. To get the bigger jackpots, "you have to play 10 million times." Salazar gets frustrated scratching off losing tickets, but he has nowhere else to turn. The California Lottery is the only game in town.

Salazar walks briskly from Lucky Day to his job at the county courthouse. He works in IT, a field he calls "easy money." He says he's frustrated by the small winnings he's seen from the Lottery lately. He plays scratchers for "the money part, the big money part. I don't care about small."

For players like Salazar, there's now a second $20 scratch ticket: "Million $$ Match." The odds of winning a top prize are one in six million.


About The Author

Aaron Mendelson

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