Monday, Oct. 28, 2002 | 9:31 a.m.
BISMARCK, N.D. -- Estimates that the Powerball lottery would raise at least $13 million for North Dakota's treasury every two years may be too generous, according to an analysis of lottery figures from other Midwestern states.
To reach that sum, North Dakotans would have to buy almost three times as many Powerball tickets per person as gamblers do in neighboring South Dakota. They would need to spend 80 percent more on the game per year than does an average Minnesota resident.
The money figure also would require a North Dakota lottery to be one of the region's most efficient games, with a profit margin of 30 percent. A more typical margin is in the mid-20s, although state lotteries in Iowa and Montana claim Powerball profit margins of 31 percent.
The calculations are derived from census figures and betting statistics compiled from state lotteries in Minnesota, South Dakota, Montana, Iowa, Kansas and Nebraska, all of which offer the Powerball multistate lottery game.
When population data, sales information and ticket profit margins from each state are used for comparison, a more realistic North Dakota Powerball profit estimate over two years could range from $3.6 million to $8.4 million.
Two-year figures are commonly used to calculate the benefit of a lottery to North Dakota's treasury, because the state's budget runs in two-year cycles. The current 2001-03 budget period ends June 30.
The chairman of the lottery campaign, state Rep. Andy Maragos, R-Minot, said Wednesday he believes the revenue estimates of lottery supporters still can be achieved.
Should the amendment be approved, Maragos said, he expects North Dakota outlets will offer the Powerball lottery only. That should make for more efficient operation and greater profit margins than other states, which also have instant scratch tickets and other lottery games, Maragos said.
"We are not going to have the kind of expenses that all of these other states have," Maragos said. "And we're going to have less competition for that dollar, because we won't be selling anything except that."
He also believes a lottery will mean other economic benefits, because people will buy gasoline, snacks and other items when they purchase lottery tickets.
"We've always maintained that the biggest part of the income that we expect is the retention of the consumer spending that goes along with forcing our citizens out of state to buy their Powerball tickets," he said.
Warren DeKrey of Bismarck, the chairman of an opposition group called Citizens Against Legalizing the Lottery, argues a lottery's financial benefits are exaggerated, and do not include the social costs of compulsive gambling.
The state has no business promoting a game where the odds of winning a jackpot are 120 million to one, he said.
"The thing that we need to be concerned about is that the state will be encouraging people to buy lottery tickets," DeKrey said. "Generally, we look at the state as the protector of its citizenry. This turns it around so that the state is actually not looking out for the welfare of its people."
Powerball is played in 23 states and the District of Columbia. On Election Day, North Dakotans will decide whether to amend the state Constitution to allow the state to participate in a multistate lottery.
Because Powerball is the game favored by North Dakota's three neighboring states, lottery supporters expect the Legislature will try to put North Dakota into the game should the measure be approved.
New states are admitted by a majority vote of states that already take part in the game, said Charles Strutt, the director of the Multistate Lottery Association. The association, which administers the Powerball game, is based in West Des Moines, Iowa.
Maragos has estimated that North Dakota Powerball lottery profits would total $6.5 million each year, out of $21.8 million in yearly sales.
If achieved, those targets would require $34.36 in annual spending on Powerball for every North Dakota resident, along with a profit margin of 30 percent, once prize payments and expenses are deducted.
Among the states of Minnesota, South Dakota, Montana, Iowa, Kansas and Nebraska, Iowa has the largest per-capita spending on Powerball, at $20.82 annually, and a profit margin of 31.5 percent.
The per-capita figure was calculated using lottery data, the U.S. Census Bureau's estimated 2001 population of Iowa, and Powerball spending in the state during the lottery's most recent fiscal year, which ended last June.
Minnesota recorded per-person annual spending of $19 on Powerball during its last fiscal year, and a 22 percent profit margin.
South Dakotans spent $12.87 each on the game, which returned a 24 percent profit, while Montanans spent $17.37 per person on the game. The Montana Lottery recorded a 31.5 percent profit margin on Powerball.
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