- Texas Lottery -

Comments FY03 - FY07 Texas Lottery Sales


Texas Lottery Audited Sales Since
Inception of the Texas Lottery,
Click here


Opinions are those of Dawn Nettles
Publisher The Lotto Report


Let The Numbers Speak For Themselves

Scratch ticket sales down by <$30.58> million.

Lotto Texas, Cash5 & Megaplier down by <$16.0> million.

Pick3 up by $17.2 million but this will be the last year Pick3 sales will ever increase.
(They are adding a Daily4 game that will eventually turn players away from playing
either game thus they will ultimately lose revenues. My prediction!

Texas 2 Step sales up by $904K. This is a drop in the bucket ... compare sales to earlier years!

Mega Millions sales up by $1.7 million. But it's important to say that Mega Millions sales
were "projected" to be $221.6 million MORE than what they were!

- Bottom line -
4 games lost $46.58 million while 3 games increased $19.94 million.
Sales down from FY06 by $26.68 million. Sad but true.

- Extra Comment -
Earlier this week I asked the TLC what un-audited FY07 sales were for the scratch tickets.
As I write this, they have yet to provide me with a figure. So I had to calculate FY07 scratch
ticket sales which wasn't really hard to do. Their figures will come in very close,
if not exact, to what I have posted.

Also it is important to note that my sales figures are based on "draw sales" where the TLC's figures
will show advanced sales going into FY08. Our figures will still be extremely close.

Let The Numbers Speak For Themselves!

Scratch ticket sales: Up by $155.9 million.

Lotto Texas & Cash5 sales: Down by $77.4 million.

Texas 2 Step, Pick3, Mega Millions & Megaplier Sales: Up by $33.3 million.

Overall Online Sales are down by $44.1 million. Thank Gawd for scratch ticket sales!

What you need to pay special attention to is that I have shown you "projected sales" this year.
As you can see, Lotto Texas and Mega Millions fell short by a whopping $381.1 million. Add to
that another $38.4 million for the 2 Step and Cash 5 shortage. What this means to you as citizens
of Texas is that the Legislature was counting on MORE money from the Lottery and the
TLC projections was far from close!

Interestingly, I asked the TLC for FY06 Projections broken down by game. They didn't
send it to me. So, I checked the two most recent Tx Lottery Strategic Plans. Sales goals
were set in the 2005-2009 Strategic Plan and those goals were broken down by product.

The Business Plan issued in 2005 also included FY 2005 sales goals by product.

However, the new strategic plan, issued in July 2006, does NOT
contain sales goals for each product. Imagine that!

The only reasonable way to estimate sales is to estimate each product separately then add them up.
Since the TLC staff did not estimate 2006-2009 sales in this manner - it is my opinion that ...
1) the TLC doesn't want to show weak on-line sales on paper and/or 2) they lost good
estimation capabilities when many of the Finance staff members were either fired or quit.

I want to say that the Texas Lottery IS an asset to the state of Texas. I'm in favor of a
lottery. However, I expect our state lottery to sell us products that are fair and reasonable,
I expect them to listen to the People of Texas, I expect open & honest government in running
our games. I expect them to treat US like they would want to be treated themselves. But we
don't have this. It is a well known fact that they treat their employees badly, they've
cheated lottery winners and they are not consumer friendly.

Next week, I plan to post two very important stories for you. One is that the
TLC refuses to accept IRS 5754 and they have yet to tell me WHY. That's because
there's no excuse for not accepting 5754's. The other is a claim story - tactics
used by the lottery to keep players prize monies.

It will behoove all of you to watch for and read these stories when I get them posted.
If you play the games of Texas, then you need to beware of these things.

- FY 05 -
Online Sales Were Down - Profits to the State Way Down
Scratch tickets sales were up but online sales were down. FYI - The "profit"
comes mostly from online sales, not scratch ticket sales. The LBB was
projecting $975 million in revenue to the school fund for FY 2005 which
was well below the FY 2004 $1 billion contribution and further below
the Comptroller's FY 2005 revenue estimate of $1.035 billion.
I estimate that the TLC will be approx $20 to $25 million below
the LBB's projection - there is certainly trouble on the horizon!

I would also like to comment on Lotto Texas sales under the new
5/44 matrix. As of Aug 31, 2005, there have been 243 Lotto Texas draws
under the new matrix - 5/44 + 1/44. This is the game that we opposed BIG TIME.
In comparing sales for the last 243 Lotto Texas draws under the old matrix of 6/54
to the first 243 draws under the new Lotto Texas matrix of 5/44, the state has lost
millions. As you will see in the table below, this is very SAD but none the less, TRUE

Lotto TX Last 243 Draws Under 6/54
(Jan 6, 2001 - May 3, 2003)
Lotto TX First 243 Draws Under 5/44 -
(May 7, 2003 - Aug 31, 2005)

Net Loss as of 8/31/05

Now they'd like for you to believe that Mega Millions is the
cause for the decline in Lotto Texas and it certainly plays a role
but not as big a role as they say. So let's see how Lotto Texas sales
were before Mega Millions started. There were 61 draws under
the new matrix of 5/44 prior to our playing Mega Millions.
Lotto Texas Last 61 Draws Under 6/54
(10/5/02 - 5/3/03)
Lotto Texas First 61 Draws Under 5/44 + 1/44
(5/7/03 - 12/3/03)

61 Lotto Texas Draws Prior To Joining MM
Net Loss


What's important is that the TLC projected an increase in sales.
Needless to say, it never happened.
Now let's go back to the first 243 draws where they've lost
$458.3 million and just for fun, let's add in Mega Million
sales to see how they've done for the state.
Lotto Texas Last 243 Draws - First 243 Draws
6/54 vs 5/44


Mega Million 182 Draws (Since Inception of MM)


- Bottom Line -
We now have 2 big jackpot games and sales for both games don't surpass sales for just the last 243 draws under 6/54 - when we had just one big jackpot game. I track these figures after every draw and have watched the loss climb. Why hasn't the TLC seen this and done something about the loss? I do know why, they've just been "hoping" sales would increase with those $100 million pots but we didn't fall prey to those huge odds and un-realistic dreams of winning the impossible. Also, I think it's important to note that staff has kept the commissioners in the dark about the reality of sales vs profits.


In my comparison, I am not including Megaplier sales
because it was a NEW game and has nothing whatever
to do with these comparisons. For those of you who may be
curious about Megaplier sales, sales since inception stand
at $85,686,709 for Megaplier. IF they were included
in Mega Millions sales above, they are still in the
red by <
$5,876,704> on just these 3 games.

The Texas Lottery promised our lawmakers hundreds
of millions of dollars in sales increases by changing our
Lotto Texas game to 5/44 and by joining Mega Millions.

They were WRONG - they didn't listen to the People of Texas
and the state has lost millions in potential revenues as a result.

Cash 5 and Texas 2 Step combined sales are down from
FY04 by <$23.8> million but Pick3 sales increased by
$7.6 million making the loss to Texas <$16.1> million for
just these three games. As you know, we fought rule
changes for these games too - all to no avail.

The increase in sales for Pick3 is not a sufficient
gain since they doubled the number of draws.
One has to wonder if the increase covered their costs!

See why jackpots don't climb faster ... click here.

- Fiscal 04 -
So the TLC's going to brag that gross sales increased by $345 Million.
But let's look at the bottom line ...

Overall gross lottery sales are up by an est $345 million for fiscal 04 compared to
fiscal 03. BUT that does NOT mean that the "bottom line" increased nor does it mean
that the TLC generated it's true potential. Let's look at the OVERALL picture ....

Scratch ticket sales were up by $182.7 million (the $25 tickets did this). That's more
than half of the overall increase and remember, they added two new games in FY04
so it stands to reason that sales "should" be greater than the year before.

Pick3 sales were up by $16.2 million but its sales have increased every year since
inception. Also noteworthy - Pick3 costs have gone up due to the twice weekly
drawings so what's the REAL bottom line for this game? Does the increase cover
the costs associated with 2 draws per day? Is the increase what it should be
considering that they doubled the number of draws?

Lotto Texas, Texas 2 Step and Cash5 sales were all down significantly yet these
games had major changes that were "suppose" to increase sales for FY 04. How
much did it cost to promote the changes to these games that failed miserably?

The TLC added two new games to the mix - Mega Millions and Megaplier which
were projected to produce a whole lot more ($104 million more) than they did.

Now let's talk about the "big money maker games"
(Lotto TX and Mega Millions) in detail ...

The TLC was extremely lucky regarding Lotto Texas sales even though sales were
down by $48 million from FY03 and ARE the lowest sales in the history of the game.

Why "lucky?" Remember that $145 million jackpot in June? Well, it required 33 draws
to reach the $145M (Feb - June) and in JUST the last 5 draws of that roll alone,
they sold $99,589,818. Imagine how bad Lotto Texas sales would have been
had it not been for that ONE roll! Not only that, but, the new Lotto Texas (5/44)
was projected to increase sales in FY04 by $153,892,860 so how much did they
REALLY lose by changing the game in May 2003? Let's see ...

If you compare the first 141 draws under the new Lotto Texas game to the last
141 draws under the old Lotto Texas game, sales are down by $132.1 million.
This is a cold hard fact.

Now the TLC is going to try to convince everyone that Mega Millions is the
reason for the decline in Lotto Texas sales between FY03 and FY04 but that's
clearly NOT so. The TLC expected a 21% decrease (from their projections)
for Lotto Texas sales as a direct result of adding Mega Millions.

They expected a 20% decrease for Cash5 and Texas 2 Step.

The matrix change to Lotto Texas HAS cost the state of Texas money no matter
how you look at it. The TLC should have given the People what the People wanted
so they are now faced with dealing with their massive boo-boo.

Now regarding Mega Millions - Based on the TLC's weekly per capita forecast,
Mega Millions was projected to bring in $294,288,579 for fiscal year 2004. But it was
short by <$104,672,168.> Not only were Mega Millions projections way off target, but the
costs to implement Mega Millions - advertising, new playslips, point of sales literature,
software development, air travel, hotels, meals, phone calls, faxing, etc ate up the profits.

Let's see - the TLC's operating budget for Mega Millions is 7% of Mega Millions
sales - that's $13.2 million. Do you actually think that $13.2 million covered the
costs associated to start up? NO, it didn't. So, question is, how much did they
have to take from the schools share of sales to pay start-up costs?

On top of that, Texas has sent at least $59 million of the $189 million out of
state to pay jackpot winners
. Texas based businesses have lost potential
revenues and the state of Texas lost tax income as a result of adding a
multi state game. This effects the bottom line. Texas winners spend
money in Texas but that revenue was lost.

In Dec 2003, the TLC told LaFleurs Magazine that they expected Mega Millions
average weekly sales to be $7.5 million and $1.2 million from Megaplier. As it
turned out, average weekly sales for Mega Millions were $4.8 million. Off target to
say the least. Again, the People said, "We want games with reasonable odds, one
that we CAN win - one that's worth gambling on - don't give us a game that is
'intended to roll' just so the lottery can build huge jackpots to entice sales. We
won't support games that are harder to win."
And WE haven't!

The good news is - the TLC's projections were close on Megaplier as
it averaged $1.1 million but sales are declining now so they are facing
more troubles. If you'd like to read the LaFleurs article, click here.

When accessing how the lottery really performed for the state, I'd have
to give them an unsatisfactory rating - I think the bottom line is that
they lost money for the state and the betterment of our communities.

Fiscal 03 - Interesting Notes
Scratch Tickets - Sales are on the rise ... but this is due to the new
$10 and $20 tickets. Scratch tickets sales increased in 2003 by
$193,590,206 yet OVERALL sales only increased by $158,908,102.

Lotto Texas - The most popular game of all and the TLC, with
their rule changes, have completely destroyed the game. Sales clearly
indicate extreme player dissatisfaction - one would think they would
get the message. If people could win the game, more would play.

Pick3 - In fiscal 03, there were twice as many draws as previous years.
Each year since inception, Pick3 sales have increased. Does the increase
justify the cost of 2 draws per day and would sales have increased
more than it did if they had left the game alone instead of angering
players who ultimately quit?

Cash 5 - In fiscal 03, there were 6 draws per week compared to
2 then 4 draws per week. Is it really cost effective to have this many draws?
Or is that the unclaimed prize fund has increased significantly so the
state is happy with the revenues generated?

Texas 2 Step - This game takes revenues away from the other games
and has never been popular with the players. I suppose the next
thing we'll see is an increase in the number of draws to get sales up too!

- Opposed Rule Changes That Effected Lottery Sales -
Important Factor To Consider - Generally speaking, it is the
SAME people day in and day out who play the games of Texas.
Therefore, one could safely conclude that these players only have
so much money they can spend for entertainment which means
they have to spread their dollars to play ALL the games. This prevents
"jackpot" amounts for the games from increasing at the rate they once did.
The state needs to recognize this point as they attempt to "increase revenues."
The Texas Lottery keeps making the games harder to win which does nothing
more than to drive players away. This is evident by reviewing the "bottom line"
in sales for each fiscal year when you see what happened that year.

Cash 5
Players said NO to 4 (four) Cash 5 draws per week (changed it on 11-25-96 anywyay)
Players said NO to 6 six Cash 5 draws per week and absolutely NO to the new $2 prizes.
(changed it on 7-29-02 anyway - see the impact! Did it cover the costs? Are the retailers
happy since they now have more FREE transactions?
) The small increase they will see by
years end won't offset the costs nor the player dissatisfaction caused by the 2002 rule change.

Texas Million

Players said NO to Texas Million - to many numbers, prizes not good - game failed miserably.
By keeping this game going for so long, how did it impact revenues for other games? Maybe
Cash 5 and Lotto Texas would have done better had they not had the competition for the dollars.

Texas 2 Step

Players said NO to Texas 2 Step - Prizes not good and we didn't want a bonus ball
(Failing miserably - see how sales are declining)


Players said NO to day and night Pick3 draws, 12 draws per week was too many.
(Implemented anyway, 4-29-02. Pick 3's revenues have increased each year since
inception - question is, does the small increase in revenue justify the cost in
conducting 12 draws per week? Does the loss in revenues from Cash 5,
Lotto Texas & Texas 2 Step - that is a direct result of rule changes and/or
sheer dislike for the games - make up for those players who simply switched
over to play Pick3 instead because it was easier to win?) By years end, will the
increase be greater than what they been in years past?

Lotto Texas

Feb 1997 - Players said NO to 25 year payouts ... they did it anyway - also
implemented Cash Value Option - causing player confusion regarding the payouts -
players think they are getting taken to the cleaners - they wonder why only "half the pot?"
Players never knew that they only won a "percentage of sales" and that was the amount the
TLC invested for 25 years - it's the interest earned that make the pot the amount advertised.

July 19, 2000 - Players said NO to making Lotto Texas harder to win - they
added 4 balls anyway - plan failed miserably.

May 7, 2003 - Players said NO to 5/44 and 1/44 - they did it anyway - lotto sales are
at all time record lows - (Now we have what's equivalent to two Texas 2 Step games
or 2 powerball games and they want to add a third!


Texas Lottery Audited Sales Since
Inception of the Texas Lottery,
Click here


The Lotto Report
P. P. Box 495033
Garland, Texas 75049-5033
(972) 686-0660
(972) 681-1048 Fax