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Tue December 6, 2011
Losing The Lotto: Comparing NH’s Lotto Prizes To Massachusetts
Recently, we told you about a gas station in the border town of Methuen, Massachusetts. According to Massachusetts State Lottery Executive Director Paul Sternburg, it’s on track to do $13 million this year in lottery revenues. When we spoke with Ted’s Mobil owner Tony Amico, he estimated at least half his customers are from New Hampshire. And StateImpact’s unscientific survey of license plates in the gas station parking lot bore that number out.
Of course, all of this leads to the question, why would people from New Hampshire gamble in Massachusetts? After all, the lotto provides funding for the state’s education system. Why export those funds?
The short answer: Massachusetts has better prizes. And you win more.
At least, that’s what convenience store clerks working on the Salem, New Hampshire side of the state line told StateImpact. Three stores–Stateline Paysaver, First Store In New Hampshire, and Discount Stateline Store– are all within easy walking distance of Ted’s Mobil in Methuen. And their parking lots were all but vacant both times we visited the area.
No one would talk on tape. But everyone said lottery ticket sales were negligible.
And when we asked why, the clerk’s responses were all a riff on the same theme: “Everyone knows you don’t win the New Hampshire lottery. And the prizes aren’t as good.”
While there were some dusty scratch ticket dispensers occupying their counter spaces, it was clear that New Hampshire tickets weren’t in much demand out on the border. Instead, the clerks explained, they make their money selling low-tax liquor and cigarettes to customers from the Massachusetts side of the line.
(And an unscientific survey of wall after wall of beer, wine, and cigarettes bore that assertion out.)
So keeping that in mind, StateImpact decided to delve into the numbers behind the Massachusetts and New Hampshire lotteries. We requested revenue numbers from both agencies, and compared figures from FY 2011. Of course, there is one major issue with looking at data comparing the two states: Massachusetts is much, muchmore densely populated than New Hampshire. It just doesn’t make sense to compare raw sale dollars. So instead, we’ll make the comparison by percentages.
Massachusetts And New Hampshire State Lottery Expenditures FY 2011
Type of Spending | Mass | NH
Prizes 72% 61%
Overhead 8% 12%
Transfers* 20% 27%
Sources: New Hampshire Lottery Commission, Massachusetts State Lottery
Looking at the table, it’s clear that Massachusetts does, in fact, give a significantly higher proportion of its revenue back to gamblers in the form of prizes than New Hampshire does. In other words, the perception that the Massachusetts lottery gives out better prizes than New Hampshire isn’t that far off the mark. (The proportion of winning tickets in each state is a related, but ultimately separate, question.) Given the research and interviews StateImpact’s conducted on this topic, this information isn’t particularly surprising.
What’s interesting, however, is that while the Bay State does transfer a smaller portion of lottery money to its dedicated funds, the overhead is, proportionately speaking, slightly lower than in the Granite State. In other words, between agent commissions, administrative costs, and the slew of other little, tiny things that are necessary for running a state lottery, the Massachusetts State Lottery appears to be just a little more efficient–percentage-wise, anyway–than the New Hampshire Lottery Commission.
*“Transfers” is the term we’ve chosen to use describing how much lottery revenue goes into each state’s dedicated fund. In Massachusetts, the money ultimately goes to local aid, while in New Hampshire, it funds the education system.