Lotteries - US - August 2004

SUMMARY

The U.S. Lottery is a $44 billion dollar market that has been growing steadily since New Hampshire initiated the first state lottery in 1964. A consistent flow of new jurisdictions launching lotteries is responsible for general growth: In August 2004, 39 states and the District of Columbia hold lotteries. The introduction of multi-state lottery games in the mid-1990s, where several states pool the prize money, has increased participation due to the excitement of a very large jackpot. Recently, a wider variety of games are being offered, especially instant win games that attract an "everyday" player who won't wait for a drawing. Additionally, lottery tickets have become more available as the number of retail outlets has expanded--both traditional outlets and very recently, the addition of self-serve kiosks and terminals.

The challenges to increased lottery revenue growth remain the potential finite aspects of the market. Where will growth come from when all jurisdictions have lotteries? Yet growth is necessary to keep up funding for swelling state government programs. In some states, lotteries may never be allowed due to powerful and influential anti-lottery groups. Thus lotteries need to find other methods of growth. Technology and the Internet may provide some answers. For now, regulations against interstate gambling prevent Internet and wireless (via cell phone or PDA) lottery games that could attract the younger audience also necessary for revenue growth.

All U.S. states and jurisdictions are predicted to have lotteries within the next 10 years, and Mintel believes that lottery sales will continue to grow during this time. Additionally, new games will be invented and technology will make lottery games faster and more engaging to play, while also being more cost-effective to operate for lotteries and retailers. This will allow more proceeds to fund the programs they are designed to serve.

TABLE OF CONTENTS

INTRODUCTION AND ABBREVIATIONS

• Introduction
• Other relevant reports
• Definition
• Abbreviations and terms
• Abbreviations
• Terms

EXECUTIVE SUMMARY

• "Ability to play" and "size of prize"
• Younger adults critical for growth
• Full jurisdiction participation
• Retail options increasing
• Newer lottery products drive growth
• Technology impact
• High revenue states need continued growth
• Advertising media changes
• Half of Americans surveyed report playing the lottery
• Continued growth forecast

MARKET DRIVERS

• Demographic influences
• Age
• Figure 1: U.S. population projections, by age breaks, 2000-10
• Generations
• Figure 2: American generation definitions, by age, 2000-10
• Baby boom
• Generation X
• Swing
• Millennenials
• Household income
• Figure 3: Median household income, by age of householder, 2002
• Graph 1: Median household income, by age of householder, 2002
• Geographic regions
• Figure 4: U.S. state lottery participants, by region
• Jurisdiction participation and sales growth
• Figure 5: U.S. lottery jurisdiction inception, by state, 1960-2004*
• Lottery participation by region
• Figure 6: Incidence of purchasing any lottery tickets in the last 12 months, by region, January-September 2003
• Purchasing behavior
• Price increases
• Technological advances
• U.S. lottery industry providers
• ITVMs, ZapLink, and more
• Entertainment-oriented games keep consumers playing

MARKET SIZE AND TRENDS

• Figure 7: Sales of lottery tickets, at current and constant prices, fiscal 2001 to 2004
• Graph 2: Sales of lottery tickets, at current and constant prices, fiscal 2001 to 2004

MARKET SEGMENTATION

• Introduction
• Figure 8: U.S. lottery product sales, by type of game, fiscal years 2001 and 2003.
• Product type
• Instant tickets
• Figure 9: Sales of instant tickets, at current and constant prices, fiscal years 2001-03
• Daily numbers (three-digit, four-digit, five-digit games)
• Figure 10: Sales of daily numbers, at current and constant prices, fiscal years 2001-03
• Video lottery terminals
• Figure 11: Sales of VLTs, at current and constant prices, fiscal years 2001-03
• Figure 12: VLT net sales, by state, fiscal year 2002
• Pull tabs
• Figure 13: Sales of pull tabs, at current and constant prices, fiscal year 2001-03
• Keno
• Figure 14: Sales of keno, at current and constant prices, fiscal year 2001-03
• Multi-state games
• Figure 15: Sales of multi-state games, at current and constant prices, fiscal year 2001-03
• Powerball and Mega Millions
• Figure 16: Powerball sales, by jurisdiction, 1992 through April 2004
• Figure 17: Sales of lotto, at current and constant prices, fiscal year 2001-03
• Jurisdiction
• Figure 18: U.S. lottery sales at current prices, by state, fiscal year 2000-03
• Figure 19: Lottery retailer to resident ratio, by state, 2003
• Figure 20: State lottery efficiency rates, throughout state lottery history
• Figure 21: States with budget dependency on lottery revenues above 5%, 2002

SUPPLY STRUCTURE

• Lottery sales by jurisdiction
• Figure 22: U.S. lottery revenues, by jurisdiction with share, fiscal years 2002 and 2003
• Figure 23: Top ten revenue-producing states, fiscal year 2003
• Figure 24: Top growth lotteries in past year, Fiscal year 2000-fiscal year 2003
• Figure 25: Fastest-growing lotteries, fiscal year 2000-2003
• Figure 26: Lottery sales per capita, fiscal year 2003

ADVERTISING AND PROMOTION

• Figure 27: Estimated U.S. lottery advertising spending, by state, fiscal year 2004

DISTRIBUTION

• Figure 28: Outlet and sales information, by jurisdiction, 2003

THE CONSUMER

• Introduction
• Incidence of lottery ticket purchase in the last 12 months
• Figure 29: Incidence of lottery ticket purchase in the last 12 months, January-September 2003
• Figure 30: Incidence of lottery ticket purchase in the last 12 months, by gender, January-September 2003
• Figure 31: Incidence of lottery ticket purchase in the last 12 months, by age, January-September 2003
• Figure 32: Incidence of lottery ticket purchase in the last 12 months, by household income, January-September 2003
• Figure 33: Incidence of lottery ticket purchase in the last 12 months, by educational status, January-September 2003
• Figure 34: Incidence of lottery ticket purchase in the last 12 months, by marital status, January-September 2003
• Figure 35: Incidence of lottery ticket purchase in the last 12 months, by region, January-September 2003
• Frequency of purchasing lottery tickets
• Figure 36: Frequency of lottery ticket purchase in the last 12 months, January-September 2003
• Figure 37: Frequency of lottery ticket purchase in the last 12 months, by gender, January-September 2003
• Figure 38: Frequency of lottery ticket purchase in the last 12 months, by age, January-September 2003
• Figure 39: Frequency of lottery ticket purchase in the last 12 months, by household income, January-September 2003
• Figure 40: Frequency of lottery ticket purchase in the last 12 months, by region, January-September 2003
• Attitudes towards lotteries
• Figure 41: Attitudes towards the lottery, June 2004
• Figure 42: Attitudes towards the lottery, by gender, June 2004
• Figure 43: Attitudes towards the lottery, by age, June 2004
• Figure 44: Attitudes towards the lottery, by income, June 2004
• Figure 45: Attitudes towards the lottery, by region, June 2004
• Figure 46: Attitudes towards the lottery, by urban status, June 2004
• Summary

FUTURE & FORECAST

FUTURE TRENDS

• Demographics
• Figure 47: U.S. population projections, by age, 2005 and 2010
• Technology
• Online games
• Instant games
• Prizes and payouts
• Government
• Public attitudes

MARKET FORECAST

• Lottery tickets
• Figure 48: Forecast of lottery tickets, at current and constant prices, fiscal years 2004-2009
• Graph 3: Forecast of lottery tickets, at current and constant prices, fiscal years, 2004-2009
• Forecast factors

APPENDIX: TRADE ASSOCIATIONS

APPENDIX: RESEARCH METHODOLOGY

• Consumer Research
• Sampling & Weighting
• Presentation & Definition
• Further Analysis
• Trade Research
• Informal trade research
• Formal trade research
• Desk & Internet Research
• Sources
• Definitions
• Forecasts

APPENDIX: WHAT IS MINTEL?

• Mintel Publications
• Mintel Services
• Product retrieval
• Retail audits
• Tailored research
• Global New Products Database
• Research Support/Consultancy/MIC
• The Mintel Information Centre (MiC)
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