FY 2009 RESULTS: LOTTERY RAISES $60.6 MILLION
FOR IOWA PROGRAMS

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Lottery Proceeds To State Up 7 Percent From Year Earlier

DES MOINES, Iowa – The Iowa Lottery raised more than $60.6 million for state programs in its latest financial year, the highest profits total from the sale of lotto, instant-scratch and pull-tab games since the lottery's start in 1985.

Preliminary figures released Thursday show that lottery proceeds to the state in fiscal year 2009 increased 7.2 percent from a year earlier, although lottery sales were down during the same period. The unaudited figures show that lottery sales totaled $243.3 million in FY 2009, down 2.4 percent from sales of $249.2 million in fiscal year 2008.

"As we move forward, our business focus is on profits: to maximize revenues and minimize expenses for our state; while our game focus will be on new entertainment for our players," said Lottery Chief Executive Officer Terry Rich. "Both have bottom-line impact. We will continue to evaluate and adjust plans to do our best to meet our FY 2010 proceeds goal in these tough economic times."

Rich also praised lottery employees' hard work for this year's success. "This was a challenging year for workers everywhere and I'm proud of the success achieved by the lottery team," he said.

Rich said that the lottery's authority status played a key role in its positive proceeds results for the year. In 2003, the lottery was remade from a state agency into the Iowa Lottery Authority, a corporate-model lottery with the business flexibility to function as an entrepreneurial enterprise.

As the Authority, the lottery for the first time was able to purchase property, doing so in 2004 by issuing revenue bonds to purchase both its headquarters building in Des Moines and the vending machines it currently uses to sell instant-scratch and pull-tab tickets in retail locations across the state. The property purchases have resulted in long-term savings to the state and that difference was especially noticeable in FY 2009, as the annual payment on the bonds decreased from $2 million the year before to $100,000.

"The long-term savings achieved by the purchase of property and the decreased annual property costs that took effect this year would not have been possible without creation of the Iowa Lottery Authority," Rich said. "Our state's leaders should be commended for providing the lottery with the tools it needed to increase profits at this critical time."

Another highlight of the lottery's FY 2009 results was the $2.8 million it raised for the Iowa Veterans Trust Fund. Legislation dedicating some lottery proceeds to veterans' causes was signed into law by Governor Culver in March 2008. The Lottery's first games to benefit the Veterans Trust Fund began sales in July 2008 and it will continue to create two new instant-scratch and two additional pull-tab games each year, with proceeds from those games dedicated to the Trust Fund.

Rich noted that when the idea of games dedicated to veterans was initially discussed, the lottery estimated it could raise $2 million to $3 million annually for the Iowa Veterans Trust Fund. The total for FY 2009, which reached the upper end of that range, demonstrates Iowans' support for the cause, Rich said.

"Our thanks go out to our players for recognizing this important cause and helping us provide a stable, ongoing source of revenue for the Iowa Veterans Trust Fund," he said.

The lottery's business flexibility also allowed it to move quickly to develop the "Keep Your Ticket Handy" campaign this spring with the Iowa Tourism Office, which helped raise awareness not only of the Lottery, but travel destinations across the state.

Due to the 2008 floods and the national economic recession, lottery sales and proceeds early in FY 2009 had trailed results from the year before. The work of producing the travel initiative was just one of the many ways that lottery staffers were able to respond to make a big improvement in the numbers as the year continued, Rich said.

"The Keep Your Ticket Handy initiative really demonstrated how the lottery can expand its reach by utilizing its huge promotional power to help other businesses in Iowa," Rich said. "We've been gratified to help build homegrown success in our state. And, we will continue to investigate new game ideas and innovative projects to drive player interest so the lottery will remain a strong source of optional revenue for the state of Iowa."

The only year when lottery profits to the state were higher than the FY 2009 total of $60.6 million was in FY 2006, when lottery profits totaled $80.9 million, a figure that included profits from the TouchPlay program.

Hot Lotto sales were a highlight for the lottery in FY 2009, increasing more than 22 percent from the previous year to $14.3 million. Hot Lotto is a multi-state lotto game that offers Powerball-style play but with easier odds. The game's jackpot has been growing since March and has reached an estimated $14.16 million for Saturday's drawing, the second-highest jackpot in Hot Lotto since its start in 2002.

"Again, having the flexibility to quickly market the hottest product was a benefit for the Lottery Authority," Rich said.

Pick 3 and Pick 4, numbers games that allow players to make several different kinds of plays at several different price points, also saw strong results in FY 2009. Pick 3 sales rose 2.5 percent from a year earlier to $6.5 million, while Pick 4 sales increased 10.3 percent to $2.6 million.

Sales in the lottery's other product categories were down for the year.

"The lottery's success has been built by offering variety in our products and entertainment for our players while keeping our eye on results," Rich said. "That will continue to be our focus in order to ensure strong lottery profits for the programs that benefit all Iowans."

Rich also noted that the lottery's positive impact in Iowa extends beyond the proceeds it provides for state programs. Iowa businesses received nearly $15.3 million in commissions from the lottery for their daily work in selling lottery products in FY 2009, he noted, and the state of Iowa also received $1.2 million in withholding tax revenue from lottery prizes.

Since the Iowa Lottery's start in 1985, its players have won more than $2.4 billion in prizes while the lottery has raised nearly $1.2 billion for state programs.