New Powerball jackpot adds money for Georgia

But scholarship costs outpace funding source

ATLANTA --- The recession hasn't stopped the growth of the Georgia Lottery, but it's being outpaced by the growth in the HOPE Scholarships that it funds.

Nationally, state lottery sales grew 1.8 percent during 2008, the heart of the economic downturn. Georgia's sales inched forward then by 2.9 percent that year, outpacing others hit harder by the housing crisis, such as Florida and California.

Last year, the Peach State games grew by 4 percent. In the first half of the current fiscal year, the lottery set a record for profits, rising $8.5 million more than the record set the year before.

Officials with the government-owned Georgia Lottery Corp. say they would have liked bigger numbers.

"We do believe that they would be even stronger if the economy were stronger," said spokeswoman Tandi Reddick.

Lotteries tend to hold up in tough times the same way movie tickets do, said Warren Miller, a stock analyst with Morningstar who follows the gaming, cruise-ship and cinema industries. While movie theaters and lotteries have remained robust during the recession and afterward, Las Vegas casinos and luxury cruise lines have suffered.

"That stuff just tends to be a lot more expensive, and people are a little hesitant to do them when they have less discretionary income," he said.

As the only traditional, government-run lottery in the United States to post 11 consecutive years of expanding profits, Georgia's lottery gets high marks in the industry for continuing to come up with clever marketing and fresh ideas for its games.

Its president, Margaret DeFrancisco, and former president, Rebecca Paul Hargrove -- who now runs the Tennessee lottery -- were leaders in the latest innovation, an agreement that allows the sale of both Powerball and Mega Millions tickets in all 41 states and Canadian provinces that operate lotteries.

Until this month, states could only sell one or the other of the multistate programs.

The Powerball jackpot has already swelled to $40 million since no one matched all six numbers in Saturday's drawing.

Powerball sales in Georgia topped $3.56 million in the days since it began, and Mega Millions ticket sales have remained solid, too, according to Reddick.

HOPE income gap to widen

As dynamic as lottery sales have been, they're not keeping up with the growth in expenses from the HOPE Scholarships and grants and the pre-kindergarten vouchers the games were designed to fund. This year, expenses will exceed income. Projections by the Georgia Student Finance Commission given to the General Assembly show the gap continuing to widen.

It's partly because of the recession.

Even though lottery sales didn't drop, enrollment in colleges and technical schools soared during the recession, increasing the drain on lottery funds.

At the same time, tuition costs paid by the scholarships have also risen. Last week, University System Chancellor Erroll Davis told the Board of Regents to prepare for another boost in tuition.

Reserves will make up the difference, though they will begin declining this year by nearly one-third, according to the commission's estimates.

That will trigger a $19.6 million reduction in what the program pays for textbooks, starting in July 2011.

Still, at the current rate of income and expense, reserves could be exhausted in as little as three years.

Some legislators have argued expanding gaming as the answer, either through legalization of casinos or betting on horse racing. So far, no legislation has even gotten a hearing in a committee.

In the meantime, the Georgia Lottery Corp. is trying to at least maintain its record of continuous growth.

"We're always looking for fresh and new and exciting games," Reddick said.

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