Bobby McCarthy of North Augusta scratches off Jumbo Bucks lottery tickets. Mr. McCarthy always plays the Georgia lottery and not the South Carolina lottery as a hobby. He spends about $3 a day on tickets. ANNETTE M. DROWLETTE/STAFF

Georgia's lottery: 10 years and counting

Ticket sales, education programs continue to thrive

ATLANTA - Ten years ago, the Georgia Lottery began selling tickets to a state that wasn't quite sold on the idea of government-run gambling.

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Church leaders predicted an explosion of problem gamblers. Economists warned that poor people tend to play the lottery the most while the wealthy reap most of the benefits. Some legislators said the state would get hooked on the early high returns of the games, then wouldn't be able to adjust when profits went down.

A decade later, it's tough to find a critic of a lottery that has brought in $18 billion and become the envy of the rest of the nation, inspiring copycat education programs in many states.

Nearly $6 billion has gone to education programs Georgia didn't have before the lottery. About 700,000 college students have gotten tuition, books and fees covered by lottery funds. Half a million 4-year-olds have gone to free preschool, making Georgia the only state with universal free pre-kindergarten.

The HOPE scholarship led to booming demand at the state's public colleges and universities. Elite students who would have gone out of state stayed home to go to school for free, driving up test scores at most Georgia colleges.

After paying for HOPE scholarships and pre-K programs, officials dumped $1.8 billion in leftover profits into school computers and construction.

It's almost too good to be true, said Zell Miller, the former Georgia governor credited for engineering the lottery and making it the envy of the nation.

"It has changed Georgia, that's for sure," Mr. Miller said from his Senate office in Washington. Mr. Miller, who bought the first ticket June 29, 1993, calls the scholarships and pre-kindergarten program "my babies."

"There's hardly a family in Georgia that hasn't been touched by the HOPE scholarship," he said. "And 25 years from now, we'll look back and think pre-K was the most important legacy for education in Georgia."

SO WHY HAS Georgia's lottery been such a hit?

Rebecca Paul has run the Georgia Lottery Corp. since it started. Ms. Paul said Georgia benefited from being one of the last states to adopt a lottery because Mr. Miller and others saw the mistakes made in other states.

Thirty-seven states started lotteries before Georgia, and most of them saw revenues dip after five years or so. But in Georgia sales have remained strong, near $2.5 billion last year.

J. Chae, who runs the Phillips 66 station on Wrightsboro Road in Augusta, can attest to that.

"I've looked at some other states. After about five years, the sales declined," Mr. Chae said. "But Georgia took about seven years."

Christina Park, 44, runs the Ko-Am Gas on 15th Street. Ms. Park says she has experienced a slight decline in lottery sales since South Carolina adopted its own lottery, but it has not hurt her business. JAMES GALLAGHER/STAFF

In Florida, lottery profits went to education, but a few years into the lottery, education spending went down. The lottery money was simply replacing the taxes that had previously been used for education.

"A lottery can turn into a real shell game," Ms. Paul said.

To avoid that problem, Georgia legislators set up a lottery fund that could be used for just four things - HOPE scholarships, pre-kindergarten classes, school computers and new schools.

Because voters can see the lottery money is going to new programs, people are likely to feel good about playing, Ms. Paul said.

"It's the wildly popular programs that we fund and the very personal nature of those programs," she said. "You know someone the lottery has benefited, and that's a huge part of our success."

GEORGIA ALSO HAS managed to duck criticisms that the rich get an unfair share of the lottery benefits.

Studies show that poor people tend to spend more of their income on tickets, but HOPE scholars tend to be middle- or upper-class.

Duke University economist Charles Clotfelter, a nationally known expert on lotteries, says all lotteries are regressive taxes, which means poor people carry a heavier burden than the rich.

"This is not a debate. It's not a question of opinion," he said.

Mr. Chae also has witnessed the lottery's regressive nature.

"If you go to Martinez, people buy the Mega Millions. They buy 100 tickets," he said. "But if you go to Peach Orchard Road, they buy Cash 3, Cash 4. The Cash 3, Cash 4 player is generally a low-(income) player."

A 2001 study by the University of Georgia found that the Georgia lottery is less regressive than most. Researchers found that critics ignore pre-K and technical school scholarships, both of which benefit low-income families.

Another lottery complaint - that it creates grade inflation - has been questioned by a Georgia State University study. Researcher Ross Rubenstein suspected that Georgia teachers and professors had been padding grades to help students earn and keep the HOPE scholarship. To find out, he and another Georgia State professor looked at the grades of Georgia high school students in 1988 and 1998 and compared them to their SAT scores.

Although more students had a B average in 1998, those students did as well or better on the SAT as the 1988 B students, before HOPE.

IT SEEMS THE biggest problem facing the Georgia Lottery is keeping the good times going.

In 1993, Florida was the only neighboring state with a lottery. Now South Carolina has a lottery, and Tennessee is about to start one. Alabama voters narrowly defeated a lottery. North Carolina has considered one, too.

Christina Park, an employee of Ko-Am Gas on 15th Street, has witnessed a small dip in her sales.

"Compared to before they had a South Carolina lottery, our sales are down," Ms. Park said.

Georgia's lottery attributes about 16 percent of its sales to out-of-state players, worth millions a year. Ms. Paul said she thinks better games and population growth will keep Georgia's lottery on top.

Others aren't so sure. The director of the governor's Office of Planning and Budget has warned that in about three years lottery programs will cost more than the games earn.

Iris Bunjevac, a clerk at a Union 76 station on Washington Road in Martinez, complained that selling lottery tickets is not a profitable venture because most ticket buyers don't purchase anything else.

Rebecca Paul: President of the Georgia Lottery Corp. says better games will keep Georgia's lottery on top. ASSOCIATED PRESS

"I'm really not making a lot of profit on it now," Ms. Bunjevac said. "Most people only come in to play lotto and not buy anything."

Already the lottery has stopped giving money for school technology and construction because HOPE scholarships and pre-K classes are gobbling all the money. The "capital outlay" programs stopped in 2001. In the short term, the lottery has frozen development of new games until September, while decade-old computer terminals are updated for vendors.

EVEN IF SALES don't go down, the scholarships and pre-K program will need more money as tuition rises and more students rely on lottery funds.

Mr. Miller said there's no reason to worry about the lottery running out of money - though he won't say what the Legislature should do if lottery proceeds don't cover HOPE and pre-K.

"I'm not sure that's going to happen as soon as everyone says it will," he said.

Mr. Miller might be right. Ms. Bunjavec and Ms. Park say they have seen increases in their ticket sales.

"Last year, (sales) picked up some from the year before," Ms. Bunjavec said. "This year, we're still up."

Even if Ms. Park has lost some sales to South Carolina, she isn't hurting for business.

"As far as I'm concerned, my sales have been up since when I started out," she said. "According to the sales rep, we made the top 10."

DIVIDING FUNDS

Georgia's lottery sales topped $18 billion in its first decade. Here's where the money went: