Maryland Lottery sales rank 9th in nation but everybody is chasing Massachusetts

A customer purchases lottery tickets at the Soda Pop Shop mart in 2015.
A customer purchases lottery tickets at the Soda Pop Shop mart in 2015. (Algerina Perna / Baltimore Sun)

The Maryland Lottery ranks ninth among the nation's 44 lottery-playing states in sales per capita, a state report says.

But all of the states are chasing lottery-mad Massachusetts, which has the highest payout percentages in the country and sells more tickets than much larger states such as Texas, Pennsylvania, New Jersey and Ohio.


"Everybody looks at Massachusetts as kind of the gold standard, and a lot of their performance is instant tickets," or "scratch-offs," said Maryland Lottery director Gordon Medenica. "Nobody has been able to actually replicate the Massachusetts success."

But Maryland sees opportunities to improve, Medenica said.


In a state with a population of about 6.8 million, Massachusetts' lottery sales top $5 billion a year, or $765 per person — more than $2 per person per day. The next closest state, Georgia, has per-capita sales of $446.

Maryland's per-capita sales were listed at $317 in the annual financial report, obtained from the Maryland Lottery and Gaming Control Agency upon request. That ranks the state behind Massachusetts, Georgia, New York, New Jersey, Connecticut, Washington, D.C., South Carolina and Pennsylvania.

New York, California and Florida sell more tickets than the rest of the states, but that's mostly because their populations are so high.

The Powerball jackpot has rolled over after every drawing for more than two months. The prize now ranks as one of the top 10 largest in U.S. history.

The report covered the 2015 and 2016 fiscal years, the latest period for which comparable figures were available.


"Maryland is a top-10 lottery — I think it's been bouncing around the top 10 for some years," Medenica said. "We can identify where we're strong and where we're weak."

For example, it might seem that Maryland has lots of lottery dealers — convenience stores, service stations and other outlets displaying the logo with the bright-yellow "L." But with 4,500 retailers and 6 million in population, Maryland has about one per 1,300 people.

Massachusetts, with 7,500 lottery sellers, has one for every 908 residents.

Maryland aims to close that gap.

"You should have a retailer for 1,100 to 1,200 population," Medenica said. "So that's definitely a goal of ours. We think we should be closer to 5,000 retailers."

Maryland's lottery sales are about $2 billion a year, and retailers earned a record $146 million from commissions in the fiscal year ending June 30, up 3.4 percent from a year earlier.

Revenue from the state's lottery games — including scratch-offs, Powerball, Pick 3 and Pick 4 — and its share of casino revenue combine to be Maryland's largest source of revenue behind income, sales and corporate taxes.

Both the lottery and the state's casinos are overseen by the Maryland Lottery and Gaming Control Agency, which Medenica directs.

In the last fiscal year, Maryland for the first time collected more from casinos — $592 million — than lottery profits — $524.9 million.

Casino and lottery proceeds go to a number of causes, including the Maryland Education Trust Fund. The horse-racing industry, local government programs and small minority-owned and women-owned businesses are among those also receiving shares.

The tight-knit lottery industry usually shares information about how particular games are doing. Massachusetts' success is often a popular topic among lottery directors.

"I'm not necessarily sure there is a secret formula," said Michael Sweeney, executive director of the Massachusetts Lottery.

In addition to having more outlets, the Massachusetts lottery has another significant sales advantage over its peers. The state faces little competition from casinos.

Massachusetts has just one slots-only casino, although two more casinos are on the way. Maryland now has six casinos.

But Massachusetts also does things a little differently than other states.

Massachusetts is known for its high payout percentages. It pays out 77 percent on instant tickets. That means more than three-quarters of the revenue is returned to players in winnings.

By comparison, Maryland's instant tickets payout was 72.6 percent in the last fiscal year, according to the lottery agency. The figure includes a range of instant tickets costing from $1 to $30. The payouts are better for the higher-price tickets.

"The attraction of scratch-offs is similar to why people play slot machines — they're looking for that adrenaline or dopamine hit," said James Karmel, a casino analyst and history professor at Harford Community College. "It's like pulling the lever on a slot machine."

Sweeney said the relatively high payouts in his state are a selling point.

"The consumers are pretty much aware of the general odds and general payout rates," he said.

Frequently, Sweeney said, a player will win a small amount — maybe $20 — and then use some of the money to play again, seeking a larger prize.

"When a player wins, there is some tendency to feel they are playing with house money," he said.

Medenica said there is no push in Maryland to increase scratch-off payout percentages. There is a balance to be struck, he said, between keeping the product attractive and ensuring adequate profit margins.

At the current payout percentages, sales of scratch-offs in Maryland grew by double-digit rates for the third straight year in the 2017 fiscal year, totaling $676.8 million.

"I think we're pretty much in the sweet spot of where those payouts need to be," Medenica said.

But the co-chair of the Joint Committee on Gaming Oversight in Annapolis said the state ought to revisit the percentages.

"I think that's something we should be looking at and not just dismissing out of hand," said Del. Eric Luedtke, a Montgomery County Democrat.

"If people win more often, they'll play more often," he said.

The colorful scratch-off tickets — full of exclamation points and dollar signs, and with names such as "Frenzy," "Easy Money" and "Bingo Gold" — appeal to players because "people don't want to wait for money. They want instant money," said Rajesh Patel, owner of the Soda Pop Shop Mart.

The Catonsville convenience store is annually among the lottery's sales leaders and earns hundreds of thousands a year in commissions from selling and cashing tickets.

Instant-ticket sales account for about 35 percent of lottery revenues in Maryland. In Massachusetts, they represent about 70 percent.

Sales for other games — ranging from Racetrax and Keno to draw games such as Pick 3 and Powerball — are nearly twice those of instant games in Maryland.

Yet, since instant tickets are surging, Medenica said he has made it a priority to boost sales. Most of the agency's advertising budget is going to promote instant games, including some with promotional tie-ins to the Ravens as football season approaches.

"If we can shoot for 50 [percent] coming from instants, there is a lot of growth that that would represent," Medenica said.