Executive Summary

U.S. state governments have relied on lottery revenue as a vital source of funding for education and other key government programs for over four decades. However, recent data indicates that, due to challenging economic conditions, many lotteries are not generating as much revenue as in recent years. In many cases, some are losing ground. In addition, illegal Internet gaming is potentially drawing away at least $7 billion in revenue that could otherwise go to states. Now more than ever, as states face grave budget deficits, they can utilize extra revenue that lottery enhancements could generate.

Frost & Sullivan analyzed state lotteries, conducting extensive interviews with lottery directors and reviewing past lottery funding, profits and sales, and marketing practices. Through this research, we identified a number of key findings that we will refer to as lottery „best practices.‰ Ultimately, if state lotteries were able or allowed to implement the best practices identified in this study, they could increase sales by approximately 127%, thus potentially contributing an additional $14.1 billion to good causes and having a significant impact on enormous state budget gaps.

Although they are owned and operated by states, lotteries are a consumer product and they should be treated as such, mirroring the same marketing and advertising techniques, as well as aligning with consumer trends, such as frequent Internet use.

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