PA Lottery lags overall economic growth

There have been seemingly conflicting media reports on the Pennsylvania’s Lottery growth. Tom Barnes in the Post Gazette repeats, without analysis, the state revenue department’s self-congratulatory release by writing “Economy, casinos not hurting Pa. Lottery sales” as does the Patriot News writing, “Pa. Lottery Sales Up in Down Economy” both highlighting “records high sales.” But the AP headline for the same story is “Pa. lottery sales virtually flat for 2007-08

In fact, lottery sales grew a scant 0.4% over last year. Over the past several years, the lottery had seen double-digit annual growth. And the LBFC study found that not only is the lottery stagnant, but areas near slots gambling have seen declines. So Tom Barnes’ headline seems to be incorrect – slots are hurting lottery sales.

But what about the economy? In contrast to the Patriot News headline, the economy isn’t down, but up (in terms of GDP it at least). Real growth – adjusted for inflation – in GDP was at 1.1% in the first quarter, and the one-year growth (Q1 2007 to Q1 2008 is 2.5%). And early estimates indicate 3% growth in the second quarter.

This is dramatically higher than lottery growth – in fact, since the lottery revenue is not adjusted for inflation, the lottery actually declined in real terms.