LANSING, March 18, 2002 – The Michigan Lottery is not only one of the most mature lotteries in the nation (at 30 years old), but according to a major gaming industry publication, it is also one of the most efficient.
In the March 2002 issue of International Gaming & Wagering Business (IGWB) – an independent and leading source of international lottery and casino information – the Michigan Lottery was ranked among the top 12 lotteries in the United States with regard to effectiveness and efficiency.
Four different rating factors were used in the study: sales as a percentage of personal income, revenue as a percentage of sales, revenue as a percentage of gross revenue and cents spent to generate one sales dollar. It is very difficult for any state lottery to rank high in all of these categories. The Michigan Lottery is one of only 10 lotteries in the United States to be ranked 12th or better in all four categories.
Out of the 38 states who operate lotteries, Michigan ranked 6th in efficiency in generating sales as a percentage of personal income. Over the past 30 years, entertainment options have expanded rapidly for Michigan residents, therefore increasing the competition for Lottery players’ discretionary income. The Michigan Lottery continues to use its advertising and promotion efficiently and effectively to attract players to its games.
"The Lottery’s games are just one of many entertainment options that Michigan residents choose from each and every day," Acting Lottery Commissioner James Kipp said. "Each year the Michigan legislature appropriates a specific amount of money the Lottery can use for the advertisement of its products. We carefully pick and choose how we are going to advertise our games through both print and broadcast mediums, and when those advertisements air, to ensure that we reach the maximum number of players all across the state."
The Michigan Lottery’s highest rank of 2nd came in the category of efficiency with regard to revenue returned to the state as a percentage of sales. The Lottery is a proud supporter of kindergarten through 12th grade public education in Michigan and that support was shown in its 39.1 percent return of sales back to the state School Aid Fund. This measure highlights that the Michigan Lottery maintains a good balance of prize payouts with sales, and shows the ability to keep costs low in order to raise the maximum amount of funds to support Michigan’s schoolchildren. The only other state Lottery that ranked ahead of the Michigan Lottery in this category was Florida.
"In fiscal year 2001, the Lottery generated more than $587 million in revenue for the state School Aid Fund," Kipps said. "On average, that would be approximately $11.2 million going into the state School Aid Fund every week, or $1.6 million per day! Every time a Lottery player purchases a ticket, an average of 35 to 38 cents of that dollar is contributed to the state School Aid Fund."
The Michigan Lottery ranked 4th came in the category of government revenue as a percentage of gross revenue. Government revenue represents the amount available for a lottery to turn over to the government based upon current-year operations and non-operating items. This factor measures the Lottery’s ability to return money to the state after taking the payment of prizes into consideration. The only state lotteries in the study that ranked ahead of the Michigan Lottery were Florida, New Jersey and Washington.
Finally, the Lottery was ranked 12th in the lowest amount of money spent to generate sales dollars. This category measured the Lottery’s expenses, not including prizes, as a percentage of sales. This ranking underscores the fact that the Michigan Lottery is very efficient at keeping its expenses low while generating revenue.
The IGWB report stated that "effectiveness and efficiency are often conflicting goals, and as a result, lotteries that perform well by both measures are rare." The Michigan Lottery is proud of its ranking in the IGWB study and strives to maintain its high efficiency ranking to ensure that the highest amount of funds possible are transferred to the state School Aid Fund.