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The lottery industry reported a decline in sales in 2002 and 2003. The sharpest decline occurred in Delaware, which reported a 6.8% drop in sales. However, four jurisdictions reported increases in 2002, including West Virginia, Puerto Rico, Florida, and Missouri. The article also discusses advertising and marketing to African-Americans.

Problems of the lottery industry

Regardless of the industry’s success, challenges remain. Some people question the role of government in marketing and advertising, arguing that government agencies should be free from all commercialism. Others argue that a public service such as the lottery has to abide by certain ethical principles. Some argue that the lottery should not be able to advertise one product.

The lottery industry is an important source of state revenue and fills budget gaps in important community services. It provides significant tax revenue for most states, and in three-fourths of the country, lottery revenues support government services. Yet, the industry is also facing a number of problems, including declining sales in some markets.

Distribution of proceeds to states

State governments distribute lottery revenue in several ways. Some allocate part of it to fight gambling addiction, while others put the rest in a general fund. The money in the general fund is often used to address budget shortfalls in important social and community services. The rest is allocated to public works or education, including college scholarship programs.

While many jurisdictions allocate a portion of lottery proceeds to education, not every jurisdiction does so. In fact, only half of states dedicate lottery funds to education. State budgets have been squeezed by skyrocketing medical care costs and the need to build new prisons. This means that states are not reaping the full benefits of the lottery money.

Advertising

The government’s reliance on lottery revenue puts pressure on state entities to promote aggressive advertising. But, these efforts can be counterproductive. The government should not focus on the fortunes of a small minority. In addition, some studies show that aggressive advertising affects lower-income Black and Hispanic populations more than other demographic groups.

While federal law restricts lottery advertising, state laws allow lottery authorities to broadcast lottery marketing materials. The Texas Lottery also has the right to use its winner’s likeness for advertising and publicity purposes, including television, print, billboards, and web site.

Marketing to African-Americans

There has been some debate over whether or not marketing to African-Americans is effective. One study found that lottery advertising had a positive effect on recall, but it did not positively correlate with game play. In contrast, black respondents recalled lottery product advertisements less than white respondents. Nevertheless, recall is a common measure of advertising effect and often interpreted as a measure of potential effect by public policy-making agencies.

Although there is no definitive answer to why lottery play among minority groups is so low, there are some trends that indicate that they are more likely to participate. Among the most compelling reasons are cultural influences and deliberate targeting. Furthermore, minority groups are more susceptible to persuasive commercial messages. In the end, a combination of these factors may best explain the current disproportionate minority lottery participation.