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Dale Wetzel, Associated Press, Published January 01 2012

North Dakota Lottery resisted Powerball price increase

BISMARCK – North Dakota fought the Powerball lottery’s decision to double its ticket price from $1 to $2, and state lottery director Randy Miller worries the move could reduce ticket sales by more than one-third.

“At this point, we’re uncertain what it’s going to do,” Miller said of the price rise, which takes effect Jan. 15 in North Dakota, South Dakota and the 40 other states where the game is offered.

“We’ve heard some good feedback,” Miller said. “But there are some others who are really not in favor of it.”

During the North Dakota Lottery’s last budget year, which ended June 30, Powerball ticket sales plummeted 22 percent to $9.86 million. Miller attributed some of the loss to competition from a similar game, Mega Millions, which was introduced in January 2010.

The lottery offers five multistate games – Powerball and Mega Millions, in which the odds of winning are microscopic and the jackpots potentially huge, and Hot Lotto, 2by2 and Wild Card 2, which have smaller payouts and more favorable odds.

Powerball has been the state’s most popular lottery game since it was launched in March 2004, following a successful initiative campaign to lift the North Dakota Constitution’s lottery ban. Players hope to match six randomly drawn numbers – five “white” numbers and the “red” Powerball number.

Until the state’s last budget year, which ended June 30, Powerball has raked in more than half of North Dakota lottery players’ annual wagers. That changed in 2011, when the game ac­counted for 42.8 percent of the state’s $23 million in lottery sales.

North Dakota’s lottery advisory board split last summer on whether to support raising the Powerball price. Attorney General Wayne Stenehjem, who regulates the lottery, decided the state would fight the increase.

North Dakota was one of 10 states that wanted to keep the $1 ticket. Twenty-two states, including South Dakota, backed the higher price, according to Charles Strutt, director of the Multi-State Lottery Association, an Iowa-based organization which administers the game.

The North Dakota Lottery is projecting a 35 to 45 percent drop in Powerball ticket sales as a result of the price rise, Miller said. That will increase the game’s revenues from $3 million to $5 million, he said.

The change will have some advantages, Miller said. The game’s minimum jackpot will rise from $20 million to $40 million, and the prize for matching the five “white” numbers will quintuple, from $200,000 to $1 million. A ticket buyer who matches the red Powerball number will win $4, instead of $3.

The $100 million jackpot threshold, which typically gooses ticket sales, should be reached more quickly with the more expensive tickets, Miller said.

Players who don’t want to spend $2 on one ticket may switch to Mega Millions, which will still offer $1 tickets, he said.

A $2 Powerball ticket “will add to our product mix,” Miller said. “It does give us some diversification.”

Norm Lingle, director of the South Dakota Lottery, said the state advocated raising the Powerball price because of the promise of larger prizes.

“Because jackpots drive sales, we saw the move to the enhanced Powerball game as a way to increase lottery revenues for the state,” Lingle said in an email.

South Dakota gamblers spent $15.7 million on Powerball tickets during the 2010 budget year, which is the most recent data available, said Kelly Thompson, a South Dakota Lottery spokeswoman.

The lottery’s 2010 annual report says South Dakota gamblers wagered a total of $687.7 million on lottery games during the year. Of that sum, $642.2 million was bet at video lottery terminals, which are ubiquitous in South Dakota.