US lottery operators worry as fewer millennials line up to play

Andrew Kelly | Reuters

Young Americans are showing less interest in buying lotto tickets than their parents, prompting lottery officials to worry about the odds for future growth.

While overall ticket sales rose 9 percent last year versus 2015, the number of millennials — adults in their late teens to early 30s — who play is falling.

That is creating consternation among leaders of the industry, which generates $80 billion in annual revenue, more than the combined U.S. sales of movie tickets, music and concerts.

"I feel like everything's just too expensive nowadays to just kind of throw away your money on luck," Melissa Mancilla, a 21-year-old hotel worker, said outside a downtown Los Angeles convenience store.

Andrew Hunter, a 26-year-old who works in software, said he does not buy lottery tickets, but his grandmother does.

"If I was going to bet money for entertainment it would probably be on sports betting versus lottery, just because it's more interactive," he said after leaving the same store.

Only a third of Americans aged 18 to 29 said they played the lottery in the past year, compared with 61 percent for those aged 50 to 64, according to a 2016 Gallup survey.

The rate for millennials fell from 39 percent in surveys conducted in 2003 and 2007, Gallup said. For all other age groups, the likelihood of playing went up over the past decade.

"Most millennials don't want to wait two days to see if they won the Powerball. They consume entertainment content just much faster than consumers did 20 years ago," said Charles McIntyre, executive director of the New Hampshire Lottery.

"We're not broke, we're just at the inflection point where a failure to change will have a steep decline over time."

'Next generation players'

Lottery officials say they are limited by laws in many states that were aimed at preventing compulsive gambling and ban the sale of lotto tickets online or via payment with credit cards.

The Virginia Lottery has tried to make things easier for players in an increasingly cashless society by allowing debit card purchases, said its executive director, Paula Otto. Other states are making similar changes, she said.

"The next generation of lottery players grew up with technology and approach making purchases and playing games differently," Otto said in an email.

Lotteries provide more than $20 billion a year to states for programs including education and military veterans.

All but six U.S. states have a lottery, and they use the proceeds in different ways, such as supplemental funding or poured directly into a state's general fund.

In California, the most populous U.S. state, most lottery proceeds are used for one-time expenses by public schools, such the purchase of library materials. A decrease in lottery sales would mean less money for those supplemental materials but would not result in program cutbacks, said California Lottery spokesman Russ Lopez.

Despite record jackpots, millennials used to the almost-instant gratification of online games and social media are put off by having to wait for the drawing of a winning ticket. Experts say they are also more risk-averse than their elders.

"This is a generation that came of age in the recession," said MaryLeigh Bliss, 33-year-old chief content officer for Ypulse, a marketing and research firm focused on millennials.

Michigan, Georgia, North Carolina, Kentucky, Illinois, New York state and Virginia allow online sales on lottery games to at least some degree.

In 2011, the U.S. Justice Department said proposals in Illinois and New York to allow online lotto sales did not violate federal law. The industry is now looking to see if President Donald Trump's new U.S. attorney general, Jeff Sessions, who opposed the move, could reconsider that decision.

Another strategy that lottery officials are exploring to appeal to millennials is designing prizes that also include a social component, such as VIP access to a concert.

"They want an experience, not just a prize," said Rose Hudson, president of the North American Association of State & Provincial Lotteries.