Monday, July 2, 2007

The D.C. Lottery”s Quick Cash game had been around for more than 15 years when Todd Zimmerman walked into Rodman”s Drugs in Northwest in February 2005 and bought two $1 tickets.

With three games on each ticket, the government contractor won the maximum $250,000 jackpot for each of the six games. But the improbable $1.5 million payout also helped put the D.C. Lottery”s Quick Cash game more than $640,000 in the red for the year, records show.

Within months, the game was canceled, although lottery officials say the move had more to do with keeping their lineup of games fresh than Mr. Zimmerman”s big wins.

The scenario nonetheless illustrates a point made in a recent audit of lottery operations. Prize payouts have a big effect on the D.C. Lottery”s bottom line, yet largely are a matter of chance and beyond the control of management.

Today, city lottery officials are hoping their latest offering, a $1 million raffle, will pay off for players and the lottery.

The citywide game is similar to raffles held in several states, including Virginia. It also comes as the city”s Office of the Chief Financial Officer is considering a move to privatize lottery operations, despite the lottery”s record-setting sales last year.

The D.C. Millionaire Raffle, which starts today and runs until Aug. 22, will sell 250,000 tickets at $10 a piece. The winner will get paid $1 million, three runners up will each receive $50,000 and 100 others will each receive $1,000. Odds of winning are one in 250,000.

“We”re always looking for a new game each year,” said Jeanette Michael, executive director of the D.C. Lottery. “We”re trying to figure out ways to create excitement.”

Ms. Michael took over the lottery in 2001. Since 2002, lottery sales have increased from $211 million in 2002 to a record $266 million last year.

“Her philosophy has been ‘let”s manage what we can control,” ” said Robert Hainey, lottery spokesman.

Ms. Michael said she”s not concerned with talk of privatization, a topic being debated in state houses across the country, including in California and Massachusetts, as lotteries face increasing competition from Internet gambling and casinos.

“That”s not for me to comment on one way or another,” she said. “I try to generate as much revenue as possible.”

Nationally, proponents say lottery privatization will generate more revenue, including big, upfront lump sums of cash through selling the lottery. But critics question whether it”s smart to have elected officials handling all that money in the short term, while leaving the long-term profits to private managers.

Ms. Michael hopes to increase lottery sales from $265 million to $300 million. Money transferred to the general fund supports education, parks, police, housing, senior and child services.

“Elected officials always want more and we”re trying to give them more,” she said. “We also have to run a lottery with the highest degree of integrity.”

The Quick Cash losses were an anomaly, representing relatively minor losses, financial statements show.

The lottery also paid out $146.6 million in prizes last year, the highest since its inception in 1982, while transferring $73.8 million to the city”s general fund.

Ms. Michael said the raffle game differs from other lottery games because only 250,000 tickets exist. If tickets sell out before Aug. 22, the game ends.

But the game also carries a risk for the lottery because of the guaranteed payouts; if the lottery sells just 100,000 tickets, generating $1 million in revenue, it still must pay out $1.25 million in prizes, whether it sells 250,000 tickets for $10 a piece.

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