SACRAMENTO — Even the California Lottery is getting hit by the bad economy.
The agency is reporting a precipitous drop in ticket sales that will hurt schools and could undermine the governor's plan to use lottery funds to balance the state budget starting next year.
Lottery revenue dropped $260 million, or 8%, for the fiscal year ending June 30. It was the second year in a row that ticket sales had declined.
With a percentage of lottery revenue dedicated to education, the dive in sales means $106 million less for schools this year and $186 million less than was provided three years ago.
State Sen. Dean Florez (D-Shafter), chairman of a Senate committee that oversees the lottery, blamed the drop on "the sour economy" and a decline in disposable income of potential ticket buyers.
Similar drops in lottery sales have been seen in other states hit especially hard by the economic downturn, including Florida, Texas, New Hampshire and Maine.
"Lotteries all over the country are down," said Richard McGowan, a Boston College professor of economics who has written books on the gambling industry.
"The primary engine of growth for lotteries previously was instant tickets: the scratch tickets for $1, $5, $10 and even $20," he said. "But given the price of gasoline and the state of the economy, people have stopped buying these tickets. They no longer have the discretionary income to fuel the sales of these instant tickets."
The last recession in California began in April 2001. Lottery revenue was flat the next year and then declined 4% in 2003. After that, it rose -- until two years ago.
The new numbers raise questions about Gov. Arnold Schwarzenegger's plan to borrow against increasing future lottery money to generate $5 billion starting next year to balance the state budget, said Florez and Sen. Sheila Kuehl (D-Santa Monica).
"It makes it hard for the governor's plan to balance future budgets," Florez said, "but it certainly argues for updating the game to make it more attractive, meaning giving people the product that they want, rather than keep doing the same thing over and over again."
State Supt. of Schools Jack O'Connell said the drop in lottery money for education is "another warning signal to our schools" and an indication that the governor and Legislature need to increase education funding from other sources.
"It's a concern," he said.
