Raleigh, N.C. — North Carolina Education Lottery officials say the state has had one of the most successful lottery start-ups in history. Critics note that sales that are on track to be $900 million to $910 million this fiscal year would be about $300 million short of expectations for the first year.

The result is that many at the State Capitol and elsewhere are trying to figure out what’s next.

The problem with uncertainty in lottery income projections is that education programs depend on those dollars. For the fiscal year that ends June 30, lawmakers will probably dip into a reserve fund to make up for the lower-than-hoped sales, which will provide about $300 million for schools.

At the lottery offices, Executive Director Tom Shaheen has a different way to view the financial statements, a more optimistic one.

“There is no shortfall because it's all new money. It's about whether you see the glass half empty or half full,” Shaheen said Tuesday.

The lottery is projecting that its fiscal 2008 sales will be about $50 million above this year.

Regardless of how one sees the Fiscal 2007 results, lottery officials are looking ahead, but they say they have to work within the guidelines the Legislature gave them.

In an effort to boost sales, Shaheen said players can expect new games, some of them with bigger payouts, in the next year.

“That's what people want. They want something new, something different,” Shaheen said. The challenge, he said, is dealing with the boundaries set up by state lawmakers.

“If you're going to have lottery tickets, you need to be able to market it like any other consumer product,” Shaheen said. The lottery is limited to spending 1 percent of its budget on advertising, however.

What can be advertised, Shaheen said, is just a fun message that can't really entice people to play.

“The big thing is, you can’t have anything in the ad that would induce people to play,” Shaheen said.

State Sen. Janet Cowell, D-Wake, said things are set up that way for a reason, however.

“I did vote against the lottery, but I think if we're going to have the lottery, we need those restrictions. We don't need to be marketing it to kids, for example,” Cowell said.

So the public can expect new games and some bigger prizes, but probably not big changes.
With just one year under its belt, many lawmakers feel the lottery is too new to experiment too much.

The governor proposed lowering the percent of profits going back to education from 35 percent to 29 percent in order to increase the lottery jackpots. The theory is that sales would increase, ultimately sending more money back to education.

The idea is not getting much traction with lawmakers, however.

“The General Assembly is not going to do that,” Cowell said flatly.

For comparison, Virginia has an established lottery that started in 1988. It had nearly $1.4 billion in sales last year.