Who Plays the Lottery in California?
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1 Lottery Bulletin Who Plays the Lottery in California? A review of player demographics
2 Who Plays the Lottery in California? At its October 1, 1999 meeting, the California Lottery Commission heard a presentation based on research data on the question above. This report summarizes the findings of that research. According to a 1999 Gallup Poll, three out of four Americans approve of lotteries. 1 Chart 1: 1999 Gallup Poll on Gambling in America Lotteries Bingo Casino Gambling Off-Track Betting Video Poker Sports Wagering In California, 32% of adults played the lottery at least once in a month last year. 2 That is a high level of participation for a consumer product. In comparison, 46% of California adults rented at least one video in a month, and 29% went to a movie at least once. 3 Yet in spite of this evident popularity and broad participation, there is a perception that the Lottery draws its sales disproportionately from low-income people or that the playership skews to certain ethnic groups. Neither of these perceptions is accurate. A review of demographic information reveals that California Lottery players generally reflect the population of the state. As required in the Lottery Act, the Lottery regularly reviews the demographic characteristics of its players. 4 Two different kinds of 42% 41% 53% 63% 75% 74% 0% 10% 20% 30% 40% 50% 60% 70% 80% % of Respondents Approving of Activity studies have been used for this purpose. A tracking survey gathers information through weekly telephone interviews of a random sample of California adults. In the fiscal year, over 5,000 telephone interviews were conducted. The tracking survey is conducted by an independent research firm and provides data on player demographics. 5 The other kind of research tool used is a player purchase survey, in which shoppers are interviewed outside retail establishments and asked about the lottery purchases they just made. The Lottery s 1998 player purchase survey of 1,500 respondents was conducted by an independent research firm, under the direction of the Statistical Consulting Center at the University of California at Los Angeles. The purchase survey provides information on the amount players spend on lottery games. 6 Where are the tickets sold? Some have suggested that Lottery retailers are concentrated in low-income neighborhoods. 7 This is clearly not the case in California. California Lottery games are sold in over 19,000 retail locations, distributed throughout the state in all kinds of cities and neighborhoods. Lottery retailers represent many different tradestyles, including mall Lottery Bulletin
3 kiosks, supermarkets, drugstores, convenience stores, gas stations, liquor stores, bowling centers and even a few bakeries. Some are small, family-run stores and some are part of major retail chains. A typical store draws its customers not only from the residents of the neighborhood, but also from workers and commuters who are in the area during the daytime. 8 The type of retail establishment that sells the most lottery tickets is a mall kiosk, which draws from a very wide region, often being a destination point in itself. According to the California Department of Finance, the median household income in California is $40,000 per year. 9 This means that half of the households have incomes below $40,000 and half have incomes above that level. When we look at Lottery retailers, we see that 56% of them are located in zip codes whose residents have median household incomes above the state average (Chart 2). 10 Chart 2: 56% of Lottery Retailers in Zip Codes with Above Average Incomes $75,000+ 5% $40,000- $74,999 51% 9% $39,999 35% Percentage of Lottery Retailers in Zip Codes by Average Household Income And fully 60% of Lottery sales come from retailers in zip codes where the median household income of the residents is above the state average (Chart 3). 11 Chart 3: 60% of Lottery Sales from Retailers in Zip Codes with Above Average Incomes $75,000+ 5% $40,000- $74,999 55% 8% $39,999 32% Percentage of Total Lottery Sales from Retailers in Zip Codes by Average Household Income That percentage is nearly the same as the percentage of Californians living in these zip codes (62%). 12 The slight difference is explained by the fact that many higher income residential areas have zoning laws that exclude or limit commercial property. A look at the top 100 Lottery retailers also reveals that these high sellers are not concentrated in any one kind of neighborhood. They are located where the people are throughout major metropolitan areas, and near the Nevada borders. 13 Individually, these retailers sold between $675,000 and $6 million in fiscal year Nearly half (48) of the top 100 retailers are in Southern California, not surprising considering that more than half the population of the state lives there. The number seven retailer in the state is a mall kiosk in Del Amo Fashion Center in Torrance, which draws shoppers from a large regional area, not just its own zip code. Of these 48 top sellers in Southern California, 27 are located in zip codes with 2 Lottery Bulletin
4 average household incomes of $40,000 or more. 14 Similarly in the San Francisco Bay Area, 15 of the 26 top sellers are in zip codes where residents have above-average incomes. 15 Who buys the tickets? California Lottery players are a broad crosssection of the people living in California. While there are some exceptions, Lottery players essentially mirror the state population demographically, with only slight variations. The exceptions are gender and age. While men and women make up equal shares of the state s population, men represent 54% of Lottery players. A larger variation occurs in participation by age group. While the 35-to- 64 age group makes up just over half of the adult population, the group accounts for nearly two thirds of the Lottery s sales. 16 This skew is the same for many other consumer products, because people in this age group are in their peak earning years and have money to spend. A comparison of the California adult population to Lottery players shows that the race and ethnicity of Lottery players is essentially identical to the adult population in general (Charts 4 and 5). 17 For example, 54% of California adults are white and 52% of Lottery players are white. Chart 4: California Adult Population Afr.- American 6% Hispanics 26% Asian 12% Other 1% Chart 5: California Lottery Players Afr.- American 7% Hispanics 29% Asian 8% Other 4% Whites 55% Whites 52% Similarly, looking at the data dispels the perception that primarily lower-income people play the lottery. In Chart 6, we see that households with incomes of $35,000 or more account for 56% of Lottery sales. 18 Chart 6: 56% of Lottery Sales from Players with Household Income of $35,000+ $35,000- $49,999 24% $34,999 9% Source: 1998 Player Intercept Study $50, % 35% This is the same as the share of the state population at that income level (Chart 7). 19 Lottery Bulletin
5 Chart 7: 56% of Statewide Population in Households with Incomes of $35,000+ $35,000- $49,999 15% $34,999 12% $50, % 32% Source: California Department of Finance 1998 Population Survey From this review of where Lottery tickets are sold and the demographic characteristics of the customers who buy the tickets, we can see that there is not a disproportionate participation by any ethnic group or income level. In fact, California Lottery players are generally representative of the people who live in California. SuperLotto, the game people have in mind when they talk about winning the lottery, is often believed to appeal uniquely to those with lower incomes. A look at the data shows otherwise. About half (49%) of SuperLotto players have household incomes above the state average of $40,000 (Charts 8 and 9). About 45% of players of any lottery game have incomes above this level. 20 Chart 8: Household Income of SuperLotto Players $39,999 23% $40,000- $59,999 21% 28% Source: Tracking Study $60, % Chart 9: Household Income of State Population $39,999 18% $40,000- $74,999 27% 32% $75, % 4 Lottery Bulletin
6 Notes 1 Gallup Poll Gambling in America, The answers were in response to the question : As you may know, some states legalize betting so that the state can raise revenues. Please tell me whether you approve or disapprove of each of the following types of betting as a way to help your state raise revenue. 2 Maritz Market Research s Lottery Tracking Survey, , based on 5,179 respondents. See note 5, below. 3 California data from Mediamark Research Inc. s 1999 Spring Study, a national survey of 10,000 American consumers. 4 California Government Code Section requires the Lottery to conduct demographic studies after the first six months of sales and thereafter from time to time as determined by the Director. 5 Lottery Tracking Survey of at least 67 phone calls per week for the past 10 years. Playership data in this Bulletin comes from the tracking survey Player Purchase Survey, conducted by Response Analysis Corporation of Princeton, NJ, under the direction of the UCLA Statistical Consulting Center. Whenever player spending is cited in this Bulletin, it comes from the player purchase survey. 7 For example, the final report of the National Gambling Impact Study Commission (NGISC), June Household income data for zip codes from NDS, NDS, See Attachment See Attachment See Attachment See Attachment Source: California Department of Finance 1998 Population Survey for statewide data; data from Lottery Tracking Survey for Lottery players. The difference in the share of Other is explained by the inclusion of a decline to state category in the Lottery s data, but not in the Department of Finance s. 18 Source: 1998 Player Purchase Survey. 19 Source: California Department of Finance 1998 Population Survey. 20 Source: data from Lottery Tracking Survey for Lottery player data; California Department of Finance 1998 Population Survey for statewide population data. The difference between the income groups used in Chart 9 and Chart 7, both of which are based on DOF data, is explained by the different breaks in the two sources to which the statewide data are compared. 8 The NGISC s report only considers the income of residents when discussing the location of lottery retailers in particular neighborhoods. The study does not consider the daytime population of workers who shop in the stores. 9 Source: California Department of Finance 1998 Population Survey. 10 Household income data for zip codes from National Decisions Systems (NDS), Lottery Bulletin
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