Why the state lottery stayed successful during the pandemic

Other entertainment businesses struggled to stay afloat

By: - June 1, 2021 3:58 am

Bill Pugliano/Getty Images

Casinos were closed in Michigan for months after the pandemic hit the state in March, but that didn’t stop Michiganders from playing their odds through the lottery.

In fact, during the special August 2020 Consensus Revenue Estimating Conference (CREC), Senate Fiscal Agency Chief Economist David Zin said that during the pandemic, the Michigan State Lottery (MSL) has “had some of the most spectacular months we’ve ever had from the lottery.”

The news came as a surprise to many because the high unemployment rates, the advice from health officials to stay home and shuttered businesses, like bars and restaurants, where many people play lottery games, seemed like a recipe for less lottery play. 

But experts say there are three explanations for the high lottery sales: online games, boredom and the hope for some luck while people struggled financially during the pandemic. 

Jacob Harris, a spokesperson for the MSL, said that lottery sales dropped in the first couple of months during the pandemic. Games that get a lot of play in public settings, like Keno Club, were hit hardest when Gov. Gretchen Whitmer closed bars and restaurants for all indoor service mid-March 2020 to slow the spread of COVID-19.

“We saw players shift some of their lottery spending to other games,” Harris said. “Online games increased during [March through August] and sales for those games were up a bit. Then games that are typically played in bars and restaurants, like Keno and pull tabs, they were down.”

Michigan State Lottery net sales data 2020 | Allison R. Donahue

According to MSL sales data, net sales dropped by over $100 million between January and April 2020, when the MSL recorded its lowest sales. 

But after April, sales began to rapidly increase. And by May, net sales even surpassed pre-pandemic sales earlier that year. Sales peaked for the year in October, recording over $403 million in net sales that month. 

“As things gradually opened back up and people returned to a more normal routine, sales increased,” Harris said. 

Harris said the MSL rounded out the year with about $4.2 billion in sales, which he says is actually on pace with the growth that was expected for 2020 before the pandemic.

Is the lottery essential?

So how did lottery sales stay on track during a pandemic that negatively affected many other businesses?

The lottery remained an essential service throughout the pandemic, even while some leaders raised concerns. 

In April 2020, state Rep. Mari Manoogian (D-Birmingham) wrote a letter to the MSL saying that in-person lottery sales should be suspended through the duration of the governor’s stay-home order and should only offer online services. 

Rep. Mari Manoogian | House Democrats photo

“While I fully understand the importance of the Michigan Lottery’s income to the State, I believe that the risks of further community spread far outweigh the benefits of our communities,” Manoogian wrote. 

The state lottery helps fund the School Aid Fund, which largely covers the state’s budget for K-12 schools. 

In March, the MSL announced that it raised about $1.2 billion for Michigan schools during Fiscal Year 2020, an increase of more than $100 million from the year before.

The MSL didn’t shut down in-person sales, but instead offered retailers to deactivate their lottery equipment upon request and without penalty.

And with many other forms of entertainment closed for much of 2020, including casinos, concert venues, bars and restaurants, some people had expendable finances that they weren’t spending on their usual hobbies, said Paolo Pasquariello, a finance professor at University of Michigan.

‘There wasn’t much else to do’

Mike, a 55-year-old factory worker from Dalton Township in West Michigan, who asked that his last name not be used, said he started playing more during the pandemic.

There wasn’t much else to do and I could afford to spend $5 here and there to buy a scratch off to see what my chances are,” Mike said. 

He estimates that he has won about $300 at the most from playing the lottery.

For Mike’s birthday, which he celebrated in quarantine, his family gifted him a book filled with scratch off tickets because it had become a hobby.

Pasquariello speculated that the increase of lottery play could be compared to the increase in interest in the stock market that took place during the pandemic. 

“We are stuck at home with little to do and some of this disposable income in excess comes from us not being able to do the things that keep us entertained,” Pasquariello said. “We have more monetary disposal because we’re not spending it on leisure activities. And so that seems like a perfect storm of introducing people to internet-based activities that otherwise they would not normally contact, and so some of them are gambling on the internet or buying stocks.”

‘It’s the option that’s available for folks that are almost hopeless’

But for many others, the lottery isn’t a source of quick entertainment. It’s a beacon of hope to get out of a financial crisis.

“You’re asking the spirits to help you win, because you can’t come up with another idea,” said Maureen Taylor, state chair of the Michigan Welfare Rights Organization. “That’s what happens to low-income people, certainly across the country, certainly in Michigan. … And that’s pretty common, especially when the economy goes bad. When so many people lose their jobs, lose their way, can’t keep up with the rising cost of living, they will go to the lottery and ask the Lord to help.”

During the early days of the pandemic in the winter and spring of 2020, hundreds of thousands of people were left without jobs and unemployment rates skyrocketed, while the state’s Unemployment Insurance Agency struggled to keep up with claims for months into the pandemic. 

The state’s average unemployment rate in 2020 was 9.7%, a significant jump of 5.6 percentage points above the 2019 annual average rate of 4.1% and the highest unemployment rate the state had experienced since 2011, according to the Department of Technology, Management and Budget. 

Downtown Party Store in Lansing Michigan on May 19, 2021 | Allison R. Donahue

In April 2020, when many businesses were closed, the state’s unemployment rate was 22.7%, the highest recorded unemployment rate in Michigan history. 

I’m sure I would have looked at the lottery different if I got laid off, but thankfully that didn’t happen. For me it was always for fun, but I can see why others would play for different reasons,” Mike said.

The jobless rate had fallen to 4.9% by April 2021, as businesses have opened and vaccination rates are increasing, bringing more Michiganders back to work and leisure activities.

Still, the pandemic left many people in a financial crisis. 

State lotteries, or “legal gambling” as Taylor calls it, are frequently criticized for aggressively targeting low-income communities and exploiting poor people. 

But for Taylor, the problem is more with the economic system that would drive people to gamble as an escape from poverty rather than support them, she says. 

“It’s the option that’s available for folks that are almost hopeless. I think it can be detrimental,” Taylor said. “We should not have to depend on the lottery to keep people eating or keep them with water bills paid or keep them with lights and gas. … What kind of nation are we where we tell people you don’t have enough money to pay for your activities of daily living, but there’s this lottery, and you might be lucky? It’s an awful way of making options available to folks that are on their last foot.”

As unemployment rates increased astronomically and the world came to a quiet pause, many people were either looking to either make a quick buck or were hoping for some momentary entertainment from the lottery.

I play because there’s always a chance I could win some money,” Mike said.Sometimes all we need is hope during uncertain times.” 


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Allison R. Donahue
Allison R. Donahue

Allison R. Donahue covers education, women's issues and LGBTQ issues. Previously, she was a suburbs reporter at the St. Cloud Times in St. Cloud, Minn., covering local education and government. As a graduate of Grand Valley State University, she has previous experience as a freelance researcher for USA Today and an intern with WOOD TV-8. When she is away from her desk, she spends her time going to concerts, comedy shows or getting lost on hikes in different places around the world.