Abstract
State lotteries have become a significant source of state revenue. The 42 state lotteries, along with the District of Columbia lottery and the Puerto Rico lottery, generated $17 billion in profits from the sale of $57 billion of lottery games in fiscal year 2006. This 30% average profit margin for lotteries is used to fund public expenditures. Lottery administrators continually adjust the mix of games and the features of games in order to maintain interest in lottery play. This paper uses a panel of monthly lottery sales and demographic variables for 831 zip codes from January 1998 to December 2000 to examine the changes in sales of the Pick 3 game per adult and the Pick 4 game per adult. The authors estimate the average percentage gain in Ohio Lottery Pick 3 and Pick 4 sales caused by the introduction of the midday and Red Ball drawings. The sales of numbers games show seasonal variation and other variation over time.