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— Retail Properties Quarterly — September 2015
T
he Colorado Lottery has
given over $2.8 billion in
distributions back to local
communities and the state
of Colorado through its pro-
ceeds partners program since its
beginning in January 1983, when
a single, $1 scratch game was
launched. Sales
for the first fis-
cal year were just
under $137 million.
Times certainly
have changed over
the last 32 years.
Scratch tickets
now are offered at
pricepoints rang-
ing from $1 to $20,
with sales grow-
ing to a record of
$377 million in the
recently completed
2014 fiscal year.
Lottery games contribute in excess
of $500 million annually to lottery
sales since 2010.
Retailer Benefits
Lottery sales and proceeds at cur-
rent levels wouldn’t be possible
without the efforts of more than
3,000 retailers across the state, from
traditional lottery trade styles such
as convenience and grocery stores,
to independently operated liquor
stores, bars, restaurants and bowl-
ing centers, among others. Retailers
that sell lottery products are paid
a commission for every ticket they
sell and for every winner they cash,
which positively impacts the econ-
omy along with providing an oppor-
tunity for consumers and retailers
to give back to their local communi-
ties with every ticket purchased and
sold.
Lottery retailers can be a single,
freestanding business located in a
neighborhood or part of a strip cen-
ter in cities and towns across Colo-
rado. It is important that retailers
understand the importance of lot-
tery profits and incremental sales
to their bottom line as a result of
the additional customers driven to
their business. Also, it is important
to understand that lottery players
enjoy convenience and accessibility
to lottery products at local retailers.
However, there isn’t a presence in
all centers, especially large regional,
power, lifestyle or outlet centers
where many consumers shop.
There are many reasons why
centers choose not to be a licensed
lottery retailer, but also there are
some misconceptions that tend
to dissuade others. Many are not
aware of what type of retailers can
sell lottery products, who to contact
or how to initiate the licensing pro-
cess. Sometimes property and mall
managers feel that lottery sales in
their centers is not a good fit, or
leases are written in a way that
makes it difficult or less profitable
for tenants to sell lottery. However,
the most common issue seems
to be the lack of awareness of the
benefits lottery has to offer to busi-
nesses, centers and the local com-
munity.
The Colorado Lottery always is
looking to license quality retail-
ers and gain a presence in cen-
ters where it is currently absent.
Expanding the retailer base also is
the only sure way to improve the
accessibility to the product and
increase sales and proceeds. Pro-
spective retailers must ensure that
lottery tickets can be sold securely,
profitably and within the lottery’s
high standards of integrity. Retail-
ers and property managers should
evaluate the benefits that come
with selling lottery tickets and the
positive impact it can have for their
business, shopping center and com-
munity.
Commissions and Bonuses
Commissions paid by the Colo-
rado Lottery are among the highest
of any lottery in the country. Retail-
ers receive 7 percent commission
for scratch ticket sales, 6 percent
commission for jackpot ticket sales
and a 1 percent cashing bonus for
all winning tickets validated at their
business. They have an opportunity
to earn additional marketing and
selling bonuses as well. Total prof-
its earned by lottery retailers have
grown from just under $30 mil-
lion in fiscal year 2007 to over $40
million in fiscal year 2014, which
equates to an annual average of
around $13,000 in gross profit per
retailer. In addition to the increased
cash flow and bottom-line ben-
efits, the sale of lottery tickets can
drive additional consumer traffic
with lottery-sponsored promotions
and advertising, all with minimal
upfront costs for licensing and
bonding fees to the retailer.
Proceeds Distributions
The mission of the Colorado Lot-
tery is to efficiently create and sell
its games with the highest stan-
dards of integrity while maximizing
proceeds for the people of Colo-
rado. Profits from lottery sales are
distributed to proceeds partners,
including Great Outdoors Colorado,
Conservation Trust Fund, and Colo-
rado Parks and Wildlife. The groups
are tasked with distributing the
funds to improve and support the
creation of new parks, trails and
recreational facilities, preserve open
space, conservation education and
wildlife projects, all of which posi-
tively impact communities across
the state. Spillover funds above the
statutory limits are given to Build-
ing Excellent Schools Today, which
issues funds in the form of grants
to underfunded school districts to
address health and safety issues.
Selling lottery tickets can ben-
efit businesses not only because of
additional traffic it can drive to cen-
ters, but also provides an opportu-
nity give back to the community.
s
Retail Business
Joel Messmer
Business
development
specialist, Colorado
Lottery, Denver
Retailers that sell lottery
products are paid a commission
for every ticket they sell and for
every winner they cash, which
positively impacts the economy
