Falling lottery sales pinch college scholarships in 8 states

ALBUQUERQUE, N.M. -- The ticket-buying frenzy that erupted over January's $1.6 billion Powerball jackpot wasn't enough to reverse a long-running trend: Proceeds from lottery games aren't keeping pace with the higher education costs they were supposed to pay.

Now lawmakers in at least eight states have made or are considering making dramatic cuts to scholarship programs funded by lotteries. The programs, aimed at opening access to college by providing nearly free tuition, include one at the University of New Mexico that helps nearly half of all first-time, full-time students.

College administrators and students alike are bracing for a blow if more money isn't found.

"This would force students to pay about $1,700 more out of their pockets annually, and most likely, it would mean borrowing more in student loans," said Terry Babbitt, an associate vice president at the university.

New Mexico has one of the nation's most generous programs, paying more than 90 percent of tuition for eligible students. Without any new money, the benefit will have to be reduced to about 60 percent, according to the state Department of Higher Education.

The problem begins with declining ticket sales. When a state establishes a lottery, excitement typically builds and consumers rush to buy tickets. As the games mature, sales level off. After 20 years, New Mexico's lottery sales have plateaued, as have sales for multi-state games such as Powerball.

Changing spending habits play a role too. Millennial consumers, according to some experts, are moving away from lotteries. And many Americans never go inside a convenience store to buy gas anymore, choosing instead to swipe a credit card at the pump. That means fewer opportunities to sell lotto tickets.

The rising cost of tuition and tight state budgets add to the strain.

Affected states have been forced to make painful changes in recent years, tightening eligibility requirements or reducing the amount of aid a student receives.

In New Mexico, lawmakers introduced dozens of measures over the last decade to shore up their program, including making one-time appropriations to prop up the scholarships and shifting $19 million in liquor excise tax revenue.