States surrounding Illinois ready for lottery business

CHICAGO -- Even buying lottery tickets in Illinois is losing its charm.

With Illinois delaying payouts of more than $600 because of its budget mess, neighboring states -- including Missouri -- are salivating at the chance to boost their lottery sales. Businesses near borders, particularly in Indiana, Kentucky and Iowa, said they already have noticed a difference.

The lottery problems stemming from Illinois' budget impasse have led to a lawsuit and come amid questions about Illinois revenues and a shake-up in lottery management.

Here are some things to know about the situation:

Leaving Illinois

Many gas stations, smoke shops and convenience stores in states bordering Illinois said they first noticed an increase in August, when the state said payouts over $25,000 would have to wait because there wasn't authority to cut checks that big.

Those businesses are reporting a bigger flurry since Oct. 14, when the Illinois Lottery announced it had lowered that threshold to payouts over $600.

Idalia Vasquez, who manages a GoLo gas station in Hammond, Indiana, said irked Illinois residents have been streaming in to buy lottery tickets. She estimates ticket sales are up as much as 80 percent since Illinois' second delay announcement.

"We have long lines, but they're patient with it because Illinois is not paying," Vasquez said of the store about 20 miles from Chicago. "They're all coming here and saying, 'I'm from Illinois; how do you play it here?'"

The Hoosier Lottery even issued a statement welcoming Illinoisans.

Revenue

Lotteries in Missouri, Indiana, Iowa and Kentucky said sales have increased since Illinois first set a cap on prize payouts. But they all cautioned other factors might be in play.

In Kentucky's McCracken County, along Illinois' southern border, there was a 13 percent jump in scratch-offs from July 1 through Oct. 9, compared with a 9 percent jump statewide.

One retailer with higher sales is Paducah's Kentucky Tobacco Outlet, where most customers already are from Illinois. According to manager Michael Coomer, those customers are buying more and say trust in Illinois is gone.

"It's definitely known and very vocal," he said of Illinois' problems. "It's definitely going to be better for us."

Ticket sales in the St. Louis area were up 3.8 percent from June to Oct. 17, while Missouri saw a 3 percent jump. Iowa Lottery officials said five counties bordering Illinois are seeing recent sales that far outpace the overall 3.66 percent increase statewide this fiscal year compared to last.

Hoosier Lottery officials said northwestern Indiana counties near Illinois also posted an increase.

Wisconsin couldn't provide figures.

The Illinois Lottery declined to release its ticket sales data, and spokesman Steve Rossi refused to answer questions about the effect of delaying payouts. He said revenues still are going to a school fund, which is required by law.

When will Illinois pay?

It's hard to say. The Illinois Lottery is one casualty of the budget stalemate, and there's no sign of when it'll end.

First-term Republican Gov. Bruce Rauner and Democrats who control the Legislature haven't been able to agree on a spending plan for the fiscal year that began July 1. Rauner wants to enact pro-business changes before signing off on a budget. Democrats want Rauner to support new taxes. Meanwhile, most state money is being spent at unsustainable rates through state laws and consent decrees.

An attempt in the Legislature last week to release money to lottery winners and others didn't make it to the floor.

For now, anyone who wins more than $600 won't get the money right away because the office doesn't have money to pay those winnings.

Winners already have filed a federal lawsuit seeking payment with interest.

New manager

Illinois is seeking a new lottery manager after terminating its contract with private company Northstar Lottery Group over concerns about management. A legislative report showed the lottery saw a drop in proceeds last year for the first time since 2009.

The state has put out feelers for a replacement, with responses due Wednesday. After that, there will be requests for proposals.

It will take time. Under the termination agreement, Chicago-based Northstar will continue operations until 2017, when a new company is expected to take over.