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Can the lottery be a win-win?

Sunday - 8/5/2012, 6:00am  ET

Rows of bottles and six-packs of beer cram Hillcrest Beer, Wine

On a recent Friday, a man in a T-shirt and red baseball cap plays some numbers at the red machine nestled onto the corner of the countertop, right next to a plastic case of about 30 scratch-off lotto tickets.

The man exits the store and re-enters. He seems irritated. This same scene repeats itself, despite the fact that it's a boiling day, nearly 100 degrees.

The shop was the first in Frederick County to become a Maryland Lottery Agent Plus in 1997 -- meaning it can cash up to $5,000 in winnings rather than the $600 allowed to regular agents.

A black-and-white laminated newspaper article about that day hangs on the wall above the lottery machine and the man's head.

Gupta said the man, who would not give his name and mumbled only in passing that he had lost $4,000, comes into the store often.

Sometimes, Gupta wonders about her customers. She has a family, after all, she says.

As a store owner, however, Gupta can't let her thoughts wander too far. She has a business to run and three children she's helping put through college.

"It's good for my business," Gupta said when asked about people who come in to play the lottery.

"We do wonder, but we can't be wondering about too many things."

Gupta's store ranked No. 3 overall in Frederick County for commissions -- a total of $274,928.60 earned from the lottery from 2008 through 2011, according to data received through a Maryland Public Information Act request The Frederick News-Post made for earnings of all lottery retailers.

"The commission is our income," Gupta said. "The good thing about lottery is we don't have to put any money in it. There's no investment."

Adding the numbers up

The lottery is a win-win for store owners. That's a sentiment shared by nearly all the operators who spoke to The Frederick News-Post.

More than 4,200 retailers offer lottery games across the state, including about 155 in Frederick County as of May 30.

In total, Frederick County retailers sold more than $178.9 million in lottery tickets and games, including online games such as Keno and Racetrax, from 2008 through 2011. During that same period, those retailers cashed a little more than $76 million in winnings, according to Maryland Lottery data.

Frederick County lottery retailers took in a little more than $9.6 million in commissions, which are currently based on 5 percent of sales and 3 percent in cashing out winners, during that time. Prior to fiscal 2010, retailers' commissions had been based on 5.5 percent of sales and 3 percent of cashes.

According to an analysis by The News-Post, many retailers are concentrated in less affluent sections of the county, near dense shopping areas or along commercial corridors on the outskirts of the city of Frederick.

Seven of the county's top 10 retailers were in areas where the average median income ranged from $42,529 to $66,978, according to U.S. Census data. Three others were in areas where the median income ranged from $80,579 to $99,050. In all, median incomes for the entire county ranged from $39,505 to $136,341, according to the census.

"That's the only way you're going to make your money, if you offer it all," said Dawna Keyser from behind the counter at Brown's Liquors & Deli, an Agent Plus retailer. Brown's, which is on East Patrick Street near downtown Frederick, is the county's No. 4 ranking retailer, with a total of $250,236.68 earned from 2008 to 2011.

Eric Van owns Festival Major Liquors, the county's top-earning lottery retailer -- also an Agent Plus -- with more than $349,890.89 in commissions during the four-year period.

"If someone wasn't playing here, they'd be playing somewhere else," he said.

Lottery earnings

Since it began in 1973, the Maryland Lottery has earned more than $36.1 billion, with about $12.8 billion going toward services meant to benefit state residents, including public schools, safety and health.

Even with the economic downturn in recent years, the lottery has broken its own earning records for 15 straight years. On July 23, Director Stephen Martino announced sales for fiscal 2012, which ended June 30, totaled $1.795 billion -- an increase of $80.4 million or 4.7 percent from the previous year. In total, lottery players took more than $1.066 billion in prizes. It generated more than $556 million in revenue to the state's general fund for fiscal 2012, 7 percent more than last year, according to the lottery.

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