By ANDREW WELSH-HUGGINS
From the Associated Press, January 3rd, 2002

COLUMBUS, Ohio (AP) -- Ohio schools have received $12.5 million less than expected from the Ohio Lottery halfway through the 2002 fiscal year as lottery profits continued their downward slide, records show.

The lottery earned $296.9 million from July through December, down from $319 million over the same period a year ago and $348 million in 1999, according to records released Thursday by the Ohio Lottery Commission.

In fiscal 2001, lottery profits fell for the fourth straight year and sales dropped 10 percent despite the addition of a new game.

Officials had estimated that the lottery would earn $309.4 million through the first six months of this fiscal year.

Although profits were down, lottery sales were up slightly, from $947 million over the first six months of last year to $969 million this year.

Profits declined despite increased sales because the lottery was paying out more in prizes, Mark Polatajko, the lottery's deputy director of finance, said Thursday.

A change in state law this year gives the lottery more flexibility in increasing its prizes.

Mardele Cohen, a lottery spokeswoman, said the lottery budgeted $608 million to the Ohio Department of Education for this fiscal year. She said even though six-month profits were below expectations, the agency still will meet its commitment. She pointed out that sales increased this December over last, a trend she expects to continue.

"We're in between two business models," she said. "What you have now is we're turning the corner. We know we're paying more out, but as we get sales up, that will lead to increased profits and everything will fall in line."

By law, lottery profits must be forwarded to the education department, where the money makes up 6 percent of the budget.

The fact that profits are falling below what the department budgeted will be a concern if the trend continues, Paul Marshall, a department lobbyist, said.

The department can dip into a $36.4 million reserve fund available if lottery profits don't meet estimates, he said. A worst-case scenario is returning to lawmakers for more money, Marshall said.

Ohio is deciding whether to join Powerball or the Big Game to increase sales and profits. Gov. Bob Taft estimates that joining a multistate game will generate an additional $41 million a year.

Several church groups and the Ohio Roundtable, a public policy group, have said they will sue the state if it joins a multistate game, arguing that participation in such games violates the Ohio Constitution.

The sooner Ohio can join a multistate game the better, said Beth Noble, 33, who manages a Speedway gas station and convenience store on the west side of Columbus. Although lottery sales aren't down, they could be better, she said.

Many customers drive from central Ohio to Indiana or Kentucky when Powerball jackpots get high, Noble said.

"We have people, they'll meet here for carpooling and take off," she said. "They'll go down there to get it. They'll ask us, 'Do you want to buy some?"'