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Ohio Lottery's new Keno game off to slow start

Nov 27, 2008 8:07 PM

Staff & Wire Reports |

The fast-paced Keno game that's expected to help plug the gaping hole in the state budget is off to a slow start.

Keno has been hindered by a weak economy and challenges getting it established at 2,000 bars and restaurants, said Mike Dolan, executive director of the Ohio Lottery.

The game is a central part of Gov. Ted Strickland's plan to insulate the state budget from the economic downturn that has dried up tax revenue.

Keno started Aug. 4 and sales were roughly $32 million through Saturday with profits of about $8 million. At that rate, Keno will fall far short of the state's goal for annual revenue of $292 million -- of which $73 million would go toward the budget deficit.

"The lottery as a whole is facing the same economic challenges that nearly every sector of the economy is facing," Strickland spokesman Keith Dailey said of Keno's lackluster start.

The governor already has issued two rounds of spending cuts and adjustments totaling $1.27 billion from a two-year, $52 billion budget that ends in July 2009. More cuts are a possibility with Keno being one of many factors influencing whether that will be necessary, Dailey said.

Pat McGinty, owner of the Clevelander, said Keno has helped with traffic at his downtown Cleveland bar, but he hasn't noticed much revenue from the game itself.

"It does all right," McGinty said. "It's actually brought in some business for lunch which has helped out."

Ohio modeled its Keno game after the one in Michigan, which began in late 2003. Ohio is behind where Michigan was four months into offering the game, largely because of the economy, Dolan said.

However, Keno sales for the Michigan Lottery were up 7 percent to $527 million for the fiscal year that ended Sept. 30. Sales from all lottery games in Michigan declined slightly from $2.34 billion to $2.33 billion.

Keno's reach in Michigan was expanded to 2,400 retailers over the last year, which Michigan Lottery spokeswoman Andi Brancato said accounts for some of the increase.

"It's just a game that's continued to grow in popularity. It's a social game. It's probably one of our stronger games," she said.

Ohio Lottery officials had hoped to have 2,000 Keno vendors by the end of the year, but it doesn't look like they'll manage that goal with only 1,010 vendors and 270 more in the application process.

Part of the problem has been finding bars and restaurants that are proactive in getting patrons to play Keno, Dolan said. Most of the establishments are new to offering lottery games and Keno has been removed from some that didn't meet sales levels, he said.

"It's been a little more challenging to reach the 2,000 retailer goal," Dolan said. "We're trying to be selective and not pop Keno in everywhere and anywhere."

Keno resembles bingo, with winnings based on how many correct numbers a player has out of 20 numbers picked. Players use video terminals connected to the game online, and new numbers are drawn every four minutes between 11:04 a.m. and 1:44 a.m. A $1 ticket has the potential to turn into $300,000 in winnings.

Strickland was aggressive in pushing for Keno despite concerns of the Republican-controlled Legislature. He bypassed lawmakers and took his request for Keno funding straight to the state Controlling Board, and then had to back off temporarily when GOP lawmakers objected. In the end, however, the Legislature's rule-making committee approved Keno and the funding followed.

One of Keno's opponents, state Rep. Bruce Goodwin, a Republican from Defiance in northern Ohio, said it's taken longer to implement the game than he anticipated.

Keno vendors in his northwest Ohio district are disappointed with the minimal revenue it's generated for their businesses, said Goodwin, who opposed Keno because he didn't want Ohio relying on unstable gambling taxes.

"They want to give it some time and give it a chance to work," Goodwin said. "They were sold some false hope."

Strickland is still confident in Keno, Dailey said, adding that the revenue from the game has been beneficial.

Dolan noted Keno revenue has helped cushion the blow from low sales in Mega Millions, Classic Lotto and several other games. The lottery is about $3 million behind the prior fiscal year in sending profits to the lottery education fund. That figure would be higher without the new game, Dolan said.

"God bless Keno," he said.