Categories
BLOG

do stores make money selling lottery tickets

The benefits of being a
Lottery retailer

The chance for bonuses, incentives and giving back

Do Lottery retailers get paid for selling winning tickets?

There’s a reason over 5,000 stores in Virginia sell Lottery tickets. Virginia’s authorized Lottery retailers are eligible for various commissions and bonuses for selling Lottery tickets.

But what about stores that sell winning Lottery tickets? They see even more money through the Lottery’s Selling Bonus Program. The higher the player’s winnings, the higher the bonus.

How much money do Lottery retailers make from the Selling Bonus Program? In this post, we’ll discuss what the Virginia Lottery’s retailer incentives are and how your store can start selling tickets today.

Do stores make money selling Lottery tickets?

Yes, stores that sell Lottery tickets earn a commission from all game sales.

Authorized Lottery retailers in Virginia currently earn a 5% commission for all Lottery games sold in-store. Those sales record as a “credit” on the weekly settlement report. Commissions do not come out of any winner’s prize.

In addition to ticket sales, there are other ways Lottery retailers get paid.

  • Claims earnings: Winning tickets that are cashed at your store qualify you for additional bonuses. Actual bonus amounts vary by game and year.
  • Retailer bonus: Retail locations that sell draw tickets with prizes of $20,000 or more qualify for further bonus payments. Bonus amounts are tiered according to the winner’s prize. The higher the prize, the higher the bonus.
  • Performance incentives: The Lottery tracks each retailer’s sales and prizes. Stores with higher ticket sales may be eligible for additional retailer bonuses.
  • Retailer promotions: The Virginia Lottery offers periodic promotions on specific draw games or Scratchers. Higher sales commissions can exist for the game being promoted.

The 5% commission combined with bonuses, incentives and promotions add up. In Fiscal Year 2019, the Virginia Lottery’s total gross sales reached a record high of $2.293 billion. Over half of those gross sales went to funding Lottery prizes: The Lottery paid over $1.4 billion in prizes in FY19.

Retailers received $128.7 million in compensation from ticket sales, incentives and winning-ticket bonuses in FY19.

What about bonuses for selling winning Lottery tickets?

Stores that sell winning Lottery tickets earn additional bonuses. Those bonuses fall into two categories.

1. In-store claims bonuses: Scratcher and draw-game winnings cashed at your store entitle you to a 1% commission. All in-store claims bonuses will appear as a “credit” on the weekly settlement report.

2. Big-win bonuses: Big-win bonuses come from selling tickets with a prize of $20,000 or more. Big-win bonuses are particularly exciting for players and retailers. Currently, the Virginia Lottery gives tiered bonuses for big wins:

  • $20,000-$49,999 ticket prize: Retailers receive a $250 bonus.
  • $50,000-$99,999 ticket prize: Retailers receive a $500 bonus.
  • $100,000-$499,999 ticket prize: Retailers receive a $750 bonus.
  • $500,000-$4,999,999 ticket prize: Retailers receive a $10,000 bonus.
  • $5,000,000 prize or higher: Retailers receive a $50,000 bonus.

These bonuses for selling winning tickets apply to draw games and Scratchers.

  • For draw games: Draw-game tickets must be verified by the Virginia Lottery’s scanning system and claimed at a Lottery Customer Service Center or Prize Zone. Any prize totaling over $600 must be claimed at these designated centers following Virginia Lottery rules.
  • For Scratchers: Winning tickets must be claimed by the ticketholder and then validated by a Virginia Lottery official, either at a Lottery Customer Service Center or a Prize Zone.

How Lottery retailers use winning-ticket bonuses

Lottery retailers have a deep history of supporting their communities with their bonuses and commissions. Consider this example below.

  • The Midway Street Kroger in Bristol donated its entire $10,000 big-win bonus to two regional charities (the Jericho Shriners Temple and the Second Harvest Food Bank) after selling a $1 million-winning Powerball ticket.

The Lottery benefits multiple groups

All Virginia Lottery proceeds go directly toward funding K-12 public education in Virginia. Here are some of the ways the Lottery benefits Virginians.

1. Winners

Lottery winnings can be life-changing for the lucky winner.

2. Retailers

Lottery tickets offer retailers a revenue stream with few expenses or operational costs. The combination of routine ticket sales plus retailer commissions and bonuses makes selling Lottery games an attractive option for stores across Virginia. Plus, players stopping into your store to buy tickets are more likely to buy other merchandise.

3. Public education

In Fiscal Year 2019, the Lottery turned over almost $650 million in proceeds to fund K-12 public education in Virginia. That number represented 10% of Virginia’s education budget. It now remains a permanent clause in the Virginia Constitution that all Lottery proceeds go exclusively to supporting K-12 public education in Virginia.

You can get your prize money right where you are: at the retailer. Lottery retailers can cash all winning tickets with a prize up to $600.

Do Stores Make Money Selling Lottery Tickets?

In most states, a limited number of stores sell lottery tickets. These are often gas stations, convenience stores, and grocery stores.

But do stores make money selling lottery tickets?

Yes, stores make money selling lottery tickets — mostly from commissions which average 5% and bonuses for selling jackpot-winning tickets. Lottery tickets are like any other retail product; no retailer in their right mind would sell a product if they weren’t making money from it. Unlike most of the products in such a store, though, the retailer makes its money from commissions and bonuses rather than from a wholesale price plus a markup. Stores also have incentive to sell lottery tickets because it brings in customers; most people buy more than just lottery tickets when they visit such a store — even if it’s just a candy bar.

Here’s more information about how retailers make money selling lottery tickets:

How Much Money Does an Average Store Make by Selling Lottery Tickets?

I’ve seen estimates that the average store selling lottery tickets makes between $10,000 and $20,000 a year in commissions.

I think that’s misleading, though, because there’s a huge difference from store to store. For example, Chuck’s Grocery in Arlington, Texas sells almost $2 million worth of lottery tickets a year. They get a 5% commission on those tickets (as do all stores selling lottery tickets in Texas.)

This means that Chuck’s Grocery makes around $100,000 just in commissions. They also get bonuses when they sell a winning ticket. Chuck’s Grocery customers also win an average of $20,000 a week, and the store gets 1% of any jackpots won there. That bonus caps out at $1 million, though.

And Chuck’s is just the biggest lottery retailer near me. Other stores in Texas that are further away from me drive even more lottery sales. The biggest lottery retailer in Texas is Rudy’s Stop and Shop in Rosenberg, Texas. They sell $6 million worth of lottery tickets per year, which means they average about $300,000 in commissions annually.

A lot of the people buying lottery tickets from stores like Chuck’s are buying into something called The Gamblers Fallacy, which is a topic I cover in detail in my post about The Most Common Winning Lotto Numbers.

What Are the Commission Rates for Lottery Retailers?

Different states pay different commission rates for lottery tickets. Most states pay around 5%, but some states pay as much as 10% of sales.

Here’s a list of states that pay a 5% commission for lottery tickets:

  • Arkansas
  • Connecticut
  • Delaware
  • Florida
  • Idaho
  • Illinois
  • Kansas
  • Louisiana
  • Massachusetts
  • Missouri
  • New Hampshire
  • New Jersey
  • North Dakota
  • Pennsylvania
  • South Dakota
  • Texas
  • Virginia
  • Washington

Many states have commission rates that vary based on how much volume the store sells. Sometimes the commission varies based on which lottery game you’re playing, too. Kentucky is notable for having commissions based on sales goals and performance, for example.

States that pay higher commissions are usually still close to that 5% range. Arizona pays 6.5% on overall sales, which is generous compared to most other states. Colorado, Georgia, and Indiana pay 6%. States like Iowa only pay 5.5.%

The most generous states include Maine, North Carolina, and South Carolina, all of which pay 7% commissions.

How Much Money Do Stores that Sell Winning Lottery Tickets Make?

Retailers don’t just make money from the commissions on their overall sales. They also make money when they sell jackpot winners. These come in the form of bonuses, and the bonus amounts vary from state to state. They can even vary from game to game within the state.

I live in Texas, and the state has a straightforward commission and bonus structure for stores selling lottery tickets. The state pays a 5% commission on sales, and they also pay a 1% bonus to any store that sells the winning ticket for a jackpot. The bonus is capped at $1 million.

North Carolina and South Carolina have a different structure. Their bonus is just a flat $50,000 regardless of the size of the jackpot. This is often less than 1% of the jackpot, but they also offer a 7% commission on sales, so — as my grandmother used to say — it’s sort of like having 6 in one hand and half a dozen in the other.

1% of the jackpot with a capped bonus amount is the standard in most states, though, although some states go higher and pay 2%.

At any rate, it’s clear that retailers stand to benefit from selling more lottery tickets rather than fewer lottery tickets. Not only do they make more in commissions based on the greater sales volume, but they also are more likely to get bonuses for selling winning jackpot tickets. (The more tickets they sell, the more likely they are to sell the winner.)

You might think my post about the 10 Signs that You’re Going to Win the Lottery is interesting, too.

How to Become a Lottery Retailer

I used to own a retail business — a bookstore. I wish I’d thought to learn how to become a lottery retailer. Maybe it would still be in business.

I could have used lottery tickets to draw in more customers and make more revenue for my business.

The goal in becoming a lottery retailer isn’t just to sell lottery tickets for the commissions. It’s also a way to draw in more customers. In my case, my goal would have been to sell more books by having more traffic in my store.

And one of the great things about selling lottery tickets is that most customers buy lottery tickets regularly. It’s easy to get a customer used to visiting your store once or twice a week to buy their lottery tickets.

The first step is to decide if your store is a good fit for becoming a lottery retailer. Does your store cater to people who are making impulse purchases?

If yes, then your store is probably a good fit to apply for a lottery retail license. Gas stations and liquor stores are perfect examples of the kinds of retailers perfect for selling lottery tickets. Bars, grocery stores, and restaurants are also sometimes good fits for the lottery business.

Every state has different requirements for a license to sell lottery tickets. They’ll often check the business owner’s background before awarding a license. They’ll run credit checks and criminal background checks. If you have skeletons in your closet, you might not be eligible to sell lottery tickets.

Your storefront must often meet specific requirements, too. Being wheelchair accessible is usually a requirement to get a lottery license. Security standards are often a prerequisite, too.

Some states offer a single license that allows you to sell any of the state lottery games, including scratch and win games and draw games. Other states require separate applications for separate products.

You’ll need to apply online at the state lottery’s official website. As with any kind of licensing from the government, you can expect to pay an application fee.

You’re usually required to be bonded, too. Lottery tickets get paid for after the sale rather than before, so the state wants to make sure they’re covered. (That’s also the reason for the credit check and criminal background check.)

If and when your license is issued, a representative from the state lottery will help you get started with the appropriate machinery and equipment.

What about the Big Bonuses for Mega Millions and Powerball?

The jackpots for games that cross state lines are often huge. These are the jackpots for games like Mega Millions and Powerball. The bonuses for these games for retailers are different.

The biggest bonus for selling a Powerball jackpot belongs to stores in California. The bonus is still capped at $1 million there. In 2016, a 7-11 in Chino Hills, California got this bonus for selling the winning ticket when the jackpot was up to $1.5 billion.

It’s customary for retailers getting such bonuses to give some of the money to charity and to their employees.

We Sold a Winner

If you’re interested in retailers who have sold winning jackpot tickets and made a pile of cash, you should look into Edie Bresler’s project, We Sold a Winner.

Bresler is a photographer from Boston who has spent years traveling to convenience stores taking pictures of the owners and customers who have won the lottery.

She’s photographed winners in Maryland, Michigan, Pennsylvania, and Virginia, among other places.

Here’s her description of the project:

I follow the trail of winning jackpots ranging from $1million to as much as $415 million, back to mom and pop stores all across the country where the winning ticket was sold. Here are the places and people who keep the lotteries in business. After selling a winning jackpot, stores acquire a lucky aura, bringing in new customers from surrounding communities. While it is true some owners receive a bonus commission, the amount varies wildly from state-to-state and in some states like Georgia, no bonuses are paid for top selling instant scratch winners. In the shadow of someone else’s lucky day, I meet and photograph the store owners, clerks and customers who get up for work the next day, dreaming about what “I would do if I had that money”.

Her photographs are beautiful, and her site is worth checking out. This is the kind of creative stuff that the internet used to be full of and is now hard to find because of the prominence of sites only interested in making money.

Conclusion

Yes, stores to make money selling lottery tickets, in 3 ways:

  1. They get commissions on the tickets they sell.
  2. They get bonuses when one of the tickets they sell is a jackpot winner.
  3. They get more customers in the door to buy lottery tickets and who go on to buy other goods.

Should you find a store that sells a lot of winning tickets?

Do you own a store and want to become a lottery retailer?

Let me know what brought you to this post by leaving a comment.

How much money do stores selling lottery tickets make? Is this a business worth getting into? You might be surprised by some of the answers to these questions. ]]>