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For lottery retailers, big jackpots mean extra sales of goods

PHOENIX -- As manager of a gas station convenience store, Leslie Robb said he's noticed that people who come in glancing at the Arizona Lottery sign often make a detour to grab chips and a soda before plunking down money on tickets.

That effect is more pronounced as Powerball and Mega Millions jackpots rise: In addition to increased lottery sales, he sees more customers and more extra purchases of this and that.

"The only reason they are here is to buy lottery tickets," Robb said.

The Arizona Lottery's retailers shared in record-breaking sales in fiscal 2013 to the tune of 6.5 percent of the revenue from tickets sold at their establishments. But a secondary impact of big jackpots is new customers dropping by and purchases made beyond tickets.

"Especially when our jackpots are high, it is going to increase the customer traffic in our retailers," said Raynie Hosto, the Arizona Lottery's director of sales.

At S & J Shop & Ship, owner Shirley Petro said big jackpots prompt people in downtown Phoenix offices to search online for the nearest lottery retailer and, when dropping by for tickets, discover everything her store has to offer.

"I don't make huge profit on the lottery itself, but it's a way to get people into the store," Petro said. "And people buy a soda, plus they buy lottery tickets. That's the way it goes."

Jeff Lenard, spokesman for the Alexandria, Va.-based National Association of Convenience Stores, said that's common among stores selling lottery tickets.

"When somebody is new to your store because of the lottery, they are able to see what you have," he said. "If they don't buy something that day, maybe you can get them to buy something another day because they see some of the great things you have, whether it's food, snacks or whatever appeals to them."

A disadvantage for convenience stores, he said, can be if long lines for lottery tickets discourage current and prospective customers who expect to get in and out quickly.

"If the regular comes in and finds 20 people waiting to buy lottery tickets, you may lose that customer," he said. "The lines are great, the excitements are great, all of that is great, but at the same time you have to make it convenient for your regulars just as much as you are serving any potential new customers."

Tim James, a professor at the L. William Seidman Research Institute at Arizona State University's W.P. Carey School of Business, said lottery retailers profit most from the extra purchases players make.

"The lottery enhances a store's revenue potential and makes it potentially more profitable," he said.

At Robb's gas station, customer Chea Saluny said she buys the lottery tickets twice a week, usually along with chips and beer.

"The key thing is just getting my lottery ticket on time so that perhaps I could be a winner someday and retire," she said.

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