He said if the proposal goes forward, retailers can expect to lose 30 to 40 percent of their sales just in the first year. Customers who come in to buy Lottery tickets also buy other items like newspapers and sandwiches. But if they are not coming for the game tickets, they probably won’t come for those “secondary items,” he told the Budget Committee.
Gas stations and convenience stores depend on Lottery tickets to serve as a major draw for customers that helps in selling other items.
That was the assesment from Sal Risalvato, a spokesman for the New Jersey Gasoline-Convenience Automative Association. Taking away that proverbial carrot could hurt convenience stores since other items would probably not be bought, such as coffee, bread, and eggs.
Risalvato said there has been a major transformation in the fuel business, as many gas stations’ service bays have been converted to convenience stores.
“They have become lottery agents,” he told an Assembly committee weighing partial privatization of lottery operations.
Satish Poondi, policy director for the Asian American Retailers Association, which represents 1,300 businesses, said the main “stakeholders” –convenience store owners – who serve on the “frontlines” of selling Lottery tickets were left out of the discussions regarding the proposal to transfer the sales and marketing operations to a contractor.
Risolvato said gas station owners already operate on very small profit margins, earning a dime for every $3.50 per gallon of gasoline sold. However, Risolvato said for every $6 of coffee sold at the station convenience store, the profit is $5.
“When you come in and buy that Lottery… you smell the coffee, and you buy the coffee, it’s worth having you there,” Risolvato said.
He described convenience stores as “impulse types of stores,” adding that if sales and marketing are turned over to a contractor, the profit motive would prevail over local mom-and-pops’ needs.
“Our members cater to that market,” he said. “If the lottery is privatized…I believe that the footsteps that I’ve have been hearing to bring Internet lottery are going to get louder.”