Although some have argued that state lotteries are generally recession-proof, this recent economic downturn seems to prove otherwise.

Testifying today before the state legislature’s joint Oversight Committee, Iowa Lottery official Mary Neubauer told lawmakers that Iowa’s lottery was not immune to the downward trend:

Last year, the lottery pumped $56.5 million into the state’s budget. In the current fiscal year that ends June 30, it is projected to give the state $53.6 million. Earlier this year, the lottery had projected the state budget would direct $61.3 million into the state budget.

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The projections get worse for the 2010 fiscal year that begins July 1. The lottery will allocate an estimated $52.1 million in profits to the state that fiscal year, according to information presented to lawmakers.

“We do not anticipate the economy is going to improve in the near future,” Neubauer said. “If anything, it’s going to get worse.”

Most state lotteries were already experiencing a dropoff in sales months ago.  As Chuck Baumann of the Oregon Lottery told Reuters in November, “It’s been kind of an industry notion that lotteries are recession-proof, but I think what we’re experiencing right now is a little bit harsher than slow economies in the past.”

For that Nov. 28 article, Reuters got data from 27 state lotteries.  Of the 27, 14 reported a slowdown in sales, nine reported “steady” sales, and four reported an increase.  This is particularly troubling, because as tax revenue shrinks, state governments rely more heavily on the lottery to keep important programs afloat.