PROVIDENCE — At the rate recession-wary Rhode Islanders are buying Lottery tickets and playing their favorite video-slot machines, the state’s gambling receipts will fall $11.1 million behind earlier estimates for the year.

State Lottery officials delivered the grim news yesterday at a Revenue & Caseload Estimating Conference that began earlier this week amid warnings: “The worst is not over by any means.”

At their last meeting in May, the state’s official revenue estimators — who include the state budget director and top fiscal advisers to the House and Senate — anticipated an overall $365.5 million from the sale of traditional Lottery tickets and video-slot play at Twin River and Newport Grand.

But Rhode Island is now seeing the downturn that is playing out nationwide in the gambling industry. The state’s Daily Numbers game was down 2.69 percent during the first three months of the year that began on July 1, compared with the same three-month stretch a year ago; Keno sales were down 7.06 percent, and Powerball sales down 15.14 percent.

There were bright spots, including an uptick in instant-win ticket sales, but the 4,752 video slots at Twin River and the 1,460 at Newport Grand that have been the big moneymakers for the state trailed last year’s collections during the same months by 0.19 percent. While recent renovations moved players from one location to another at Newport Grand, they did not boost business.

If trends continue, Lottery Director Gerald Aubin and Chief Financial Officer Dan Sarro said, the Lottery’s contribution to state coffers would be closer to $354.4 million than the projected $365.5 million.

In most years, the Lottery has been a reliable and growing contributor to the state treasury. State revenue from the Lottery has increased steadily from $249 million in 2003, to $281.1 million in 2004, to $307.6 million in 2005, to $323.9 million in 2006, to $320.9 million in 2007 to $354.3 million in the 2008 budget year, which ended June 30. The exception in 2007 was due to major construction and renovations that disrupted business at the former Lincoln Park as its new owners created Twin River, which is now struggling financially.

In other words, Rhode Island’s gamblers aren’t gambling enough to meet the expectations of a state that relies heavily on machines with names like “Pharaoh’s Fortune,” “Double Dragon Frenzy” and “Twice Your Monkey” to pay the routine expenses of state government, from school aid to law enforcement to health-care payments to doctors, hospitals and nursing homes of behalf of the state’s neediest citizens.

The revenue estimators have several more days of meetings before they try to reach a consensus on what this latest run of grim financial news means for the state’s bottom line. The state started the year with a $33.6-million deficit, attributed to overspending in the prior year. Overall, revenue fell a further $25 million to $33 million short of expectations during the first quarter of this fiscal year. State officials have not yet said how they expect to pay the state’s potential $10-million share of a settlement with Station nightclub fire victims.

Governor Carcieri suggested recently that the state might be $100 million or more in the hole only three months into the new budget year, but he did not respond to queries yesterday about what actions he is taking — or believes the state needs to take — to plug the hole.

After listening to the morning session, John Simmons, executive director of the Rhode Island Public Expenditure Council, said the governor and lawmakers may not have the luxury of waiting until the General Assembly reconvenes in January to start to address the “clash between decreasing revenues, and increasing demand for services … as people go out on unemployment,” in a state that already has the highest unemployment rate in the nation.

State Lottery officials, meanwhile, took an extraordinary step in their effort to dispel the contention that the payouts at Twin River and Newport Grand are below industry standards at “72 percent to 73 percent,” as alleged in a report issued by University of Massachusetts/Dartmouth Prof. Clyde Barrow early this week.

Aubin made public a breakdown of “cash played” and “cash won” by players at each machine in Lincoln and Newport since Sept. 1. The reports generated for the Lottery yesterday by GTECH placed the average payout at Newport Grand at 90.85 percent and at Twin River at 91.275 percent.

Barrow based his conclusions on the “payout(s)” the Lottery reflects on its own Web site which, in turn, are based on the actual “cash-in” and “cash-out” at the end of each month, and they rarely break 80 percent.

But Aubin said again yesterday that Rhode Island’s payouts only look low because no other gambling venue reports its payouts the same way, and the GTECH-produced report released yesterday is more comparable because it takes into account how much — including “uncashed credits” — are wagered with each play, not how much an individual gambler arrived and left with.

The gambler may only arrive with $100, but by the time it “churns” through an evening of play, it may be reflected in the calculation as two, three or more times that.

“We have gone through this exercise to disclaim the statements by Clyde Barrow that the Rhode Island facilities, Twin River and Newport Grand, have payouts of 73.1 percent and 71.9 percent respectively. As the reports indicate, the overall game payout percentages are 91.275 percent at Twin River and 90.850 percent at Newport Grand,” said state Revenue Director Gary Sasse, the head of the state agency that oversees the Lottery.

Added Aubin: “This should put to rest Mr. Barrow’s misguided statements … Players entering Twin River and Newport Grand are offered the same payout percentages as all of the other jurisdictions Mr. Barrow included in his report.”

kgregg@projo.com