LANDRUM — The sign on the wall of the Diamond B Kwik Shop proudly announces how much people won playing lottery games at the store in 2004: $1,051,169.

The sign hangs above a small table and chairs, where eager customers sit and scratch away at $1, $2 and $10 tickets, hoping for a bit of luck to pay off.

For stores like the Diamond B, which sits yards from the state’s N.C. border on Interstate 26, Thursday marks the end of their monopoly.

That’s when North Carolina starts its lottery. Owner Harold Burrell is trying to keep as many N.C. customers as possible.

State officials 120 miles away in Columbia have the same goal. They want to maintain a stream of revenue that the state increasingly has become dependent on for a basic need — education.

S.C. officials plan to use every tactic allowed by law to stay competitive, including touting better prize payouts, advertising targeted at border cities and offering new games to draw back former players.

But for South Carolinians, the first north-of-the-border lottery could mean the loss of millions for college scholarships and staffing, K-12 education and technology.

“That will impact us drastically,” Burrell said, estimating four-fifths of his customers come from out of state. “If (sales) drop ... South Carolina has a problem.”

GEARING UP

North Carolina will allow sales of scratch-off lottery tickets beginning Thursday.

In May, North Carolina will begin selling the same high-jackpot Powerball multistate lottery tickets that South Carolina sells.

The impact could be dramatic. Palmetto State leaders are budgeting a 12 percent drop in lottery sales next year.

That means the up to $290 million the lottery will pump into colleges and K-12 education this year is projected to drop to $245 million next year.

S.C. lottery officials have been planning ways to keep sales up since the North Carolina Legislature approved the lottery last year. They plan new games, such as a “second chance” offering that gives losing ticket holders another shot at cashing in. They also aim to boost advertising and focus on the larger share of revenues that S.C. pays out in prizes.

They also draw hope from neighboring Georgia, where lottery sales continued to increase after South Carolina started its lottery in January 2002.

“I anticipate seeing a dip in traditional instant tickets,” said Ernie Passailaigue, director of the S.C. lottery. “I don’t think it will be a long-term dip.”

Passailaigue said South Carolina should be able to tell the impact on Palmetto State lottery sales a few days after North Carolina starts its lottery.

The state has set sales records every year, though growth began to flatten last year — increasing just $6 million over the previous year’s sales of $950 million. Sales this fiscal year, which ends June 30, are ahead of last year’s pace.

Kentucky’s experience could provide the Palmetto State with a case study. The Bluegrass State had a lottery for more than a decade before next-door Tennessee started its lottery in 2004.

Kentucky anticipated an 8 percent dip in sales. Instead, sales dropped to $707 million from $725 million the previous year, a decline of just 2.5 percent, said Chip Polston, a vice president for the Kentucky Lottery Corp.

Lottery sales in Kentucky counties bordering Tennessee declined most, Polston said.

“The impact was most certainly there,” Polston said. “But it ended up not being as hard as projected.”

TARHEEL DEAL

North Carolina will start its lottery with a handful of instant games similar to South Carolina’s.

The scratch-off tickets cost $1, $2 and $5, with prizes as much as $100,000. South Carolina also sells $3 and $10 tickets, the latter paying as much as $1 million to a winner.

North Carolina law also allows video lottery games, banned in South Carolina. That could mean Keno, a bingolike game broadcast to N.C. bars, restaurants and elsewhere with drawings every five minutes.

Passailaigue has not suggested changing S.C. law or the constitution to add more games.

The General Assembly is not considering changing state games, but lawmakers have proposed bills changing the way the S.C. lottery could buy advertising. It could raise the limit on how much advertising the lottery can do.

Even so, South Carolina faces a disadvantage that Georgia did not have to deal with when South Carolina started a competing lottery on the Peach State’s border: Charlotte.

North Carolina’s largest city sits right on the N.C.-S.C. border. S.C. sales figures show nine of the top 10 lottery outlets most weeks are in York County, just south of the state line.

Among the state’s best chances for stemming the tide: North Carolina law sets aside a higher percentage of lottery ticket sales for education.

That means South Carolina can spend more on prizes, about 60 percent after paying administrative costs, retailers and moving money to the state budget.

North Carolina can spend only about 52 percent, and Passailaigue wants N.C. residents to know that.

By law, the S.C. lottery can spend no more than 1 percent of its revenues on advertising. That’s about $9 million a year.

This year, that money will target out-of-state residents. Passailaigue said television ads will remind N.C. residents of S.C. games.

“It doesn’t matter how many ads we run the first few days,” Passailaigue said of the expected media buzz about the N.C. lottery.

Tom Shaheen, director of the North Carolina lottery, has said he does not see a competition between the two states.

But, Shaheen acknowledged, there is “a history” of higher payouts leading to larger sales.

“It’s not science,” he told The Charlotte Observer. “It works in some states, but not in others.”

SCRATCHING IT OUT

At lunchtime last week in the Landrum store, dozens of customers — nearly all North Carolina residents — come through buying as many as $100 worth of scratch-off tickets.

Hendersonville, N.C., resident Bob Jameson said South Carolina’s higher prizes — coupled with cheaper gas and cigarettes — could keep him driving the 25 miles to Diamond B for his $30 to $35 in weekly tickets.

“It depends on how much I win,” said Jameson, 58. “If the odds are not as good as they are here or if the payouts are not as good, then it might drive the business back down here.”

Gene Franks, a 64-year-old painter and drywall installer from Candler, N.C., 80 miles from Landrum, was working his way through $100 of scratch-offs at the Diamond B.

“I keep some all of the time,” Franks said of the tickets. “I’d still buy here, but I probably won’t come as often.“

Another customer, Asheville resident Jerry Armstrong, said he probably will not be back once North Carolina begins Powerball.

“Not likely,” he said. “I’ll play Powerball every week when it comes to North Carolina.”

Burrell, the Diamond B’s owner, is doubtful his store’s N.C. customers will come back to Landrum.

During big Powerball weeks, such as the more than $300 million jackpot in February, his sales have surged to as high as fifth-best in the state. During those four weeks, he sold $484,000 in lottery tickets.

Burrell owns three stores in North Carolina but thinks he’ll sell fewer lottery tickets, combined, at his four stores than he sells at his one S.C. store now because people will no longer go out of their way for the lottery.

“I’m sure it will have an impact,” Burrell said of the higher S.C. payouts. “But how do you get that word out in North Carolina?”

While the novelty in North Carolina will cause S.C. sales to drop, Passailaigue said the core lottery player recognizes the Palmetto State offers the best deal.

“They’re interested in one thing, and that’s M-O-N-E-Y.”

Knight Ridder newspapers contributed to this report. Reach O’Connor at (803) 771-8358.