South Carolina Education Lottery players spent a record $1.14 billion in fiscal 2006, which ended June 30, but a decrease is projected for this coming year.

The state Lottery Commission predicts $935 million in gross sales for the fiscal year that started July 1, said Ernie Passailaigue, executive director.

Meanwhile more students are getting and keeping lottery-funded Palmetto Fellows and LIFE scholarships, said Karen Woodfaulk, director of Student Services at the Commission on Higher Education.

North Carolina's new lottery and high gas prices are part of the reason for the anticipated decline in sales, Passailaigue said.

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Charlotte residents no longer need to drive to Fort Mill for Powerball tickets, and gas prices are cutting into everyone's discretionary income and discouraging North Carolinians from driving across the border to play South Carolina games, he said.

In addition, two monster Powerball jackpots in excess of $300 million pumped up revenue this past year by attracting infrequent players. It's unusual to have two huge jackpots in a single year, Passailaigue said.

Since North Carolina's March 30 lottery launch, scratch-off tickets -- 60 percent of total sales have continued to do well, Passailaigue said. Powerball -- 20 percent of sales -- has declined about 15 percent, and Pick 3, Pick 4 and Palmetto Cash 5 are "growing slightly," he said.

At the Kangaroo Express on Church Street in Greenville, John Gleaton, the assistant manager, has seen no slowdown in scratch-off tickets and enjoyed the Powerball runs.

"People just here for something to drink will see the jackpot and think it can't hurt to spend a dollar," said Gleaton, 25, of Piedmont.

Gleaton, who is finishing a degree at the University of South Carolina and has two small children he hopes will go to college, takes a personal interest in the scholarships the lottery provides to South Carolinians.

South Carolina's lottery started in 2002 to fund college scholarships and education.

The scholarships, created to keep more top students in state, are working, Woodfaulk said.

Almost all -- 92 percent -- of students with Palmetto Fellows scholarships keep them all four years, and 65.4 percent keep LIFE scholarships, Woodfaulk said.

In an age of rising tuition prices, thousands of South Carolina families depend on the LIFE and Palmetto Fellows scholarships, at $5,000 and $6,700 a year respectively, for full-time undergraduate students who maintain a B average.

A three-year state general fund outlook predicts a 7.5 percent increase in appropriations will be needed each year to fund the Palmetto Fellows scholarships and a 5 percent increase in funding for LIFE scholarships.

But what if the revenue stream supporting those scholarships continues to diminish?

"The scholarships have greatly benefited the students in South Carolina and provided us the funding we need to stay in college," said Tommy Preston, a senior and student body president at the University of South Carolina, who has had a LIFE scholarship all four years.

"Any reduction would be detrimental to students in South Carolina, especially with college costs continuing to rise," Preston said.

It's up to the Legislature and governor to determine any change in the program, Passailaigue said.

Scholarship funding already comes from a combination of lottery and general fund dollars determined annually by the General Assembly, said Les Boles, state budget office director. State law calls for any shortfall in LIFE and Palmetto Fellows scholarship funding to be picked up by the general fund, Boles said.

Joel Sawyer, spokesman for Gov. Mark Sanford, said the lottery program could return more money to education, for example, by cutting retailers' percentages from 6 percent to 5 percent, the national average, or by cutting salaries of top lottery officials that he said are higher than the national average.

"If lottery revenue declines, we need to continue looking at ways to make sure the lottery returns more of its sales to education programs in South Carolina," Sawyer said.

State Rep. B.R. Skelton, R-Six Mile, an emeritus professor of economics at Clemson University who serves on the House Education and Public Works committee, said lawmakers "have embarked on these scholarships, and we have to maintain them."

State Rep. Dan Cooper, R-Piedmont, who chairs the Ways and Means Committee, said scholarships are his top priority. Any cuts would be dealt to other lottery-funded items first.

The scholarships are "a way to keep our best and brightest students in state and move them into the economy in the state and move in the good jobs," Cooper said.

State Sen. Mike Fair, R-Greenville, who is on the Senate Education Committee, said that in light of "dismal" overall budget forecasts ahead, he opposes taking money from the general fund to cover a lottery "nose dive."

The universities would have to "get creative again" and find new scholarship money from private or federal sources, Fair said, adding he also opposes any expansion of gambling, such as casinos, to boost revenue.

Clemson University continually looks for new institutional and external sources of financial support for students, said Marvin Carmichael, director of financial aid, who fears that any reduction in the LIFE or Palmetto Fellows "ultimately could increase the amount of borrowing by families."

Carmichael said he doesn't believe any scholarship program change would impact tuition.