SALEM In recent weeks, Oregon Lottery officials have installed 400 new casino-style slot machines in bars and taverns across the state in hopes of boosting player interest and ending a slump in lottery play.

Lottery Director Dale Penn said the plan is to install another 2,100 of the newer machines in retail establishments soon to replace some of the lotterys older-style video lottery terminals.

Were real hopeful that we can bring some players back and encourage others to play more, Penn said Friday.

His comment came a day after state economists issued a new forecast saying the slumping economy and other factors likely will result in a $43 million drop in expected Oregon Lottery revenue in the current budget.

That forecast reflects similar declines in many lotteries across the country, said Mary Loftin, a spokeswoman for Oregons lottery.

The gambling industry as a whole for years was thought to be recession-proof, but this recession has changed that view, Loftin said. Across the country, lottery sales are down.

In Oregon, lottery retailers have been hit with the double whammy of a lousy economy and the advent of smoke-free drinking establishments with a state smoking ban that took effect Jan. 1.

Lottery officials and some retailers have said the smoking ban hurt lottery sales by sending some players to tribal casinos where they can still indulge their nicotine habit while playing the slots and other gambling games.

Penn is hoping the new video terminals, which cost nearly $30 million, and other steps will bring players back to lottery establishments. The new terminals will offer nine slot machine games and three video poker games, he said.

Having new games is very important. Thats what players want to see, the lottery chief said.

Oregons lottery is an important source of cash for the state, generating more than $1 billion for schools, parks and other programs in each two-year budget.

However, not everyone is pleased to hear about the states new efforts to ramp up state-sponsored gambling. Tax dollars not people losing money on slot machines should fund state programs, said Ellen Lowe, a veteran social services advocate.

I acknowledge that the lottery is part of Oregons culture, but I think it is irresponsible for us as a state to look to the lottery as a major source of funding for services, Lowe said.

Penn said, however, that Oregon voters adopted the lottery in 1984 and see it as a good way to help pay for schools and other programs.

He noted that a portion of lottery proceeds are used to make treatment programs available to any players who feel they are problem gamblers.