Lottery reform gambling on bigger payoffs, better odds – Enid News & Eagle

OKLAHOMA CITY While lottery sales in most states are smashing records as people spend big on scratch-off tickets, the Oklahoma Lottery is on course for one of its most dismal performances.

Officials say its a blow for the states voter-approved game of chance. The lottery was once heralded as the savior of education amid over-inflated promises from lawmakers that it could bring in as much as $300 million to $500 million a year for schools.

It was probably the best marketed thing that weve ever seen because here it is a decade later and people still think that it is still some sort of solution to education funding woes, and the reality is its probably less than 1 percent of any school districts budget, said state Sen. David Holt, R-Oklahoma City.

In just over a decade, the states lottery has contributed a little more than $750 million to education, but lottery contributions have been declining since last peaking at $71.6 million in budget year 2008. If lawmakers do nothing to address the situation, state budget officials predict the lottery will lose another $25 million over the next five years.

I dont like the lottery'

Every day for the past seven years, somebody has asked Holt about the lottery and why its not fixing the states education funding woes.

I always have to explain nothings broken about the lottery. It just didnt raise the money that was predicted, he said.

Reform advocates, though, say the states system is crippled by an antiquated, restrictive and broken framework that does little to incentivize people to gamble. In hopes of revitalizing the lotto, theyre pushing a measure that would overhaul that framework.

As other states have raised prize amounts for instant win games better known as scratch-off cards and increased the odds of winning, Oklahomas rigorous and some claim anti-gambling framework has made it impossible to offer the lucrative prizes that players demand, said Jay Finks, director of marketing and administration for the Oklahoma Lottery.

It hasnt underperformed based on the law, he said. We have overperformed based on the overly restrictive law.

Oklahomas prizes and odds of winning remain among the worst in the nation, and many players have simply deduced that the state-sponsored lottery is a bad bet, he said.

That leads people to stop playing altogether or go to another form of gaming to play, he said. People want to play and win.

In 2016, national lotto sales grossed more than $80 billion more than $22.5 billion of which flowed into state and local coffers, according to the North American Association of State and Provincial Lotteries, which represents the majority of lottery systems, including Oklahomas.

Oklahomas lotto sales lagged behind the national average of $216, according to a legislative budget analysis. Neighboring Arkansas, which offers larger prizes, saw per capita sales of $138 in 2015 while Oklahoma saw $44, the analysis found.

Lawmakers have long been aware that the states lottery is in crisis, said former state Rep. Mike Shelton, D-Oklahoma City. Among the legislators who initially helped set up the lottery laws, Shelton unsuccessfully pitched legislation to overhaul the program for years and was among the first to champion updates.

Our Legislature has known full well that the law needed tweaking, but theyve never touched the lottery, he said.

For those colleagues frowning upon games of chance, the idea of incentivizing gambling by making it more lucrative proved a tough sell, Shelton said.

(Lawmakers) have just told us, We dont want to increase gaming, so were not going to help the lottery,' Finks said. 'I dont like the lottery. I want you (the lottery) to die.'

Dollars and cents

Proponents of change, though, continue to push lawmakers to remove the mandated portion automatically allocated to schools so that it can be adjusted closer to the industry standard of 25 cents. The state would be able to offer more appealing games to consumers and increase the lottos overall revenue, they say.

Lawmakers are currently vetting the measure, which has passed the House, but is awaiting a Senate vote. Bill author Rep. Leslie Osborn, R-Mustang, did not respond to a request for comment.

Under current law, for every $1 lottery ticket sold, 35 cents goes straight to education. Retailers, who sell tickets, receive 6 cents. The vendor who runs the games makes 4 cents, while the states lottery keeps 3 cents for administrative costs.

You cannot have a successful lottery if you only have 50 cents for prizes, Finks said. That doesnt leave you enough money to put prizes where they need to be.

At 35 cents, Oklahoma has one of the if not the highest fixed percentages in the nation, he said.

State budget officials estimate that eliminating the mandate would actually increase the lotterys contributions to education by $110 million in the next five years as more people play.

Under current law, 45 percent of the proceeds go to K-12 education. Higher education and other educational programs share another 45 percent. The remainder is split between a school consolidation fund and the Oklahoma Teachers Retirement System.

If lawmakers had adjusted that amount sooner, schools would already be benefiting, Shelton said.

I think the lottery has done what weve given it the power to do, he said. What we did was left it to fail intentionally. Oklahoma is a gambling state. We should have set it up to work. The lottery was set up to help our kids, and people are going to spend the money whether theyre going (to) casinos, whether theyre playing the lottery.

Last year, the state saw more than $3 billion spent on gambling, but only a small percentage of that $188.7 million was spent on the lottery, Finks said.

Right now, the only way we survive is to get a big jackpot, Finks said, referring to the states two non-instant win games Powerball and Mega Millions.

Last year, Oklahoma only sold $77.5 million in scratch-off tickets, he said. This year, sales are predicted to drop to less than $70 million.

The decline isnt a surprise for Ross Hutson, general manager of Duncan-based City Mart Energy, which sells lottery tickets at 16 convenience store locations in the Duncan and Pauls Valley areas.

He said fewer customers are buying the scratch-off tickets. His busiest locations sell between 70 and 100 tickets a day, he said.

If the prizes were better, it would be an increase in ticket sales, Hutson said.

Better payouts and odds'

If lawmakers approve the measure, budget officials estimate retailers like City Mart will see a windfall as well. Statewide, businesses could expect to generate an additional $25 million in new revenue over five years.

Were certainly not going to keep the lights on by selling lottery tickets with our percentage, Hutson said. He said the games help draw customers into the store, who hopefully spend money on sodas, candy bars and other items.

Checkout stands at the states retailers could have a different look in July. If lawmakers ultimately approve the overhaul, lottery officials plan to throw out their current instant win games and replace them with new games that all have better payouts and odds, Finks said.

While Holt said he supports the legislative measure, he doesnt believe it will increase lottery play tenfold.

I think the theory is sound and I think it will help but I think people need to understand it will never get the lottery proceeds up to the levels that were predicted when this was considered by voters a decade ago, Holt said.

Janelle Stecklein covers the Oklahoma Statehouse for CNHI's newspapers and websites. Reach her at jstecklein@cnhi.com.

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Lottery reform gambling on bigger payoffs, better odds - Enid News & Eagle