Multi-state lotteries: Dream or doom?

Multi-state lotteries: Dream or doom?

Oct. 14, 2000

By Tom Vaughan
Mancos Times Editor

For those who love gambling, passage of Amendment E (multi-state lottery) would be a dream come true — it would open the gateway to those fabulously rich payoffs in Powerball and other multi-state lotteries.

But to those who hate gambling, the passage of Referendum E means more dollars being diverted from rent and groceries in pursuit of wealth against hopeless odds.

By voting on Referendum E on Nov. 7, citizens will approve or disapprove the wording of Senate Bill 00-84, which changes Section 1, 24-35-201(5) of the Colorado Revised Statutes. If the majority of voters mark no, the present lottery system will continue unchanged.

If the majority of votes are in favor of Referendum E, the Colorado Lottery Commission will be authorized to "enter into multi-state agreements allowing Colorado residents to play multi-state lottery games." There are eight multi-state lotteries currently, of which the best known are Powerball (20 states), Cash 4 Life (10 states) and the Big Game (seven states). According to the "Blue Book" analysis by the Colorado Assembly’s Legislative Council, 29 of the 38 states with lotteries participate in multi-state games.

In addition to opening the door to participation by Colorado residents in multi-state lotteries (some Colorado residents go to neighboring states to buy those tickets now), the other major change in the lottery rules will be the distribution of the proceeds.

After prizes and administrative costs are covered, lottery proceeds must now go to Colorado State Parks (10 percent), the Colorado Conservation Trust Fund (40 percent) and Great Outdoors Colorado (50 percent, capped at $35 million in 1992 dollars.

Todd Greco, spokesperson for the Colorado Lottery, said the 1999 distribution to GOCO was $43.5 million. Revenues beyond the GOCO cap presently go to the general fund and are available for refund to the taxpayers.

Referendum E includes language that would transfer lottery income above the GOCO cap to "(school) districts for capital expenditures to address immediate safety hazards or health concerns within existing school facilities." In other words, anything left from lottery revenues after the mandatatory 10 percent to parks, 40 percent to the Conservation Trust Fund, and $35 million in 1992 dollars to GOCO would go to capital construction for schools.

LONG ODDS

Greco quoted the current Colorado odds as 1 in 5,200,000 for the top prize; the size of the prize varies with numbers of sales and participants and was $8 million on Friday, according to Greco. The $20,000 top prize in the Cash Five game has odds of 1 in 201,000.

In contrast, Marilyn Travis, a public information officer with the Kansas Lottery, quoted the odds in the Kansas Powerball jackpot at 1 in 80,089,128. The website for that game (http://www.kslottery.com/winnum.html) put the estimated jackpot value at $21 million for Saturday, Oct. 14. Travis said the chances of winning the $100,000 Match Five prize were 1,953,393 to 1. All tickets cost $1.

The executive director of the multi-state Lottery Association, Charles Strutt, said the odds for Powerball and the other multi-state lotteries are fixed and would not be affected by the entry of another state.

Colorado’s agreement to enter Powerball, to cite one game, would have to be with the other 20 states that participate, plus the District of Columbia. While his organization, based in Des Moines, Iowa, collects the money and draws the numbers, Strutt said, "Powerball is a state lottery," run according to the laws of each state in accordance with the multi-state agreement.

‘JACKPOT FATIGUE’

The Legislative Council estimates lottery proceeds would have to increase by at least 17 percent, or $13.5 million, to make moneys available in the current budget year for school health and safety projects.

In fact, the council notes that lottery revenues have been flat or declining in recent years, a phenomenon called "jackpot fatigue" by Greco.

While the Colorado Lottery is forbidden to take a stand on the issue, Greco did observe that other states entering into multi-state agreements have experienced an initial increase in sales, and then the sales level off after a few years. A similar observation was made by Lyle Cox, owner of Cox Conoco in Mancos, saying that there was an initial spurt of sales when he started selling Colorado Lottery tickets but then it levelled off and "maintains a steady level of sales."

A TAX ON THE POOR?

Gov. Bill Owens was quoted in the Sept. 12 Rocky Mountain News as saying, "This is one where I think I’m going to be on the losing side, but I nevertheless think it’s poor policy to continue to expand gambling in Colorado. Today we have the ability to gamble at dog races and horse races. We can go up to a number of towns in the mountains and gamble in casinos. We have a state-sponsored lottery, which has been expanded to Lotto."

Pastor Lynn Evans of First United Methodist Church in Cortez said, "I’m opposed to any kind of gambling — it’s a tax on the poor."

The League of Women Voters assessment at ( http://www.sni.net/lwvco/lwvballotinfo.htm) cites arguments in favor:

"Lottery sales have been lagging."
"This would provide more money to the state without being an involuntary tax on all citizens."
"Additional lottery dollars would allow for the public purchase of lands for parks and recreational facilities."
"Dollars are needed for school construction."

The opposing points cited by the LWV are:

"Colorado citizens already have many opportunities to gamble."
"Gambling addition is a real problem for some people."
"Legality of this referred statute is questionable." The constitutional amendment that authorizes a lottery within Colorado may not allow sharing that authority with other states.
"State government and the public schools of Colorado should rely on sound financing, not on gambling revenues."

Lottery tickets are currently sold in numerous locations around the county. Jim Berhost, manager of City Market in Cortez, said he had no opinion on the ballot issue. Cox expressed opposition, saying of the revenue that he preferred to "keep it here."

Pete Loyd, owner of P&D Grocery in Mancos, observed that access to multi-state lotteries "won’t generate any new customers for me."

The CRS changes, if Referendum E passes, will also authorize the commission to foot the bill for "all expenses incurred in connection with any such multi-state agreements unless such expenses are otherwise provided for in such multi-state agreements."

"Management of and control over the operation of a multi-state lottery shall be determined by the terms of a multi-state agreement," is another provision of the referendum, a change from the exclusive state control and management of Colorado’s existing lottery.

The proposed changes would exempt the distribution of multi-state lottery proceeds from the restrictions of TABOR (the Taxpayer’s Bill of Rights) — they would not be refunded to the taxpayers as excess revenue.