Texas Lottery: Texas lottery legislation seeks to ensure state's share of revenue
Texas State Sen. Jane Nelson, one of the Legislature's most vocal gambling opponents, has sidetracked a measure to extend the life of the Texas Lottery Commission by tucking in a provision saying that the state must receive at least a 25-cent cut of every dollar wagered in every game.
Nelson's amendment to Senate Bill 405, if it survives the legislative gristmill, could doom the already-struggling effort to legalize video slot machines under the lottery's auspices. Critics warned that it could cripple or kill the entire lottery, which generates about $1 billion annually for the state treasury.
But Nelson, R-Lewisville, said she's only trying to make sure that Texas government doesn't run afoul of gambling's basic truism: The house always wins.
"If we are going to have a lottery, I am just trying to protect the state's interest," Nelson said.
State Sen. Ken Armbrister, a Victoria Democrat promoting legislation to legalize slot machines at Texas' racetracks and Indian reservations, said the measure would cost the state money, not generate more revenue.
"What we've seen over the years in the operation of the lottery is that every time you try to tweak something to provide more money for the state, it has an impact on the general public and their willingness to participate," Armbrister said.
He noted that in 1997, the Legislature increased the state's share of lottery ticket sales, which left less money available for prizes. Ticket sales, which had been rising steadily since the lottery's debut five years earlier, slumped dramatically. Instead of the state getting more money, it got less, he said.
That sales slump lingered for several years before rebounding to pre-1997 levels last year.
According to an analysis by the lottery commission, Nelson's proposal would cost the state more than $160 million a year because prizes for the popular scratch-off games would have to be sharply curtailed to the point were people would cut back on their purchases. The state's share of scratch-off sales now averages 22 percent, though some games generate as little as 12 cents per dollar for the state.
Nelson said she's willing to scale back her proposal so that 12 cents on the dollar would be the minimum.
"Let it not be said that I'm trying to kill the lottery's scratch-off games," Nelson said.
But she has acknowledged that she's trying to kill the video slots initiative because "it's just a sleazy way to make money."
Armbrister disagreed with her assessment of slots, but did say that Nelson's proposal would deal them a deathblow in Texas.
Under legislation by Armbrister and others, the state would receive only a few cents on each dollar wagered from video slots. That's because a slot player might enter a venue with $10 that he's willing to risk. He'll lose money some of the time, win some of it back, then lose some, and so on.
By the time the player's session ends, he might have sent $50 or so through the slot machine without using more than the original $10. If the state demanded 25 cents for each dollar wagered, the frequency of winning would decline, and so would someone's willingness to play, opponents said.
The prime goal of SB 405 is to allow the lottery to remain in operation for 12 more years. State agencies are reviewed every 12 years to make sure they are still needed.