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Lottery dealer opens his books to show he's not getting rich

Jan 24, 2005, 10:09 am

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Oregon LotteryOregon Lottery: Lottery dealer opens his books to show he's not getting rich

Customers strolling into Jammer's Bar and Grill at 12th and Hoyt Street SE can spend their paychecks on 18 taps of beer, hard liquor, burgers and munchies, and five pool tables.

But barkeep Scott McComas' biggest profits come from the folks glued to six video-poker machines lining his tavern's rear wall, alongside an ATM.

The Oregon Lottery Commission is expected to vote Wednesday to add slot-machine-style games to its network of video-poker terminals housed in bars and restaurants across the state. In exchange, the Oregon Lottery is pressuring McComas and other retailers to revise six-year contracts signed last year by lowering their share of video-poker profits.

McComas called the Lottery's effort "un-American," and said it would cause great harm to his business. To make his point, he offered to open up his books, sharing his IRS corporate-tax filing and a monthly profit-and-loss report.

"Everybody wants a piece of the pie, but nobody wants to go down and work with me in the morning," said McComas, who starts his workday at 5:30 a.m.

Education backers, who are urging the state to keep more of the video-poker profits and share less with retailers, make it sound too easy, McComas said, "like all we do is walk in, dust the machines off and go on our way to the bank."

Cash cow?

Nevertheless, McComas said it's not making him rich.

"I personally draw a salary of $4,100 a month, so how good has it been?"

That's $49,000 a year for a management job consuming 50 hours a week. He also earns profits from his business. McComas' 2003 corporate tax filing with the IRS showed Jammer's had a taxable income of about $6,000.

Tax forms allow businesses to understate profits via depreciation allowances and other deductions. McComas said his real profits haven't topped $22,000 in any of his 13 years owning Jammer's, the last 11 of them as a video-poker host.


One of McComas' first chores when he arrives at work is tending to lottery proceeds from the prior day. It takes two to 2 1/2 hours a day to process the money and balance the books, he said.

Hosting video poker also requires indirect costs, such as providing retail space, stools, insurance and banking services.

McComas spends money to make Jammer's a nicer place to drink beer, play pool and wager on video poker. That enables the Lottery to make more money from its video-poker terminals.

McComas spent $7,500 for three air cleaners that make the place less smoky.

"A good, responsible owner reinvests in his business," McComas said. "Without the lottery, I couldn't have done that."

Like many bar owners, McComas prices his food to keep people drinking, rather than make big profits. Jammer's sandwiches and other food are priced only 7 percent more than the ingredients cost, he said. That doesn't factor in labor and other expenses.

Jammer's has become a top hangout for Salem's competitive pool players. McComas reported spending about $20,000 per year in free T-shirts and other promotional expenses, including paying for "regulars" who travel to pool tournaments. He also sponsors youth sports teams.

Beer is a big source of profits. Those 18 taps rang up $11,803 in sales in November, according to a monthly profit-and-loss statement. Those suds cost him $4,121.

Poker most profitable

There's no doubt about the value of video poker to his bottom line.

When McComas invested $8,500 for the ATM, that enabled players to shell out more of their money on the six adjoining video-poker terminals. His video-poker profits zoomed about 20 percent higher.

"I would guess between 30 to 40 percent of the time, my machines are full," he said.

For the first time, he is pursuing a health insurance plan for employees, which would provide medical, dental and prescription coverage. He would pay half the $375 monthly cost.

Lottery retailers resent critics who accuse them of milking the state-run system. They view themselves as partners with the Lottery, helping the state earn more for public schools, parks, salmon habitat, and economic development projects.

"We've been more successful than any other lottery," said Bill Perry, lobbyist for the Oregon Restaurant Association, which represents the retailers. "How can anybody say we're not maximizing revenue?"

Call for change

A growing number of critics say the Oregon Lottery has been too cozy with retailers, at the expense of public services it was designed to fund.

The Lottery's job is "not to keep the retailers in business," said Jonah Edelman, leader of the group Stand for Children. "There's been a sense of entitlement, it seems, to this money."

In the six-year contract the Lottery negotiated last year, bar and restaurant owners accepted a 10 percent drop in their video-poker profits. That reduced their share to 28.8 percent of profits, on average. Edelman and other education advocates want to slash that to 15 percent, citing studies that show that retailers still would make a tidy profit.

Lottery Director Dale Penn opened a new round of talks recently, suggesting that retailers replace the 2004 contract with one providing them 25.6 percent of profits. That would reduce their video-poker earnings 11 percent on average. Penn projected they can make more money than before because electronic slot games will lure new customers who didn't play video poker.

McComas and other lottery retailers said they'll fight to retain their existing contract instead.

Lottery profits dropped $3,000 to $4,000 per month, McComas said, after Native American tribes opened Spirit Mountain Casino in Grand Ronde and Chinook Winds Casino Resort in Lincoln City. Reduced terms in the 2004 contract cost him another $23,000 a year, he said.

Penn's proposed new terms could cut his proceeds another $10,000 a year, McComas said. That's based on the Lottery's sales projections, which were derived from other states' experiences with electronic slots.

McComas said a 15 percent profit share from video poker, as school advocates demand, would be catastrophic for Jammer's. "I'd be out of business, plain and simple."

Lynn Lundquist, president of the Oregon Business Association, said the retailers should settle for lower video-poker profits so that more money can go to schools and other services.

Lundquist, a former Republican House speaker and economics professor, praised McComas for opening up his books. But he said a fuller analysis of the role of video poker requires detailed accounting.

The telling evidence, Lundquist said, is the claim by McComas and others that substantially reducing their video-poker profits would force them to close their doors.

"So that means then the lottery is subsidizing your business, and without the lottery you wouldn't be in business," Lundquist said. "That's the crux of the matter."

Statesman Journal

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1 comment. Last comment 15 years ago by MADDOG10.
Page 1 of 1
MADDOG10's avatar - smoke
Beautiful Florida
United States
Member #5709
July 18, 2004
23977 Posts
Posted: January 24, 2005, 10:53 am - IP Logged

  what ever happened to the " little guy " making money, instead of the government. if the government officials already signed a contract for x amount of profits for the retailers, they should live up to their part. period..! if the " little guy " opens up his books, then maybe the lottery commission ought to do the same. maybe they may be the ones making all the profits. just my opinion, but something smells a little fishy in that Salmon habitat...!     


                                               "Slander becomes the tool of the loser when the debate is lost." - Socrates.