Florida lottery players soon will rake in more dough when they win games such as Lotto, Mega Money and Fantasy 5, thanks to a bill signed into law Thursday by Gov. Jeb Bush.
Bush, an outspoken critic of gambling, and state lottery officials are betting that the higher payouts will boost ticket sales for the games, similar to a measure passed three years ago that doubled the sales of scratch-off games.
Higher sales should mean more money for education, which is the stated purpose of the new law. Although increasing the payouts will decrease the percentage of ticket sales going to education, officials say the overall growth in income will boost education dollars.
Bush said he was signing the bill because the lottery pays for Bright Futures scholarships — a program whose growth will exceed its finances in coming years if nothing is done to increase lottery proceeds.
But even the best-case scenario shows that most of the extra money will go back to the lucky winners, not to education.
According to state estimates, boosting payouts from the current 50 percent of gross revenues to 60 percent would increase ticket sales by nearly $1 billion, but would mean only $103.8 million in extra money for education. Winners would net an extra $774.3 million and the state would get an extra $108.6 million for administration of the program.
Under current law, a $1 billion increase in sales would mean $390 million extra for education, but there's no reason to believe sales would increase that much without the impetus of larger payouts.
Florida law currently mandates that at least 39 percent of the revenue goes to the Education Enhancement Trust Fund, which is to be used for educational items such as school construction and Bright Futures scholarships.
Lottery officials have not determined how the increase in payouts will be handled for what they call their online games — Florida Lotto, Mega Money, Fantasy 5, Play 4 and Cash 3.
They must determine, for example, whether to use all of the extra money in a game such as Lotto for a Pick-6 payout, or whether to spread it among the 3-, 4- and 5-match winners.
Or they could use the extra money in special one-time promotions with higher jackpots.
Officials say they plan to increase the online payouts from 50 to 53 percent this year, then to 55 percent next year and to as much as 60 percent soon afterward.
A legislative revenue estimating conference predicted that increasing payouts for online games to 54 percent this year could hike sales by nearly $400 million, putting an extra $65 million into the education trust fund.
Last year, the Florida lottery generated more than $3 billion in sales of instant, or scratch-off, tickets and online tickets combined. Of that, about $1 billion — or about 34 percent — went to education, and $1.7 billion was given away in prizes.
Since 2002, when lottery officials began to increase the payouts on instant tickets, sales have more than doubled — from $662 million in 2001-02 to $1.36 billion in 2003-04, making instant ticket sales nearly half of all lottery sales.
Online sales grew by only 14 percent during the same period.
But the instant ticket sales contribute only 35 percent of the total lottery money transferred into the education trust fund.
The new law gives lottery officials unregulated authority to vary the percentages of gross revenues that go back to players as prize money, which in turn lowers the percentages of revenues going to education. But the law requires that the "percentages must be established by the Lottery in a manner designed to maximize deposits in the Educational Enhancement Trust Fund."
The legislative revenue estimating conference estimated that the maximum benefit to the fund would be a 60 percent payout, which would reduce the percentage going to education to 29 percent. Eleven percent is always reserved for administration of the program, including payouts to stores that sell lottery tickets.
Research shows that increasing prize payouts for instant tickets still nets a "good transfer" for education, Bureau of Economic and Demographic Research analyst Pam Johnson said.
But, she cautioned, no such evidence exists for the online games.
"Basically, we don't expect to see nearly the same kind of response," she said.
And there is no guarantee in the new law that the current amount of money deposited into the education trust fund will continue if ticket sales fail to meet expectations.
The bill signed by Bush also requires that 80 percent of unclaimed prizes to go directly into the education trust fund and 20 percent to go back to the Florida Lottery.
Previously, lottery officials could increase the payouts of online games by dumping unclaimed prize money, about $30 million a year, into the prize pools.
But a legislative analysis said that the "direct transfer of unclaimed prize money would generate no new money for education."
"Taking the unclaimed prize money would mean the Lottery would transfer that much less money from sales," the analysis said. "This loss would be offset by the deposit of the unclaimed prize money into the EETF, resulting in no net gain for education."