As a result of the finance and audit committee's dreary budget forecasts for fiscal year 2008, the Oklahoma Lottery Commission is planning to trim costs and attempt to get a key statutory requirement of the commission eliminated.
The board plans to try to amend out a requirement that the Lottery Commission post a 35-percent profit in their third year of operations.
The board said they are doing all they can to trim operating costs without cutting current staff and advertising expenditures, including moving offices upstairs in their current building and turning the first floor into rental space, and opting not to refill four vacant staff positions.
"I hate to say this with staff in the room ... but we might have to reduce staff. Any way you look at it, it's not a pretty picture," Executive Director James Scroggins said in explanation of the finance committee's predictions that ticket revenues will remain stagnant through fiscal year 2010 at about $208.2 million.
He added that the commission operates with the smallest staff when compared to surrounding states' lotteries with comparable populations.
The commission met the required 30-percent profitability benchmarks in its first two years, posting 33.6 percent in 2006 and 32.2 percent in 2007, yet the board doubted it could raise sales beyond the current average of $4 million a week.
The board then discussed ways its revenues could be improved and why it wasn't keeping with regional lottery averages.
Scroggins said the profitability mandates greatly hinder the commission's ability to maximize proceeds for education, and listed other reasons gross revenues are not expected to increase, including low payouts, competition with tribal gaming and casinos, quasi-legal and illegal gaming, and restrictions on game types allowed and retailers allowed to participate by location.
"I'm not saying tribal gaming shouldn't be here ...but tribal gaming is playing by different rules," he said. "It's not a very level playing field for us."
Oklahoma's 53.5-percent scratch prize payout percentage is 10 points behind other state lottery payouts with comparable populations, such as Missouri, Louisiana, Connecticut, and Kentucky. These and other states averaged a scratch-game payout of 63.5 percent, and had an average profit/sales percentage of 28.6, far below Oklahoma's mandated 35 percent.
Only Louisiana operates with such a mandate, yet it has higher payouts and higher profits.
When discussing how game-type restrictions hurt profits, Scroggins said adding video lottery, keno, and pull-tabs games could increase revenues by $45.7 million if Oklahoma only made the lowest annual per capita rate achieved by other states.
Scroggins, who has been running state lotteries for 30 years now, said that increasing payouts on scratch games increases sales.
"People play to win. The more they win the more inclined they are to play, " he explained.
The commission also hopes the addition of its lottery game show will also boost sales. It begins taping this week and will air beginning Oct. 13 in Oklahoma City on the CW Saturdays at 6 p.m. and in Tulsa on Cox Channel 3 Mondays at 2:30 p.m. and Wednesdays at 6:30 p.m. Contestants will be able to win prizes up to $8,000 in preliminary rounds and up to $50,000 in the championship.