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Are lawmakers selling the Texas Lottery short?

Apr 13, 2017, 8:39 am

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Scratch-off lottery tickets are big business in Texas.

They raise billions for state coffers and are so popular that as many as 95 new scratch-off games are introduced here each year, making up a sizable chunk of overall Texas Lottery sales, officials say.

But lottery officials are worried they will have to cut back on the variety of scratch-offs offered — and on the advertising that promotes the games — now that Texas budget writers are considering cutting as much as $18 million from the agency's budget.

These budget cuts could lead to a drop in ticket sales, which could dramatically shrink the amount the lottery gives to the state to help pay for education and Texas veterans.

"It looks, apparently, to the Legislature like we don't need what we've got," Texas Lottery Commission Chairman J. Winston Krause said during a recent meeting. "It's astounding we are that successful but our success is being used against us.

"The bottom line is it's going to hurt what we do."

Overall, the lottery has transferred more than $20 billion to the Foundation School Fund and more than $77 million to the Fund for Veterans' Assistance.

At issue this session, as a conservative Texas Legislature works to craft a final budget, is a proposed $18 million reduction to the lottery budget in the Senate and a proposed $6 million cut in the House over the next two years.

Both chambers have passed budgets, which now will be hammered out in a conference committee where lawmakers will craft a final version.

Lottery officials say the Senate's proposed cuts in advertising, marketing and promotions could bring a loss of about $108 million in revenue to the Foundation School Fund, and the House's cuts could reduce revenue to the school fund by $20 million.

This continues a years-long battle between the Legislature and the Lottery Commission, as critics maintain the game financially hurts some of the most vulnerable Texans and doesn't do enough to help the state. Supporters disagree and question where enough money can be found to replace revenue lost if the entrenched business is shut down.

"The Legislature will adequately fund education with or without the lottery," said state Rep. Tony Tinderholt, R-Arlington. "The lottery is afraid they won't be able to market to low-income people to get them to buy scratch-off tickets.

"I have no desire to spend more money telling people who can't afford it to play the lottery."

State Rep. Ramon Romero Jr., D-Fort Worth, is among those hoping the Lottery Commission suffers as little a funding hit as possible.

"I don't think this should be a target because the money predominantly goes to education. Is this the wrong place to be funding education? Absolutely," he said. "You shouldn't fund schools with a fund that goes up and down or can be targeted this way.

"But now you're jeopardizing Texas kids' education," he said. "The best-case scenario for the Lottery Commission is that the House conferees hold their ground and don't let the Senate conferees take any more than $6 million."

A long history

In 2013, the issue came to a head when members of the Texas House, in an unexpected move, voted to do away with the lottery.

Within hours, as questions arose about how to replace the revenue for the state's public schools, legislators shifted gears and continued the lottery.

The lottery began in 1992, after state lawmakers and Texans themselves voted the year before to allow the sale of tickets to avoid a huge tax hike to counter a budget shortfall.

Since the Texas Lottery began, $25 billion has been generated in revenue for the state, including more than $19 billion for Texas public education and more than $66 million for Texas veterans, lottery records show.

Last year, state officials announced that the Texas Lottery for the first time topped the $5 billion mark in scratch-off and lottery drawing tickets during the 2016 fiscal year — and put a record $1.39 billion into state coffers.

That was the 13th consecutive year that the lottery put more than $1 billion into state accounts, officials have said. Scratch-off tickets made up $3.72 billion of those overall sales, records show.

At the same time, more than $50 billion in prizes, including $3.27 billion in 2016, has been paid out to players, lottery records show.

Before 1997, lottery proceeds went into the state's general revenue fund. Since then, they have gone to the Foundation School Fund, which is administered by the Texas Education Agency, according to the Lottery Commission.

Lottery concerns

Lottery officials unsuccessfully asked state lawmakers to restore their proposed reductions to the budget.

They also asked them to consider adding a "rider" to the state budget that would develop a new funding mechanism for scratch-off tickets.

If sales reached a certain level, then additional money would go to the agency to allow a larger variety of tickets to be produced.

The Senate denied the request; the House put it in its so-called Wish List.

"In order to be responsive to the market preferences of our consumers ... we've explored new scratch ticket game opportunities and product enhancements that allow for us to generate revenue for the Foundation School Fund and the Texas Veterans Commission," said Kathy Pyka, the Texas Lottery's controller.

With the budget the way it is, she said, "the commission will not be able to offer the unique and innovative products we have been able to offer."

Commissioners at the April 6 meeting appeared frustrated.

"Any loss in revenue here has to be replaced for somewhere else," Lottery Commissioner Carmen Arrieta-Candelaria said. "I think that to reduce the budget here really translates to a loss in public education dollars.

"It's incumbent upon all of us ... to call on the Legislature and impress on them how important this is... [to] get the budget restored to last year's levels."

Mixed reactions

State Rep. Craig Goldman, R-Fort Worth, cautions that nothing is a done deal yet.

"Nothing is final until after the conference committee meets and the final budget is voted on by both chambers in May," he said.

But some local lawmakers say they'd like to do away with the lottery entirely.

"It is not the proper role of state government to be administering a 'lottery,' which is why I support eliminating the Texas Lottery altogether," state Sen. Konni Burton, R-Colleyville, said. "We need to end the ridiculous hypocrisy of Texas outlawing gambling while having our own state-owned lottery."

State Rep. Nicole Collier, D-Fort Worth, said she believes the proposed lottery cuts are the wrong move.

"The proceeds from the Texas Lottery, including 'scratch offs,' go to very worthwhile programs including public education and veterans support services," she said. "I believe that cutting the marketing budget will ultimately lead to cuts in such programs at a time when they can least afford it."

Texas Lottery Commissioner Robert Rivera, an Arlington city councilman, said he and other commissioners will do the best they can with the money they are allotted.

"The budget is not in the direct control of the commission," he said. "Whatever resources are made available to the Lottery Commission, I'll do my best to administer them to benefit Texas schools and veterans."

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11 comments. Last comment 5 years ago by mikeintexas.
Page 1 of 1
Avatar

United States
Member #164717
March 12, 2015
1300 Posts
Offline

95 new scratchers a year is ALOT.  I dont think cutting back will harm sales. As to advertising, what specifically do they mean? I think people buy scratchers on what is based in the store case and posters where lottery scratchers are sold. As to television/radio/website -- not so much.

    Todd's avatar - Cylon 200.jpg
    50
    Chief Bottle Washer
    New Jersey
    United States
    Member #1
    May 31, 2000
    26502 Posts
    Online

    Advertising does in fact generate a great deal of sales.  It if didn't, they would not advertise.

    Everything being done with creating and selling scratch games is a finely-tuned machine for state lotteries at this point.  All those new games generate more excitement and sales.  They really know what they're doing.

    In Texas there is a strange group of legislators who are extremely anti-lottery, so when you see stories like this about the Texas Lottery and cutting back, just be aware of where that is coming from.  If you're a fan of the lottery, these people are working against your best interests.

     

    Check the State Lottery Report Card
    What grade did your lottery earn?

     

    Sign the Petition for True Lottery Drawings
    Help eliminate computerized drawings!

      Technut's avatar - moon
      3rd Rock from Sun
      United States
      Member #159096
      September 13, 2014
      178 Posts
      Offline

      The People made the choice to have the lottery to begin with a long time back. Since then many elections have come and gone and legislatures have changed. i believe they should concider public choice before trying to get rid of the lottery. Otherwise they may end up without a job thru the vote.

      Yesterday is History, Tomorrow is a Mystery, Today is a gift that's why it's called the PRESENT! (c8

        Avatar
        Simpsonville
        United States
        Member #163182
        January 22, 2015
        2757 Posts
        Offline

        The People made the choice to have the lottery to begin with a long time back. Since then many elections have come and gone and legislatures have changed. i believe they should concider public choice before trying to get rid of the lottery. Otherwise they may end up without a job thru the vote.

        That state seems to be going backwards in more ways than one!

         

        Doubt they'll ever have on-line lottery sales--too 21st Century for them. Legislators that is, NOT ordinary common sense citizens.

         

        Casinos?  Forget about that too!

          bobby623's avatar - abstract
          San Angelo, Texas
          United States
          Member #1097
          January 31, 2003
          1648 Posts
          Offline

          Anyone in Texas ought to know that our politicians are born and bred idiots.
          Voters often are upset by what goes on every two years, but they go to the polls and re-elect those already in office.
          Seems the only time there is a change, its because the current office holder died.
          Voting against the lottery sells in their churches, but, they know there is no way the Governor is going to sign a bill that kills the Golden Goose.

            rcbbuckeye's avatar - Lottery-062.jpg
            100
            Texas
            United States
            Member #55887
            October 23, 2007
            12275 Posts
            Offline

            Anyone in Texas ought to know that our politicians are born and bred idiots.
            Voters often are upset by what goes on every two years, but they go to the polls and re-elect those already in office.
            Seems the only time there is a change, its because the current office holder died.
            Voting against the lottery sells in their churches, but, they know there is no way the Governor is going to sign a bill that kills the Golden Goose.

            I really like (love) living in Texas. Been here 19 years now. Our lottery is one of the (if the most) transparent lotteries in the country. But you are right bobby. I just can't figure out why our politicians are such idiots. They seem to go out of their way to kill their goose that has been laying golden eggs for years.

            It's obvious that Texans love to buy lottery tickets, but our politicians are no different than anywhere else in that they don't really care what their constituents want, they just feel they have the right to tell people what is good for them, instead of letting them live their lives.

            CAN'T WIN IF YOU'RE NOT IN

            A DOLLAR AND A DREAM (OR $2)

              JAMORA's avatar - ladyclover
              NC
              United States
              Member #164391
              February 28, 2015
              3835 Posts
              Online

              Sounds as if they are cutting off their nose to spite their face...save a little to lose a lot....

              Not a good move...

              I expect a vote change will fix that soon enough...

              "Don't waste time, it's the stuff life's made of..."

              VTs are like looking for a sewing kit in a haystack as opposed to looking for the needle.

                Avatar

                United States
                Member #164717
                March 12, 2015
                1300 Posts
                Offline

                Dont knock Texas.  The people these legislatures represent may oppose the lottery. It's always refreshing for politicians to represent the views of those who elected them. Since, many in TX support the lottery, it is not going to go away.  Also, I like the fact that the office is not treated as a lifetime job. They meet every other year and arent over paid.  In Calif they are so greedy that even on days the legislature is out of session, they will show up for a free coffee and danish then leave so they can claim their daily per diem fee which use to be close to $200 bucks tax free. This adds up to an additional $35k a year, tax free. Nice work if you can get it....

                  rcbbuckeye's avatar - Lottery-062.jpg
                  100
                  Texas
                  United States
                  Member #55887
                  October 23, 2007
                  12275 Posts
                  Offline

                  The reason Texas sells so many scratch off tix is because they bring out so many new games, and advertise them. They bring out a lot of new games because there is pressure to bring in more revenue each year. This is also why they brought out new draw games that are $2 a ticket. The legislators see all these new games and some don't like all the new games. But, if sales and revenue fall, legislators are going to come after lottery officials saying they aren't effective anymore. Kind of a catch-22.

                  CAN'T WIN IF YOU'RE NOT IN

                  A DOLLAR AND A DREAM (OR $2)

                    Avatar

                    United States
                    Member #164717
                    March 12, 2015
                    1300 Posts
                    Offline

                    Calif has 46 Scratcher games. Some of these have been around for a while. They dont do a big turn over like TX.  I do admire some of the designs: Day of the Dead, Chinese New Year; Zombies!

                      mikeintexas's avatar - h87TsB4
                      Texas Panhandle
                      United States
                      Member #136837
                      December 20, 2012
                      1660 Posts
                      Offline

                      That state seems to be going backwards in more ways than one!

                       

                      Doubt they'll ever have on-line lottery sales--too 21st Century for them. Legislators that is, NOT ordinary common sense citizens.

                       

                      Casinos?  Forget about that too!

                      I believe there are 44 states that offer the lottery to their citizens and the last time I checked, there were only four that offered online sales.  Why didn't you level the "backwards" charge at them as well?  Never mind, rhetorical question.

                      We/Texas ARE in the 21st century, guess you didn't get the memo from a few yrs. back.  Texas surpasses California as top tech exporter   and this - Texas Is Top Wind Power State Not sure what orifice you pulled that one out of, but I'm thinking it's a smelly one. 

                      As far as casinos are concerned: being a libertarian, I'm all for casinos if residents want them, but I personally don't care if we have them or not.  I can drive an hour to get to an Indian-run one in Oklahoma, same for people in Dallas or most people along the Gulf Coast or in East Texas, what with their proximity to Louisiana.   I'm sure Indian lobbyist money has quite a bit to do with the Texas Lege not allowing casinos here in Texas.  (and if you don't think any other state's politicians aren't influenced the same way on that issue or many others, then you're naive beyond redemption)

                      Perhaps legislators who are anti-casinos are not influenced by lobbyist's money, but by the social costs of casinos.

                      From Forbes: (I'd link to it, but Forbes doesn't allow deep-linking.  A Google search will give you the cached article, though)

                      According to a 2012 study of casino crime by University of Maryland researchers, there is a 10 percent increase in substance abuse, suicide, violent crime, theft and bankruptcy when a new casino opens in town.  Other studies found 8 – 9 percent crime increases at a cost near $70 per year for every person living nearby.  After Atlantic City’s rapid casino growth in the 1980s, crime increased by 100 percent in a 30 mile radius surrounding the area.

                      With a snarky attitude like yours, I'd be willing to bet (no pun intended) that your mother is a "bleudog" too.   Tell her I said "Woof", wouldja?

                      Epstein didn't kill himself.