Many North Dakota merchants, who are hoping a new state lottery will draw more customers, are fretting there wont be enough ticket terminals to go around -- and state officials say theyre right.
"If (a lottery machine) is available to my competition, then that is a tool that I must have," said Bob Johnson of Cavalier, who owns a convenience store and off-sale liquor outlet near the Icelandic State Park. "If they put one in the Cenex in Cavalier, I need one."
North Dakota may not have enough lottery customers to justify more than 320 sales terminals, gambling industry officials say.
The state has close to 900 convenience stores and about 200 grocery stores, according to spokesmen for their North Dakota trade groups. Grocers, convenience stores and gas stations are the most common lottery outlets.
"Some people may want a license, and because of the rules, theyre not going to get one," said Russ Hanson, who is president of state associations that represent convenience stores and service stations.
The state hopes to begin offering tickets to the Powerball lottery by April 2004. North Dakotas three neighboring states are among the 24 that already take part in the game.
"Ive heard that from several people, who are concerned that somebody across the street may get (a lottery sales terminal) and they wont," Hanson said.
Merchants are also taking their worries to a five-member lottery advisory board and Attorney General Wayne Stenehjem, who is in charge of North Dakotas lottery office.
Stenehjem said alternative arrangements could be worked out, such as having competing businesses in a small community take turns as lottery sales locations.
"There are other compromises that might be possible," Stenehjem said.
Johnson believes any store that meets the lotterys criteria as a ticket sales location, and is willing to pay the required fees, should be licensed. Stores that are refused could form a group and file a lawsuit, he said.
He worries that smaller operators like himself could be crowded out by larger, more influential companies that are also eager to be lottery outlets.
"If this goes to a Tesoro, a Superpumper, the Cenexes, Im going to feel slighted, even though I have all the criteria," he said. "That doesnt set well with me."
Stenehjem said merchants do not have a right to sell lottery tickets, and Chuck Keller, the lotterys interim director, said allowing any qualifying business to offer the game would make it unprofitable.
North Dakota has requested sales pitches from four lottery companies, which are expected to suggest how many ticket sales terminals the state needs. Typically, the companies agree to provide a maximum number of machines and pay for communications hookups, in exchange for a cut of the action.
South Dakota, which has about 755,000 residents, may have as many as 375 terminals without incurring extra costs, said Clint Harris, the states lottery director.
The limit is set by the states contract with a lottery administration company, International Game Technology of Reno, Nev. It is responsible for providing lottery sales terminals and needed infrastructure, in exchange for a payment of 14.029 cents for every $1 Powerball ticket sold.
The South Dakota lottery now operates about 355 terminals, and Harris said the rest are kept back to service new or expanding businesses.
"If you have a huge grocery store open, you want to have terminals to put into those big stores," Harris said. "We keep those 20 in our back pocket for those kinds of situations."
Should North Dakota use the same per-capita ratio as South Dakota for determining the right number of needed lottery machines, it would have about 320 terminals.
Rep. RaeAnn Kelsch, R-Mandan, the chairwoman of the states lottery advisory board, said it would be impractical to allow close to a thousand sales terminals.
"Do we open this wide open, and just allow anybody and everybody to be able to sell lottery tickets? I think the answer is no," she said. "I think that at that point, you become oversaturated. Its probably unlikely that every one of those businesses is going to have somebody stopping in to buy a lottery ticket."
Harris said if South Dakotas lottery were to install a Powerball sales terminal for every business that wanted one, the venture would be unprofitable for everyone.
"In a small town, you may have two (convenience) stores and a grocery store, and youre going to make one of them happy and one of them mad," Harris said. "Theres not much that you can do about it."