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Reducing Lottery Rewards

Editorial / OpinionEditorial / Opinion: Reducing Lottery Rewards

Some Florida legislators figure that the way to sell more lottery tickets is to reduce the size or number of prizes the players can win. It's something that will be attempted during the 2004 session that begins in March -- and, given the financial philosophy of this Legislature, it has a good chance of passage.

This is, after all, the same Legislature that set in motion the largest telephone rate hike in state history using the logic that if rates were increased, there would be more competition for residential phone service and rates would go down.

The Public Service Commission approved the rate increase, which will add between $3 and $6 a month to telephone bills, last month. Fortunately, Florida Attorney General Charlie Crist has appealed the PSC's action to the state Supreme Court. "The law says [the PSC] must take into account a benefit for the residential consumer," Crist said at a press conference Tuesday. "If anybody can explain to me how sticking it to them -- $355 million more -- is a benefit, that's a new way of thinking and a new kind of logic that I don't understand."

With brainiacs like the ones Crist refers to in Tallahassee, can smaller lottery prizes be far behind?

One could almost bet on it. Legislators have set their sights on unclaimed prize money, which averages about $4 million a month. Under current rules, the Lottery Department can use the money for promotions and to increase the size or number of lottery prizes. And there's a lot of history, research and auditing that shows that distributing unclaimed money back to the players works to sell more tickets -- and thus increases the lottery profits available for education.

But last year, when an unclaimed Lotto ticket expired, the state was left with a $30 million windfall. So legislators set out to appropriate that money for use by community colleges and state universities which had been hard-hit by budget cuts.

Fine. There's nothing wrong with a one-time shot when a prize that size goes unclaimed. Lottery officials, who otherwise support rolling unclaimed prizes back into more prizes, were generally agreeable to it.

But now there is a flood of legislation prefiled for the session that would permanently siphon unclaimed money to the education pool. It's a bad tactic -- one

that is not advised by state auditors.

"I've heard that pitch before about this being a shortsighted move," Sen. Evelyn Lynn, ROrmond Beach, told the Orlando Sentinel. Lynn is sponsoring three bills to change the unclaimedprize distribution method.

"I just don't buy the lottery's argument."

Before her colleagues vote for those bills, they might want to ask Lynn for supporting documentation assuring lottery sales won't be harmed. There's plenty of evidence to the contrary.

In an annual audit of the Lottery Department released last week, state Auditor General Bill Monroe noted that sales of scratch-off tickets increased 62 percent last year. The reason? In 2002, at the request of lottery officials, the Legislature passed a law giving the lottery more discretion over increasing prizes. Prior to the change, the lottery could offer no more than 50 percent of its revenue as prizes. The change removed the limit, letting the lottery secretary determine prize amounts.

Partly because of that change, the Educational Enhancement Trust Fund received a payment of $109 million late last year -- the highest payment to date.

Monroe's audit noted that Mega Money sales, which started in 1998, dropped to $95.9 million last year -- nearly a 21 percent decrease from its peak year. In response, Lottery Secretary Rebecca Mattingly said plans to revamp the game were already in progress. Beginning with the last Mega Money drawing in January, the top prize will carry a $500,000 minimum guarantee, and the number of prizes are estimated to increase by 50 percent.

Lottery officials say audits and studies show that each $1 added to prize money results in $4.67 in additional ticket sales. In the 20002001 fiscal year, an audit said unclaimed jackpots that were offered as additional prizes brought in an additional $36 million for the education trust fund.

Diverting a $30 million unclaimed prize for education on a one-time basis is far different from permanently diverting money spent by lottery players that could be used to sweeten jackpots and increase sales. Without persuasive evidence to contradict the lottery's studies of extra money increasing sales, the Legislature should move cautiously.

The Ledger

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9 comments. Last comment 13 years ago by CASH Only.
Page 1 of 1

United States
Member #379
June 5, 2002
11296 Posts
Offline
Posted: January 9, 2004, 8:16 am - IP Logged

I don't get the argument in the first paragraph.

    RJOh's avatar - chipmunk
    mid-Ohio
    United States
    Member #9
    March 24, 2001
    19828 Posts
    Online
    Posted: January 9, 2004, 8:43 am - IP Logged

    Years ago when Ohio Lottery had jackpots of $40M+ quite often, the Ohio legislators came up with the idea to limit the winnings on one ticket to $20M regardless of the jackpot size.  Up until then the Ohio attracted players from all the surrounding states and many were big winners.  After that, large jackpots didn't attract players and a year later Ohio got rid of that rule but the lottery never recovered until recently when Ohio added MegaMillions.  Large jackpots are attracting more players again and I'm sure Ohio has seen the last of payout limits to jackpot winners.

    RJOh

     * you don't need to buy more tickets, just buy a winning ticket * 
       
                 Evil Looking       


      United States
      Member #379
      June 5, 2002
      11296 Posts
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      Posted: January 9, 2004, 8:56 am - IP Logged

      RJ:

      Michigan Winfall has a $5 million cap...but of course Ohio's limit on a prize on a single ticket came long before Mega Millions began.

        Lotto Czar's avatar - sam
        Harrisburg, Pa.
        United States
        Member #3093
        December 23, 2003
        233 Posts
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        Posted: January 9, 2004, 12:25 pm - IP Logged

        I really don't follow this logic at all.  Would it seem that the higher the prize the more people come out to get tickets?  Agree, maybe some sort of cap could be instituted and jackpot prizes rolled down (Actually Powerball does that, but it hasn't happened since the rule started).  Nah, what do you think attracts rookie players (and more sales)  Are these people cutting off their nose to spite their face?  Sounds like it to me!

          Avatar

          United States
          Member #1505
          May 13, 2003
          95 Posts
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          Posted: January 9, 2004, 8:09 pm - IP Logged

          dont play any lotto ga

            dvdiva's avatar - 8ball

            United States
            Member #2338
            September 17, 2003
            2063 Posts
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            Posted: January 10, 2004, 12:01 am - IP Logged

            i never understood this nonsense of making smaller jackpots. every player already knows they only get like 25 - 30% of the jackpot anyway (cash after tax). power ball has a stupid cap although they have never reached it. no one plays for second place. not in sports. not in politics and not in the lottery. you only play for the jackpot.

              Avatar
              Wisconsin
              United States
              Member #1610
              June 3, 2003
              668 Posts
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              Posted: January 10, 2004, 2:30 pm - IP Logged




              "Some Florida legis
              ... the lottery never fails to surprise!
                Avatar
                Wisconsin
                United States
                Member #1610
                June 3, 2003
                668 Posts
                Offline
                Posted: January 10, 2004, 4:19 pm - IP Logged

                i realize that most politicians are hard working and dedicated individuals and i thank them for their service. but, when a person hears the logic (or lack of it) that is being given for reducing the size and number of prizes a player can win ...and going furthur to say ...with the hope that it will increase ticket sales?!

                ...after recovering from shock and getting up off the floor, i must ask myself...am i dreaming? no? ok, so what kind of lottery economics would justify this type of logic; this type of statement by politicians?

                everyone in this forum knows that when the PB or MM prize gets above 100 or 200 million, ticket sales soar, to the point where a winner or winners is almost expected at certain prize levels. do ticket sales increase as prize payout levels fall? that's what some politicians believe in florida? do lottery players buy more tickets with fewer categories of prizes? that's what some politicians believe in florida?

                ...the scary part is to think that legislation like this could actually pass.

                ... the lottery never fails to surprise!

                  United States
                  Member #379
                  June 5, 2002
                  11296 Posts
                  Offline
                  Posted: January 12, 2004, 8:16 am - IP Logged

                  golotto:

                  Jeb Bush kept PB out of FL even though the previous governor OK'd it.