Off the Kuff: Jackpot! Archives

The fifty dollar flop

Guess those fifty-dollar scratch-off Lottery tickets weren't such a big deal after all.

The Texas Lottery Commission is set to cut several poorly performing scratch-off games, even though more than $25 million in promised top jackpot prizes have yet to be awarded or claimed by winners.

Though its Web site still advertises "9 prizes from $1,000,000 to 5,000,000" for its priciest scratch-offs, a $50 ticket called $130 Million Payout Bonanza, the game will close next month, and as of Thursday only three of the nine jackpots had so far been claimed by winners.

Another $50 game, $130 Million Spectacular, the state's first $50 game, which became the nation's priciest ticket when it was rolled out in May 2007, is due to close the same day, though only $10 million of its $21 million in top prizes has been doled out to winners.

Boy, remember when these pricey games were going to be the next big thing? When we thought this was going to be so successful there was talk of a $100 scratch-off ticket? Those were the days.

Lottery officials say the soon-to-be-closed-games are not selling well and take up valuable shelf space in the stores where they're sold. Yet Lottery spokesman Robert Heith concedes the agency has no set criteria for closing games.

Since early 2007, the commission has allowed itself to close games for any one of three reasons: its sales were sluggish, its top prizes had been claimed, or 85 percent of its total prizes had been claimed. Earlier this month, the commission authorized game closings for reasons that don't fall into the previous three categories.

"It could be anything," Heith said.

Michael Anger, the director of the agency's operations division, said flexibility is critical if the agency is going to give players games they want.

But Gerald Busald, a math professor at San Antonio College and frequent Lottery observer, said the lack of specific criteria for closing games could be used to disadvantage players. By closing them, the commission avoids paying out the promised big prizes.

"You ought to have procedures for doing anything," he said.

Dawn Nettles, a Lottery watchdog who runs a Web site for players on Texas Lottery games, believes the commission may close games knowing full well that its winning tickets have never left its Austin warehouse.

Heith scoffs at any suggestion the Lottery commission knows where its winning scratch-off tickets are -- or that it holds them back.

It's not exactly a ridiculous suggestion, is it? I mean, in one game two-thirds of the big winners will go unclaimed; in the other, more than half the big prize money stayed home. Given that these games are being shelved more or less on a whim, it's not at all hard to understand why some people are suspicious. The ironic thing is that just before the $50 scratch-offs were introduced, the Lottery was being accused of continuing to sell games long after all the top prizes had been won. Heck of a job, Texas Lottery Commission!

01/18/09 | permalink | comments [0]

Why lotteries make me queasy, continued

I've said before that I have decidedly mixed feelings about state-sanctioned gambling, in particular state lotteries. Part of that is because of the social costs of gambling, especially on lower-income folks, and part is because of the sleazy characters involved in the gambling trade. My dilemma for the near future is that I fully expect expanded gambling to be on the agenda in the Lege in 2009. It was always going to be, but with Hurricanes Gustav and Ike putting pressure on the state's cash reserves, there will be a greater push to find new revenue sources. I don't like it, but the choices I'd be presented with as alternatives, such as an expanded sales tax, are worse. Most likely, I'm going to have to suck it up and push for the least bad possibility.

But again, that doesn't mean I have to like it. And being reminded again what a bunch of scuzzballs the leading players are doesn't help. There are people who I hold in great esteem, like State Sens. Rodney Ellis and Mario Gallegos, who are big proponents of expanded gambling. I respect their position, and will probably grudgingly accept it when it eventually comes to pass. But again, I doubt I'll ever like it. Harpers link via Yglesias.

10/09/08 | permalink | comments [0]

The state of the lottery: Booooooring!

Stop me if you've heard this one before: Texas lottery revenues are declining.

Texas officials fear that revenues dropped more than $100 million in the most recent fiscal year -- a $49 million blow to public education -- because the current crop of games are tired, unappealing and at the end of their life cycle. Sales are down 2.7 percent, including a $73 million decrease in the normally mega-popular scratch-offs.

"People get bored. How many times can you employ the same games?" said Rep. Ismael "Kino" Flores, D-Palmview, chair of the committee that oversees the Texas Lottery Commission.

There's a marriage counseling joke in there somewhere, but I'll leave that as an exercise for the reader.

Flores and officials at the commission complain they can't fix the problem in the state's 16-year-old lottery.

Texas law restricts the lottery commission from introducing new forms of gambling, such as keno, video lottery terminals and instant online games. Those games give instant results, which are appealing for players.

Unlike the scratch-off games, which take forever to let you know if you've won or not.

"We can't expand, we can't do anything," Flores complained, directing his ire at gambling opponents who he insists have blocked a good number of his gambling initiatives in the Legislature.

Texas lottery officials estimate that video lottery terminals at racetracks could bring in an additional $1.4 billion in state revenue over a five-year period, with keno, a bingolike gambling game, bringing in as much as $173 million in additional revenue over a five-year period.

But gambling opponents aren't swayed by the numbers. They say the state has no business expanding games that tend to appeal to those least able to afford them.

Jokes aside, this is the key bit to the story. Whatever your opinion of expanded gambling in Texas is, it's not just going to be on the table in 2009, I expect it to be one of the hotter issues. There's a ton of lobby money behind it - take a look at Rep. Flores' campaign finance statements, for instance - and there are proponents and opponents on both sides of the partisan aisle. If there's even a hint of a revenue dropoff in the next Comptroller's report, look for this to climb even higher on the issues ladder. And if a bill passes and Gov. Perry vetoes it, or if no action gets taken, don't be surprised to see this an an issue in the 2010 elections. Might be time to get Mayor White and Senator Hutchison on the record about this.

On the bright side:

The drop in lottery revenue doesn't have education officials overly anxious.

"The public has the perception that the schools are highly dependent on lottery funds, but they're not," said Texas Education Agency Spokeswoman Debbie Ratcliffe. "Typically the lottery provides us with a billion a year. When they slip below that, other state monies make up the difference."

Good to know, though I wouldn't get too comfortable while Tom Craddick is Speaker. Frankly, if we do wind up with expanded gambling, I'd just as soon it be targeted for general revenue, since I would never expect it to be a consistent source from year to year. Regardless, do keep this in mind for the next time you hear someone mention gambling as being a primary source of education funding in Texas.

10/07/08 | permalink | comments [1]

Lottery sales down

This is just what school districts need to hear right about now.

Texas lottery officials are monitoring a decline in ticket sales that they say could reduce the amount of money the lottery sends to public schools if the trend continues.

"There's a lot of speculation that it's tied to higher gasoline prices," said Robert Heith, lottery communications director. "But we don't have any studies to confirm that."

Overall, lottery ticket sales statewide for this fiscal year are running 1.8 percent behind last year, according to a May 17 report.

In addition to the economy, Heith said the lottery could have been hurt this year because it hasn't had as many big jackpots, which increase ticket sales.

The state lottery has been transferring about $1 billion yearly to the Foundation School Program, a fund that goes to local school districts, since 2004, but the amount could slip below that number this year.

Through April 30, the Texas Lottery Commission estimated that it will transfer $621 million to the fund, but it had an additional four months in its fiscal year, which ends Aug. 31. If the trend holds, the money going to the Foundation School Program would be about $930 million.

The lottery's assistance is significant to public schools. The state has appropriated $19.8 billion to the Foundation School Program for next year.

[...]

The Lottery Commission is hoping to turn the sales numbers around.

"We're doing our best to improve sales," Heith said.

The lottery regularly introduces new games, and later this summer, it will unveil another $50 scratch-off ticket. Last year, a similar high-dollar ticket boosted revenue in the final quarter, and lottery officials are hoping for a similar effect.

I'll never understand the allure of high-priced lottery tickets, but if I have to hope they succeed so that the schools don't get short-changed, I will.

06/10/08 | permalink | comments [1]

If at first you don't privatize, try try again

You have to hand it to Governor Perry. He never gives up, no matter how bad the idea is.

Texans could buy lottery tickets at the checkout lines in supermarkets and big-box department stores, at coffee shops and cabarets. They could pay with credit cards or personal checks and play online or the old-fashioned way with a ticket that's also a tiny ad for anything from soft drinks to sporting events.

Those are just some of the proposals offered to state officials by some of the nation's largest financial firms that have an interest in remaking the 16-year-old government-run Texas Lottery Commission into a market-driven enterprise operated by companies motivated more by the prospect of profits than the vagaries of politics.

Although the prospect of turning over Texas' $1 billion-a-year lottery to the private sector received the coldest of shoulders when Gov. Rick Perry first suggested it, a year ago, proponents have been busy laying the groundwork for a second, more concentrated push when lawmakers return to Austin in January for the 2009 legislative session.

"I seriously doubt at this point that they have one vote, much less the 100 they'll need [in the 150-member House], but they're already here visiting with folks to lay out their case," said state Rep. Warren Chisum, a Pampa Republican who heads the powerful House Appropriations Committee.

Chisum, whose committee is among at least three legislative panels to be tasked with at least looking at the feasibility of a closer partnership between the lottery and private enterprise, describes himself as very much a skeptic. He questioned whether lottery ticket sales could generate the billions of dollars that the investment firms say are out there and whether the capital markets want to take chances on state lotteries.

"It sounds very pie-in-the-sky -- to me, anyway," Chisum said.

When folks like Warren Chisum are expressing this kind of skepticism, you wonder if Governor Perry has anyone in the Lege on his side of this. You have to wonder what the point of this effort is. I mean, don't we have bigger things to worry about?

According to a demographic study released in December by the University of Houston, fewer and fewer Texans are playing the lottery. And those who do play most tend to be lower wage earners with less education.

The study found that people without a high school diploma are likely to spend more than $60 a month on lottery games. People with a four-year college degree are likely to spend about $5 a month. People who earn $20,000 to $50,000 a year spend twice as much on lottery games as people who earn $100,000 a year or more.

The privatization proposals say the lottery needs to end its reliance on a ticket-buying base of low-income earners by marketing the games to people with college educations and more disposable income.

One suggestion is allowing ticket sales at grocery store and department store cash registers, where the price of the ticket would be rolled into the overall outlay. The same strategy could be used in cafes under some of the proposals.

Gerald Busald, a mathematics professor at San Antonio College who has conducted several studies of the Texas lottery operations and its players, questioned whether the pool of lottery ticket buyers can be significantly expanded.

"I don't think those players are out there," Busald said. "If people [with more disposable income] want to gamble, they can drive to one of the casinos across the state line."

Well, yeah. It's pretty simple, really - in terms of entertainment value for the dollar, a Lottery ticket is pretty far down the list. How much fun is a scratch-off ticket, anyway? I just don't get the allure. Thanks to South Texas Chisme for the link.

04/09/08 | permalink | comments [1]

Free Starbucks At 11 AM Today!

Starbucks is giving away 8 oz cups of its new "everyday" coffee at all its locations at 11 a.m. CDT today. This freebie only lasts 30 minutes, so don't be late or you'll turn into a pumpkin latte.

There has apparently been a constant drumbeat of requests for a consistent, everyday brew rather than Sumatra one day and Gold Coast another and so on. Me, I like the variety. I always get a tall cup of their "bold" coffee of the day with room for cream and then I'm well into one of my "I don't require much to be happy" moods. But, if it's free, I'm willing to try the everyday stuff.

More details:

New brew will be called Pike Place

bold, robust flavor with smooth, buttery finish

freshly roasted, freshly ground

baristas will throw out any that has not been used after 30 minutes

$9.95/lb

This caught my attention:

The company has also promised to start grinding all its brewed coffee in stores, which will bring back the pungent aroma many customers have missed since the company started using flavor-locked bags of pre-ground coffee years ago.

Love that. I wanna walk into Starbucks and smell that smell.

There's lots in the article about Starbuck's business model, but who really cares. The world stops for me at 11 a.m. today when I'll be at Starbucks getting my free cuppa Pike Place.

04/08/08 | permalink | comments [0]

Lottery privatization still lurking out there

I thought the idea of privatizing the Lottery was pretty much dead after it went over with such a thud last year, but apparently some bad ideas never truly go away.

Texas would have to expand gambling to see the multibillion-dollar profits Gov. Rick Perry promised last year when he proposed selling the state lottery, according to a report an Austin watchdog group plans to release today.
Texans for Public Justice, which monitors money in politics, obtained Texas Lottery sales projections by three private companies compiled for Perry from 2006 through 2007.

The Public Justice report indicates that to generate the $14 billion or more Perry said the lottery would yield, Texas would have to allow more gambling and more-addictive games.

"If Texans oppose such a gambling expansion, then these documents suggest what they should play with the Texas Lottery games is Texas Hold 'Em," the report concludes.

The report is here. I think the main point to be aware of is here:

Today, more than a dozen states are studying lottery privatization. California Governor Arnold Schwarzenegger said last year that his state's lottery could be auctioned off for as much as $37 billion. Yet the Associated Press reported this February that seven Wall Street banks privately priced the deal for Schwarzenegger, who publicly touted the most "wildly optimistic" quote. Significantly, to reach its highest valuations, Wall Street said that the state would have to "allow a significant expansion of gambling in California."

Lottery privatization is not dead in Austin, either. Lieutenant Governor David Dewhurst has directed two interim Senate committees to assess the merits of lottery privatization. Meanwhile, gambling interests continue to ply Governor Perry with lottery-privatization schemes.

As in California, many of the documents that the Texas governor's office has released thus far to Watch Your Assets suggest that the payout that Governor Perry has touted is unrealistic unless Texas aggressively expands into new games and widens the venues in which gambling occurs. Texas Attorney General Greg Abbott has issued non-binding opinions indicating that many of the new kinds of games that the gambling industry is pushing require a constitutional amendment. Yet the Dallas company Aces Wired now openly operates electronic gaming machines in selected Texas markets that already cross some legal lines drawn by the Attorney General. Aces Wired, which spearheads a business consortium interested in running the Texas Lottery, has flooded the governor's office with advice on how to go about making this happen.

The two Senate committees, according to a footnote, are Finance and State Affairs. May mean nothing, but it doesn't sound like it. Just keep this in mind for when the next Lege convenes.

03/27/08 | permalink | comments [1]

Fifty-dollar scratch-off redux

You may need to sit down for this one: Those fifty-dollar scratch-off games that the Texas Lottery pushes on the public in the hope of luring richer people to play, are instead mostly bought by not so rich folks.

The Chronicle looked at each of the state's ZIP codes with at least 1,000 adult residents, dividing them into groups based on their median household income in the 2000 census.

The analysis found that sales of the $50 Spectacular surged across middle-income ZIP codes, seeing strong per-capita sales in areas both with incomes of just more than $30,000 and in those with earnings upwards of $50,000 and $60,000.

Sales figures dropped off in both rich and poor areas, although the state's poorest ZIP codes -- those with median incomes of $20,000 or less -- saw stronger per-capita sales than the richest, with incomes of $90,000 or more.

While the analysis is imperfect because it does not account for people who may buy lottery tickets in a ZIP code where they don't live, and whose incomes may differ from the median there, it bolsters numerous other studies indicating that lottery games tend to be most popular among the non-affluent.

If you're thinking you've heard this story before, you have. Nothing much has changed since then.

"The $50 ticket salvaged our entire fiscal year last year," said Robert Tirloni, projects manager for the Texas Lottery Commission, bringing $137 million to state coffers since the game's debut in May and helping the commission close a $93 million gap in revenue between 2006 and 2007.

Texas lottery commission spokesman Robert Heith said the games are voluntary and are designed to entertain. He added that his agency has one overriding mission: to generate revenue for Texas public schools. Last year, more than $1 billion of the $3.8 billion raised from lottery sales went to public education.

The $50 scratch-off game did so well in Texas that the state, without fanfare, launched in November a second $50 game called $130 Million Payout Bonanza. Together, the two games have generated $158 million in revenue.

[...]

The state has pondered introducing a $100 ticket and last year ordered up a study to determine whether enough Texans would embrace it. Tirloni called a $100 ticket "the next step, though we're not there yet."

He added, "Whenever we put out a (higher-priced ticket), it's been successful."

Okay then. Why not take this to the logical extreme? Introduce a $1000 lottery ticket, to be sold only in high-end retail outlets. If the goal is to increase revenues without doing it on the backs of the poor, let's be direct about it. Something tells me that will never happen.

01/15/08 | permalink | comments [1]

Which races are they playing in?

This is one of the more disturbing political stories I've seen lately, both for its lack of concrete information and its far-reaching implications.

Texas' ailing racing industry is planning an expensive gamble for survival -- a $3 million campaign and lobbying effort to bring slot machines to the state's horse and dog tracks.

Texans for Economic Development, the umbrella group for track owners, breeders and other segments of the racing industry, has budgeted $1 million to contribute to campaigns in the 2008 legislative elections and $2 million for a lobbying effort to convince lawmakers that the tracks need slot machines to survive, the Austin American-Statesman reported Wednesday.

It's a tough sell. State lawmakers have brought up the possibility of slots at tracks in the past, but all efforts have failed under opposition to expanding gambling in Texas. Proponents want Texas voters to decide.

Group President Tommy Azopardi said the $1 million will be targeted on about a dozen races in the state House of Representatives.

"It's not about Democrats and Republicans, it's not about the speaker's race," Azopardi said. "It's not about anything other than, 'Are you for VLTs (slot machines) or not?'"

That's a hell of a lot of money to put into State Rep races, and it raises the very big question of what races are they intending to put it in? And are we talking primaries, general elections, or both? Are they targeting people for defeat, or aiming at open seats? Or are they just going to hand out cash to those they perceive as softly opposed to their position, in hopes of getting them on their side?

I agree it's not about Democrats or Republicans, as there are supporters and opponents of slot machines on both sides of the aisle. As for the Speaker's race, certain key Craddick lieutenants, such as Kino Flores, are both supporters of expanded gambling and involved in hot races. I don't care what Azopardi says, if they are supporting Flores (I'm just hypothesizing here), they are supporting Craddick. Perhaps they will balance their support fairly evenly among the Craddickites and the anti-Craddickites, but the bottom line is that almost any contested race this year is to some extent is about the Speaker's race. It can't be avoided.

It's a shame that there's no indication of what the pro-gambling forces intend to do with their million bucks. We ought to know more when the next round of campaign finance reports come out, but still. This is a big deal, and it deserves a lot more scrutiny.

12/27/07 | permalink | comments [1]

Why lotteries make me queasy, in a nutshell

I've expressed my ambivalence about state-sanctioned gambling before. On the one hand, I've got enough civil libertarian in me to be wary of outlawing clearly popular activities like gambling. On the other hand, the gambling industry, especially the state lottery industry is such a sleazy combination of oligopoly and influence peddling that it's hard to see anything good in its expansion.

Over the last three decades, Gtech and Scientific Games have jointly generated several billion dollars in revenue as vendors to lotteries -- a business that flourishes at the crossroads of capitalism and public policy. In the process, the companies have steadily -- and often controversially -- evolved from minor suppliers into an influential oligopoly with a hammerlock on lottery operations.

Every business has its titans, of course. But according to analysts, lottery officials and public documents, Gtech and Scientific Games have done more than just ride the gambling boom -- they have strong-armed their way to the top of a publicly sponsored industry that they now dominate. And with the domestic lottery market plateauing, both companies are focused on securing new footholds overseas.

Gtech, in particular, has been heavy-handed at times. According to court papers and regulatory filings, the company's representatives have drawn persistent allegations of bribing their way into contracts. Gtech officials acknowledge questionable practices by some employees, but say the problems are a thing of the past.

[...]

To protect and expand their turf, Gtech and Scientific Games have tightly woven their interests into the nation's political fabric. Through the years, both companies have spent millions of dollars lobbying legislators and bankrolling lottery referendum proposals that have led to the establishment of lotteries. For example, Scientific Games spent about $1 million in 1984 supporting Proposition 37, which authorized the creation of a state lottery in California.

Often, the companies have also helped draft the very language used in lottery legislation. Some rivals complain that Gtech and Scientific Games have leveraged their political ties not only to win lottery bids, but also to ensure that contracts themselves are written in ways that discourage competition.

Put aside any moral qualms about gambling, that last paragraph in itself should give everyone pause. There's a whole lot more to the story, which goes into how these two oligarchs are expanding globally. Read it and weep. Link via Matthew Yglesias.