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Texas Baptist Christian Life Commission

Ending the Lottery?

Seems unlikely, but that won’t stop some folks from trying.

As lawmakers look at whether the Texas Lottery Commission is operating effectively, influential Baptists are suggesting that the lottery shouldn’t merely be tweaked. They want it abolished.

“Ask the pertinent questions. Has the lottery fulfilled its promise? My answer would be ‘no,’” said Suzii Paynter, director of the Baptist Christian Life Commission.

The group contends that the lottery was sold to Texans 20 years ago as a “voluntary, nonregressive” way to raise money but instead preys on the poor and caters to impulse purchases of scratch-off tickets. Attempts to attract higher-income players with $50 scratch-off tickets haven’t worked, they say.

They question whether the lottery has provided a revenue increase for public education or simply replaced other revenue sources.

[…]

While there may be bills next session proposing to do away with the lottery, Rep. Dennis Bonnen, the Angleton Republican who leads the sunset commission, warned in a recent public hearing that eliminating the lottery isn’t an option for the panel.

“It’s our job to make sure agencies are doing their jobs effectively with what they’ve been tasked to do,” he said. “Don’t expect that we’re going to put a poison pill in the sunset bill to end the lottery.”

After prize money, retail commissions and other expenses, about $1 billion a year from the lottery goes into a public education fund. Ticket sales in fiscal year 2011 totaled $3.8 billion, most of it coming from scratch-off tickets.

This year, lottery sales are 10 percent ahead of last year and are on track to surpass $4 billion for the year, executive director Gary Grief told legislators this month. Among top-grossing lotteries in the nation, Texas ranks fourth behind New York, Massachusetts and Florida.

I found this story via Believe it Or Not, which adds some more information.

Amid the recent Mega Millions lotto hype, Texas Baptists’ theologian-in-chief Jim Denison discussed the potential for lottery winnings to destroy lives. He warned Christians that playing the lotto can push them to seek happiness through money instead of through Christ.

Texas Baptists also opposes the expansion of legalized gambling through casinos and other gaming venues.

Paynter pointed out that two of the states highest-selling lottery ticket locations are Fiesta stores in Houston, and Rep. Garnet Coleman’s district spends $44 million on the lottery a year, more than others in the state despite being a lower-income area.

Coleman has supported the examination of the lottery system, with his own district spending more on the lotto than middle and high-income areas of Houston.

“I don’t know why I didn’t see it before,” Coleman told the Austin-American Statesmen in 2010. “It’s true and it’s real. I see who plays, and it’s not who folks think. It’s not entertainment.”

I largely agree with the Baptist Christian Life Commission that the Lottery has not fulfilled its promise, and I think there’s merit to their pursuit. The Lottery does generate some money for education, but it does so in just about the least efficient and most regressive way possible. We absolutely should do a better job providing for public education and we should do it in a way that doesn’t hurt lower income folks. But let’s be honest, that ain’t gonna happen. I’d bet on gambling being expanded before I’d bet on the Lottery being even scaled back, which is not to say that the former is a good bet.

One more piece to the puzzle: I recently came across this article in Wired about how it’s possible to get an edge in playing scratch-off games, which are the Texas Lottery’s bestsellers. Note that as of the story’s publication in January of 2011, the North American Association of State and Provincial Lotteries was unaware of this potential security hole, and that there’s a woman in Texas who’s managed to win over $1 million on four separate occasions, three of them coming from scratch-off games. The implication of all this is that there’s a possibility that scratch-off games are an even worse proposition for the average player than they’re supposed to be. Read the story and see why.

Another story analyzing gambling’s odds in the Lege

I have three things to say about this story.

[W]ith a budget crisis looming — and funding to public education, health care and other state services on the chopping block — gambling opponents aren’t taking any chances.

Both sides have said legalizing gambling could generate at least $1 billion in state revenue, which lawmakers could dole out as they see fit. Even with a more conservative Legislature this year, some believe a billion-dollar temptation could sway more lawmakers.

“It’s a situation where a lawmaker could hold his nose and say, ‘public education is too important for me to not take advantage of this financial opportunity,'” said Chuck McDonald, a legislative consultant in Austin who has worked on pro- and anti-gambling efforts in the past.

And it’s still the case that getting a constitutional amendment for anything remotely controversial passed is an exercise in counting votes, and I have yet to see an article that really explores what that means in this Lege. The fact remains that a number of legislators who supported expanded gambling – almost all Democrats – lost in 2010. Those votes have to be replaced, and a few legislators who had previously voted No would have to change their minds, since this same effort has fallen apart in previous sessions. Where are those votes coming from? How many House freshmen are open to voting for more gambling? Are there any opponents who may now be reconsidering? I agree that if a referendum makes it onto the ballot that it is a favorite to pass, as public opinion is in favor of the idea now. It’s how a joint resolution gets passed, that’s what we need to know.

Suzii Paynter, director of the Christian Life Commission for Texas and staunch gambling opponent, is bracing for a fight.

“It’s always tempting and there’s always a big push at the capital . . . especially at a time when revenue is short,” Paynter said.

She has polished up her talking points and put together a fact sheet, ready to tell lawmakers why gambling would not be the best way to collect revenue: Unlike the lottery — where the state makes 33 cents for every $1 spent — Texas stands to make only 2 cents on every $1 bet in a slot machine, Paynter said, noting that sales tax is 8 cents to the dollar.

Instead, she argues, taxes on beer and wine could be raised by $1, bringing in $786 million immediately.

“And you don’t need to build anything or plant any palm trees,” Paynter said.

And again, this isn’t an either-or choice. You can raise the alcohol tax and support gambling, and bring in more money now and hopefully in the future as well. That’s assuming the gambling industry is being honest about its potential, which brings me to this:

In Pennsylvania, for example, supporters of legalizing slot machines in 2004, including then-Gov. Ed Rendell, said it would generate $1 billion a year once all 14 casinos authorized by the law were up and running. Ten are open today, while plans to build four others have been stalled by lawsuits, collapsed financing and local opposition. In the current 2010-11 fiscal year, those casinos are on track to provide roughly $800 million in money for tax cuts and additional funds to support civic development projects, the equine industry and local governments.

That was a remarkably accurate projection, especially given the current economic climate. It doesn’t address the social costs of more gambling, of course, but to predict $1 billion in revenue from 14 casinos and get $800 million from 10 is impressive. I’ll consider us fortunate if Texas has a similar experience, if it ever comes to pass. The Trib has more.

The Sunday liquor sales debate

As we know, one of the Legislative Budget Board recommendations for generating revenue is for the state to allow liquor sales on Sunday. The Statesman takes a look at the debate this proposal has generated.

Legislation to allow Sunday liquor sales died in 2009, but the issue gained momentum this session when the Legislative Budget Board included Sunday liquor sales on a list of revenue-raising options for the Legislature to consider.

It’s an issue that splits the distilled liquor industry.

Distillers are pushing the legislation because they think Sunday sales will increase the demand for liquor. But the Texas Package Stores Association — there are almost 2,500 stores in Texas — opposes it.

David Jabour , the president of Twin Liquors, which has 63 locations in Central Texas, said the legislation would be a burden to store owners.

He argued that opening on Sunday would just spread six days of sales over seven days and increase a store’s overhead.

“It doesn’t pay for itself,” Jabour said. “It ends up costing more in labor and overhead.”

[John Roenigk, co-owner of the Austin Wine Merchant on West Sixth Street,] disagreed.

He said Sunday is second only to Saturday as a popular shopping day. He said he wants a level playing field with his competitors — grocery stores, mainly — who are selling wine on Sundays to his customers.

“The rest of the retail world has changed around us,” Roenigk said. “For the life of me, I don’t know why our industry opposes it.”

Allowing Sunday sales is a no-brainer to me. Let’s be honest, the basis of this restriction is Christian morality – a very specific kind of Christian morality; I can attest that Catholicism has no particular injunction against alcohol. I say that has no place in the law. Individual stores may of course choose to remain closed on Sundays as they see fit, but as Roenigk said earlier in the story, they should have that choice.

The amount of tax revenue at stake here is relatively tiny, which opponents of Sunday sales have used to misdirect the debate a bit.

The budget board staff estimated that allowing Sunday sales would increase liquor consumption by almost 3 percent. That could raise an additional $7.4 million in taxes over those two years, a number that the comptroller has not verified.

Based on the budget board’s numbers, the store owners association estimates that on average a store would only sell an additional 10 bottles of liquor.

“That’s not generating much, even according to their numbers,” Jabour said.

Suzii Paynter with the Texas Baptist Christian Life Commission agrees.

When Texas lawmakers face a budget shortfall as high as $27 billion, Paynter said, $7.4 million won’t go far.

The real money, she said, would be in raising taxes on all alcohol, including beer.

She said the state’s excise tax rate on beer has remained the same since 1984. In 2006, the last time the Legislature considered — and rejected — raising alcohol taxes, some plans to increase taxes on all alcohol would have raised $800 million a year. The tax on a can of beer would have increased to 22 cents from 1.2 cents.

Mike McKinney, a lobbyist with Wholesale Beer Distributors of Texas, said that kind of increase in beer taxes would cripple the industry.

Let me pause for a moment to call BS on Mike McKinney. People aren’t going to stop drinking beer because a six-pack costs $1.20 more. I’m sure sales would drop a little, but “cripple the industry”? Please.

As for Paynter, why is this an either-or situation? I say go ahead and do both – raise alcohol taxes and allow Sunday sales. No, I don’t expect the Lege to seriously consider that, I’m just saying that an argument for one is not an argument against the other. Allowing Sunday sales is an easy one for me, and it should be something the Lege is willing to do. I don’t see the argument against it.

LSG hearing on expanded gambling

The Legislative Study Group held a hearing on Wednesday to start the discussion about the various proposals for expanded gambling in Texas that will be brought to the Lege next year.

Racetrack and casino interests that want to expand Texas gambling dangled promises of new tax revenue before lawmakers Wednesday, but faced tough, skeptical questions from Democrats about the economic benefits and social costs.

“Could I make a suggestion to you? Don’t pretend like there’s not a downside. Somebody needs to talk about how we’re going to mitigate the downside,” Rep. Garnet Coleman, D-Houston, told Jack E. Pratt Sr., chairman of the Texas Gaming Association, which is pushing a proposal that would include destination resorts with casinos.

[…]

Their questions ranged from details of the $1 billion to $1.5 billion projected annually in new state tax revenue to the likely bidding process for casino licenses, as well as the people likely to play and whether they can afford it.

Rep. Lon Burnam, D-Fort Worth, said the hearing was meant to make public the private conversations that are occurring about the possible legislation for the 2011 session. He said he would like to get updated revenue figures besides those generated by the interests involved.

Racetrack and casino interests testified, as did gambling opponents from the Texas Baptist Christian Life Commission. At this point, I’m just glad to see decent information getting out there. If people are going to be called upon to vote on this next year, they should have as much accurate data at their disposal as possible. Texas Politics and First Reading have more.

The stalking horse

Peggy Fikac brings up a familiar point about expanded gambling.

[Rob Kohler, a Texas Baptist Christian Life Commission consultant working against gambling expansion] suspects the gambling talk is paving the way for a new push to lease the state lottery to private interests, who would give Texas a big up-front payment in return for being allowed to run the games. Private interests might promise a bigger payment if allowed to expand gaming through such means as online ticket sales, he said.

GOP Gov. Rick Perry in 2007 suggested the state could reap more than $14 billion by leasing the lottery. At the time, Perry wanted to use the money to create education and health-related trust funds. This time, Kohler said, a private consortium could appear to “ride in on a white horse” with badly needed funds.

“I think that’s their play,” said Kohler — who thinks it’s a bad play. “It would be nothing short of the state taking a payday loan.”

That’s the first time I’ve seen this connection made in this context, but it’s not the first time it’s been made. When Perry first proposed privatizing the Lottery, I speculated that might lead to expanded gambling. I wasn’t the only one to think along those lines. Now it seems like we’ve come full circle. I guess no bad idea is ever truly dead when Rick Perry is involved.

Texas to get Powerball

The Texas Lottery Commission is fixing to bring Powerball to Texas.

The commission unanimously voted to publish rules for the game for public comment. If the panel gives final approval to the rules early next year, the first Powerball ticket could be sold in Texas on Jan. 31.

Texas already is part of the Mega Millions multi-jurisdiction lottery game, and officials for years have discussed the idea of adding Powerball to the mix.

The two big games just recently reached an agreement to allow states to participate in both. Previously, states had to pick one or the other.

It was back in 2003 that the TLC approved Mega Millions, after being given the authority to join multi-state games by the Lege. Looking back through my archives, I don’t see why they demurred on Powerball at the time. It may be because its jackpots are not guaranteed as advertised and can be reduced if ticket sales do not reach the needed levels. That’s kind of a sore spot at the Lottery Commission.

One objection that was raised at the time and is being raised again is that Powerball will not bring in the millions of extra revenue that the TLC is projecting.

Lottery watchdog Dawn Nettles, who operates the Lotto Report Web site, predicted, “It’s going to kill (the state jackpot game) Lotto Texas.”

“They’re not going to get more money out of the players, because the people don’t have it to give,” Nettles said. “All they’re going to do is divide their money amongst the games.”

Rob Kohler, a consultant for the Texas Baptist Christian Life Commission, said his group is most concerned about instant-win scratch tickets because they are impulse purchases.

He said that as a jackpot game, Powerball is “pretty benign.” He added, however, “We don’t think it will solve any of the budget problems or add any more money to the state.”

I think that at first, when Powerball is shiny and new, it will spur an increase in lottery revenues. Going forward, its ridiculously large jackpots may draw in more casual players. But I think Nettles has a point – I think a lot of Powerball’s sales will come from Texas Lotto players who have shifted their purchases from one game to the other. At the very least, I hope the TLC tried to include that likelihood in its models. Anyway, for those of you looking for the chance to throw away a few bucks on a one-in-147,000,000 chance, you’ll get it starting next January. We’ll see how much revenue for the state it really does generate.

Scratch EZ Match

I can’t say this comes as a surprise.

EZ Match is a scratch.

The Texas Lottery Commission pulled the plug Friday on the proposed game that would have allowed players to become instant winners by handing their money to a clerk for a ticket printed from a lottery terminal.

Commission staff had described the game as another way to deliver the sort of instant gratification players enjoy with scratch tickets, since they would not have had to wait for a drawing.

Conservative groups and other critics, however, had charged that the game would be a big step toward slot machines, which lawmakers have refused to approve.

“As long as I am chairman, it is never my intent nor my wish or desire that we overstep our bounds in regards to our authority for making rules,” said commission Chair Mary Ann Williamson.

[…]

Commission staff had emphasized that the ticket could be purchased only through a clerk, not directly from a machine. Proposed rules had specified the game would not be played on a video lottery terminal.

The commission’s assistant general counsel, Pete Wassdorf, had said the only similarity to a video lottery machine is that the ticket would have been purchased from an electronic machine, but that the differences were far greater.

Yes, and those differences are what made the game sound deadly boring to me. If you’re going to put out a new tax on people’s innumeracy, the least you can do is give them a bit of a thrill for their money. Never mind the claims about a back-door expansion of gambling, I never saw how this game was going to appeal to anyone. Now we’ll never know, though I figure the Commission will find a way to try again with something similar. We’ll see if they can do any better.

Now you can blow your money on lottery tickets even faster

Is it just me, or does this sound like much ado about not very much?

A proposed lottery game that would allow players to become instant winners (or losers) without so much as scratching a ticket is under fire from critics who contend it would be a giant step toward slot machines.

Under the proposed EZ Match game — which the Texas Lottery Commission could take up as soon as Oct. 2 — players would hand their money to a clerk and get back an instant ticket printed from a lottery terminal.

No wait for a drawing, and no need to scratch.

“It’s just like a scratch game, only you don’t scratch the latex,” Lottery Commission spokesman Bobby Heith said after being asked about critics’ slot-machine concerns. “There’s no buttons. There’s no spinning wheels. There’s no levers. You can only get the ticket through a clerk-assisted transaction at a lottery retailer.”

Proposed rules for the game specify that it would not be played on a video lottery terminal, a form of slot machine. The commission’s assistant general counsel, Pete Wassdorf, has said the only similarity to a video lottery is that the ticket “is purchased from an electronic machine, but the dissimilarities far exceed that.”

A slew of critics, however, have sent the commission pleas to stop the plan. The key, they say, is that game results would be predetermined in the lottery’s computer system and delivered instantly.

“It is a video lottery system that they are approving,” said Rob Kohler, a former Lottery Commission staffer who is a consultant for the Texas Baptist Christian Life Commission.

“Whether they are going to allow players to immediately start pressing buttons and seeing electronic versions of card games happening is irrelevant …,” Kohler said. He called passage of the rule “the equivalent of allowing assault rifles, but saying, ‘We’re not going to use this to shoot holes in tanks, we’re going to shoot water balloons out of it.’ ”

So let me get this straight: You give your dollar to a clerk at the local Quik-E-Mart, he then prints you a ticket, and you…look at the ticket to see if you won or not. Boy, if that doesn’t scream “hours of fun for everyone”, I don’t know what would.

I guess I can see the argument about this being a camel’s-nose-in-the-tent for video lottery terminals, or video slot machines. Except that you don’t get to play the machine, someone else does it for you, and instead of an exciting video display, you get a piece of paper. Am I crazy for thinking that this has all the sex appeal of toll booth? Again, I understand the logic of not wanting to set a precedent if you oppose VLTs, but I can’t help but think that this would be a complete dud that no one would want to play. What am I missing here?