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Texas Lottery Commission

Paxton opines against daily fantasy sports sites

I feel confident saying this will be tested in court.

While placing bets on fantasy sports sites might involve skill, there is still an element of chance that equates such leagues with illegal gambling in Texas, Attorney General Ken Paxton said in a nonbinding opinion released Tuesday.

The “odds are favorable that a court would conclude that participation in paid daily fantasy sports leagues constitutes illegal gambling,” Paxton said in the nine-page opinion. But “participation in traditional fantasy sport leagues that occurs in a private place where no person receives any economic benefit other than personal winnings and the risks of winning or losing are the same for all participants does not involve illegal gambling.”

In November, state Rep. Myra Crownover, R-Denton, asked the attorney general to weigh in on whether fantasy sports sites such as DraftKings.com and FanDuel.com were legal in Texas. The request came days after New York’s attorney general declared such sites to be illegal gambling.

[…]

In a statement Tuesday, Crownover said she requested the opinion to clarify the law on fantasy sports sites. “It is our responsibility to try to make sure no business is profiting from illegal activity in Texas.”

As you might imagine, the sites were none too happy about this.

Daily fantasy sports site DraftKings said it intended to keep operating in Texas, disagreeing with Paxton’s interpretation of the law and his description of how the games work.

“The Texas Legislature has expressly authorized games of skill, and daily fantasy sports are a game of skill,” said a statement by Randy Mastro, counsel to DraftKings.

“The Attorney General’s prediction is predicated on a fundamental misunderstanding of [daily fantasy sports]. We intend to continue to operate openly and transparently in Texas, so that the millions of Texans who are fantasy sports fans can continue to enjoy the contests they love,” said Mastro, who disputed the description of an entry fee as a cut.

[…]

Dallas Mavericks owner Mark Cuban has invested in Fantasy Labs Inc., a platform of proprietary daily fantasy sports data, tools and analytics. He slammed Paxton’s legal opinion on Twitter, calling it “a disappointment.”

“You certainly don’t represent the views of Texans,” tweeted Cuban, who is due to keynote the Fantasy Sports Trade Association’s Winter Conference in Dallas on Wednesday.

Paxton’s opinion came despite a flood of emails to his office supporting the games. His office received 18,429 emails and 339 calls, the majority of them in favor of the games, a spokeswoman said Tuesday.

I would agree that there is skill involved in playing fantasy sports, at least if one wants to be any good at it, but one could also argue there’s skill involved in horse racing or playing blackjack. There’s obviously a big element of luck involved as well, so where does one draw the distinction? I have zero interest in these daily fantasy game sites, so I’m not qualified to say where that line is, but it’s clearly subjective. I look forward to the inevitable lawsuit.

One more point of interest, from the DMN last week.

When news broke that Texas lottery officials were looking into fantasy sports and casino games in other states late last year, the lottery agency said its exploratory trips were no big deal. Just a fact-finding mission to gather information for lawmakers, a spokeswoman said.

What the agency didn’t say was that for months, Texas Lottery Commission Executive Director Gary Grief had been aggressively working to get in on the billions of dollars flowing into fantasy sports. His efforts came as the games became the focus of legal questions around the country — and despite conservative state leaders’ long-standing aversion to any expansion of gambling here.

More than 400 pages of emails, obtained by The Dallas Morning News under Texas public records laws, directly contradict the agency’s contention that it was only considering traditional lottery draw and scratch-off games. The records include discussions with fantasy sports lobbyists and show that Grief wanted a contract with DraftKings, one of two companies at the center of a national controversy over the games.

He prodded his staff to quickly nail down a plan to get Texas in on the action. And when an insider betting scandal erupted in the industry, Grief embarked on a plan to bring the games — which some consider an illegal form of gambling — under the lottery commission’s umbrella.

Winston Krause, chairman of the five-member Lottery Commission, said that Grief explored the issue at the behest of a lawmaker whose name he couldn’t recall. When Gov. Greg Abbott learned from a News report that Grief and agency staffers had traveled to Delaware to investigate its sports betting operations, he ordered the commission to end its dalliance. Suddenly, Krause said, the lawmaker lost interest.

“The bottom line is, no one in that organization wants to expand the footprint of gambling in Texas. Nobody,” Krause said.

Lottery Commission spokeswoman Kelly Cripe declined repeatedly to elaborate. Grief, in a written statement, said the agency has stopped its efforts. He declined multiple requests for an interview, and the agency has challenged The News’ requests for additional documents on the matter.

Nothing at all curious about that. Who can keep track of all these legislators, anyway? Read the whole thing. This was separate from the request for Paxton’s opinion, but it’s definitely relevant. ESPN, Trail Blazers, Texas Monthly, and the Press have more.

Texas Lottery Commission dies and is reborn

And we have our first curveball of the legislative session.

Is this the end?

The House voted Tuesday to defeat a must-pass bill reauthorizing the Texas Lottery Commission, a stunning move that casts doubt on the lottery as a whole and may potentially cost the state billions in revenue.

House Bill 2197 began as a seemingly routine proposal to continue the operations of the commission that oversees the lottery until September 2025. But opposition mounted after one lawmaker called it a tax on the poor, and the House eventually voted 82-64 to defeat the measure.

A short time after the vote, the House called an abrupt lunch recess and could reconsider the measure if any lawmaker who voted against it offers such a motion. Unless lawmakers reconsider, the commission would begin a one-year wind down, and cease to exist by Sept. 1, 2014.

“There are more members than I thought who are against the lottery and just have a psychological aversion of it,” said Rep. Rafael Anchia, D-Dallas, who sponsored the failed bill.

The state Senate has yet to consider the matter, but it can’t because the so-called “sunset bill” on the Lottery Commission initiated in the House.

For now, there’s no one to operate the lottery, which means a potential loss of $1.04 billion in annual revenue for the Permanent School Fund and $27.3 million to cities and counties from charitable bingo.

The state budget already under consideration in the Legislature has factored in the $1.04 billion — and losing the lottery proceeds would create a deficit lawmakers would need to fill.

Here’s HB2197. I think it’s fair to say no one saw this coming. Here’s more from the Trib:

During a spirited debate on the bill, state Rep. Scott Sanford, R-McKinney, got a round of applause in the House as he spoke against the bill, calling the lottery a “predatory tax” and “a tax on poor people.”

As soon as the vote was over, House leaders were already discussing possible workarounds to keep the programs going. Anchia said the House may reconsider the vote.

Texans spent $3.8 billion on lottery tickets in the 2011 fiscal year, according to the Legislative Budget Board. The majority of that was paid out to players and retailers, with $963 million transferred to the Foundation School Account. Another $8.1 million was transferred to the Texas Veterans Commission.

Anchia warned that charity groups around the state would be outraged at learning they could no longer host bingo games.

“VFW Bingo’s dead now,” Anchia said. “They’re going to have to go back to their constituents and explain why bingo is illegal.”

I don’t disagree with what Rep. Sanford says, though I wonder if he will feel the same way when the payday lending bill comes to the House floor. In the end, however, everyone sobered up after taking a lunch break.

In a 91-53 vote Tuesday afternoon, the Texas House passed House Bill 2197, continuing the the Texas Lottery Commission. An earlier vote Tuesday had failed to continue the commission.

Bill supporters spent the hour after the first vote impressing on those who voted against it the impact of cutting $2.2 billion from schools. The House Republican Caucus hastily assembled to discuss the situation.

“I think when people took a sober look at the budget dilemma that would ensue, they voted different,” said state Rep. Rafael Anchia, D-Dallas, the bill’s author.

Several lottery critics in the House saw the day’s drama as a victory, setting the stage for a more thorough debate on the lottery in the future. Public Education Chairman Jimmie Don Aycock, R-Killeen, said he originally voted “no” largely to make clear his opposition to gambling. Once that statement was made, it made more sense to back the Lottery Commission for now.

“I don’t like gambling, but I do like school funding,” Aycock said. ‘It was, for me, at least, a signal vote. I sort of anticipated I would switch that vote when I made it.”

State Rep. Lon Burnam, D-Fort Worth, said school funding was also the primary motivator for his switch.

“When you weigh principle vs a billion dollars in public ed, I set aside my principle for a billion dollars in public ed,” Burnam said. “I still hate the lottery.”

I had always wondered why they vote on bills three times in the Lege. Now I understand. Having had their fun and having made their statements of principle, if the Lege is serious about wanting to eliminate the Lottery, let’s go about it in the next session by filing a bill and letting it go through the usual committee process, mmkay? Thanks. BOR, who notes that failure to pass this bill could have led to a special session, and Texpatriate have more.

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.

A step forward for online gambling

Interesting.

The Justice Department has reversed its long-held opposition to many forms of Internet gambling, removing a big legal obstacle for states that want to sanction online gambling to help fix their budget deficits.

The legal opinion, issued by the department’s office of legal counsel in September but made public on Friday, came in response to requests by New York and Illinois to clarify whether the Wire Act of 1961, which prohibits wagering over telecommunications systems that cross state or national borders, prevented those states from using the Internet to sell lottery tickets to adults within their own borders.

Although the opinion dealt specifically with lottery tickets, it opened the door for states to allow Internet poker and other forms of online betting that do not involve sports. Many states are interested in online gambling as a way to raise tax revenue.

New York has offered an online subscription service since 2005 that allows state residents to enter a string of Lotto or Mega Millions drawings.

See here for some background. I don’t really expect anything to come of this here in Texas, but I won’t be too surprised if it’s part of the legislative conversation in 2013. If nothing else, I have to figure the Texas Lottery Commission would like to add online subscriptions to its bag of tricks. Worther keeping an eye on, in any event.

States looking at online gambling

Until the economy returns to the point where states aren’t completely strapped for revenue, I expect them to look at all possible sources of new money.

It’s an idea gaining currency around the country: virtual gambling as part of the antidote to local budget woes. The District of Columbia is the first to legalize it, while Iowa is studying it, and bills are pending in places like California and Massachusetts.

But the states may run into trouble with the Justice Department, which has been cracking down on all forms of Internet gambling. And their efforts have given rise to critics who say legalized online gambling will promote addictive wagering and lead to personal debt troubles.

The states say they will put safeguards in place to deal with the potential social ills. And they say they need the money from online play, which will supplement the taxes they already receive from gambling at horse tracks, poker houses and brick-and-mortar casinos.

“States had looked at this haphazardly and not very energetically until the Great Recession hit, but now they’re desperate for money,” said I. Nelson Rose, a professor at Whittier Law School, where he specializes in gambling issues.

When it comes to taxing gambling, he said, “the thing they have left is the Internet.”

I don’t really expect this to come up in the Texas Lege in 2013, because casino and horse racing interests have too much at stake to let it happen. While I am not an advocate of expanded gambling myself, if it ever does happen in Texas I would prefer it to be in the form of real casinos and/or slot machines at racetracks, on the grounds that they would provide more jobs than online gambling. Having said that, once this is up and running somewhere, it’s not really clear to me how you could prevent someone in Texas, or anywhere else, from playing.

There are other ways that a state could leverage the Internet to feed its own gambling habit:

Some states, including New York and North Dakota, already sell lottery subscriptions online. Since 2005, New York has offered a subscription service that allows people in the state to enter a string of Lotto or Mega Millions drawings. The state says 100,000 people subscribe.

New York is exploring whether to allow people to draw from an escrow account when they decide to buy into a single drawing — say, when the jackpot reaches alluring levels.

Again, I can’t recall hearing of anything like this in Texas. Unlike the virtual casinos, I could imagine something like this being implemented by the Texas Lottery Commission, without direct input from the Lege. I wonder if they haven’t thought of it, or if they think it’s illegal for them to try it. Anyone know anything about that?

Bad times are good for the Lottery

Some people might consider this to be good news, but I don’t.

This year, the Texas Lottery Commission’s sales are headed for a record high, on pace to reach about $3.83 billion, up from $3.74 billion last year. The previous high was $3.77 billion, in 2006.

Lottery spending is also up in Harris County. Sales grew to $639 million in the state’s 2010 fiscal year and are on pace to clear $645 million this fiscal year, which ends Aug. 31.

The prize payout percentage also has increased this year – about 64 cents of every dollar spent has gone back to customers. But as is always the case with the lottery, those who play more are likely to lose more.

And which consumers are spending the most?

According to a Hearst Newspapers analysis of lottery sales statistics using data from the U.S. Census Bureau, residents in the state’s poorer counties appear to be doing a disproportionate amount of the spending.

While this is not an exact analysis – some consumers, of course, buy tickets outside of the counties where they live – lottery sales per resident are consistently higher in the poorest counties than in the wealthiest ones.

[…]

Charles Clotfelter, an economist and lottery researcher at Duke University, said it’s difficult to pinpoint what drives up lottery sales, but said, “There’s probably a desperate side to it.”

“Just ask yourself the question,” he said. “How is a person going to get his hands on $100,000? If you’re a rich person, you could think of ways. If you’re a poor or blue-collar person, there are two ways: Legal gambling and illegal gambling.

“Maybe lottery is the poor man’s Dow Jones,” he added.

I don’t know what I can add to that. I’d prefer to live in a society where playing the lottery was strictly a matter of enjoyment and not an investment strategy. I don’t see us getting there any time soon.

The bingo business

Really interesting story about how bingo, which is legal in Texas as a charitable fundraiser, operates without a whole lot of scrutiny.

In June 2006, police responded to a call from Daytime Bingo Hall in Midland reporting that $100,000 in cash was missing from a floor safe. As investigators began digging into the apparent theft, they had questions: Since bingo operations are not allowed to have so much money on hand overnight, what was the cash doing there in the first place? And how had it escaped notations on the hall’s books?

According to police reports and descriptions of the case in Texas Lottery Commission transcripts, workers at the hall revealed several possible sources for the money. Bingo prizes were often overstated, they claimed; the hall would report a $100 prize as $200 and keep the difference. They said the operator also was selling tickets without reporting the sales to the state and placing proceeds in the safe — another violation of Texas bingo rules.

The police contacted the agency that regulates bingo, the Lottery Commission, and requested an audit of the hall and the three nonprofit organizations that sponsored bingo games there — the B’nai B’rith Youth Club, B’nai B’rith Men’s Club and Lou Rosenberg Scholarship Fund.

The commission’s Bingo Operations Division had recently audited two of the charities, finding only minor bookkeeping errors. This time, auditors found that about $250,000 could not be accounted for.

The incident highlights the serious regulatory challenges facing the agency reponsible for keeping an eye on a business that generates about $700 million every year in Texas, the vast majority in cash. A small — and shrinking — state enforcement staff, laws ripe for manipulation and the fragmented nature of the game have resulted in a legal gambling enterprise that critics contend in some ways is free of meaningful scrutiny from government regulators.

Experts and participants say the vast majority of games are conducted fairly, with proceeds accounted for and ending up in their proper places; most nonprofits use the $35 million they earn annually from bingo for charitable purposes. Yet without adequate oversight, they add, money can simply disappear, with few repercussions.

“In this business, that’s more the case than not,” said Kenneth Messer, who runs an American Legion bingo hall in Longview.

How well the state keeps track of bingo money could have costly implications. As legislators grapple with a projected $27 billion budget shortfall, several have said they would consider expanding legalized gambling to bring in more revenue. If that happens, the bingo industry wants a share of the action.

As this and a companion story show, the lack of strong oversight and uniform standards means that an awful lot of bingo-generated cash can wind up in the hands of the operators and not the charities for which it is supposedly intended. A lot more often winds up getting stolen as well. And thanks to a court case won by bingo interests (currently under appeal), they’re in there lobbying the Lege to keep them in mind for any expansion of gambling they may see fit to allow. Worth keeping an eye on.

The state of the Lottery

The Statesman has an interesting two-part story about the state of the Texas Lottery today. Part One is about the declining fortunes of Lotto Texas and what that means for the state’s finances:

Consider:

• In 1994, 70 percent of adult Texans reported buying tickets. Today, it’s closer to 40 percent, meaning the lottery must extract more dollars from fewer people to keep raising the same amount of money. In 2004, the state’s estimated 9 million lottery players each spent an average of $390. Last year, an estimated 7.4 million players averaged $500 each.

• The state has become increasingly dependent on instant scratch-off games, which today generate 75 cents of every lottery dollar. Yet such games are more likely to be played by “less educated and lower income” residents, according to the Texas Lottery Commission’s research. The latest analysis found that “unemployed (players) were more likely to purchase scratch off tickets than employed and retired” players.

• Because the state’s take is smaller on instant tickets, it must sell more to make the same profit. Last year, the lottery sold nearly $700 million more in tickets than in 1998 — and gave schools $160 million less.

• As a percentage of education spending, the lottery’s contribution is shrinking. In 1996, lottery proceeds paid for about two weeks of schooling for Texas students. This year, the money raised by the lottery will barely cover three days.

Part 2 is about the scratch-off games. I really try to be open-minded about expanded gambling in Texas. The argument that people are gambling anyway so we may as well let them do it here and keep that money in the state is a persuasive one. It’s just that it’s nearly impossible to find a story that analyzes some aspect of the gambling we already have – horse racing, bingo, the lottery – and comes to the conclusion that it has met the promises that were made of it when it was first legalized. Why should we expect this time to be different?

Lottery can’t meet its jackpots

Oops.

Lottery officials are celebrating an uptick in Lotto Texas sales this year, but ticket proceeds were nearly $1.2 million short of covering the latest winning jackpot, forcing officials to dip into the state lottery account to cover the difference.

The shortage for the advertised $21 million jackpot that hit on July 31 was not the first the Lottery Commission has had to cover.

Lotto Texas jackpots are guaranteed to be worth at least the advertised amount, but ticket sales have fallen short of covering 14 of the 24 jackpots won since August 2006, according to figures from lottery watchdog Dawn Nettles and documents posted on the commission’s website.

State law allows officials to shift money from the state lottery account, which includes sales revenue from all lottery games.

The situation is drawing fresh criticism from Nettles, who said it means the lottery’s operating account or proceeds slated for the school trust fund must suffer.

“What I know for sure is that Lotto Texas is not self-supporting. They are not able to pay the players from sales. They are having to get money from either their operating budget or school fund money,” said Nettles, who owns the online Lotto Report. “The state’s getting shortchanged.”

If you are now asking yourself “Haven’t I heard something like this before?”, the answer is yes, you have. Some things never change.

Who wants to run the Texas Lottery?

The contract is up for a bid, and the competition is fierce.

Companies that run lotteries around the world are expected to ante up by this week, proposing how they would oversee the Texas Lottery if they were to land its lucrative operations contract. The Texas contract, currently held by Gtech Corp., rarely comes up for bid, so the stakes are high for the competing businesses and taxpayers.

It’s a coveted contract, one that could net the winning bidder as much as $100 million per year.

Three firms — Scientific Games Corp., Intralot Inc. and Gtech — will probably submit bids, according to comments and actions by the companies since the beginning of the year, when the Texas Lottery Commission issued a request for proposals.

“The Texas Lottery is a highly valued customer of Gtech’s, and we are preparing to bid,” said Gtech spokesman Bob Vincent, who wouldn’t discuss the bidding process any further. Other likely bidders wouldn’t comment last week.

Since the request for proposals, the bidding process has been caught in conflict because a consulting company the commission hired to help write the bid request had been doing business with Gtech. That led to questions about whether Gtech has an unfair advantage in the selection system.

The consultant, Gartner Inc., had its contract revoked by the commission, and the deadline for bids was extended twice to remove any doubts about unfairness in the bidding, lottery officials said. The new deadline for bids is Tuesday.

A panel of Lottery Commission officials and a representative from the Texas comptroller’s office will evaluate the bids, with a decision expected in September. The Lottery Commission hired a new consultant company, Battelle, to take the place of Gartner and help check the bids to see whether they meet all the commission’s specifications, said lottery spokesman Bobby Heith.

The bidders’ financial proposals won’t be revealed by state officials even after Tuesday’s deadline passes. Only when the winning bid is selected will provisions of the new contract be public, Heith said.

The Chron has more on the GTech conflict of interest, and a quote from a familiar source.

Dawn Nettles, who owns the watchdog Lotto Report, predicted the agency would stick with its longtime operator.

“My prediction is GTECH will be awarded the contract, irregardless of who bids what,” Nettles said. “Because there are ties. And they’re not going to be broken. … I think for the purposes of our taxpayer dollars, and the fact we’re in such dire straits for money, I believe the Texas lottery ought to go with the best price.”

I will not be surprised if that prediction turns out to be true. There’s plenty of room for improvement in how the Lottery is run, though a lot of that is the Commission’s fault. Be that as it may, this is a rare opportunity. I hope we take advantage of it.

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.

Here comes Powerball

Powerball will come to Texas as soon as January 31 after a unanimous vote approving sales of its tickets by the Texas Lottery Commission.

“What the Legislature has charged us to do is to raise revenue, and this is going to increase the amount that we can send to the education fund by $35 million,” Commissioner J. Winston Krause said after the panel unanimously approved a rule to allow the game in Texas. “That’s good for the schoolchildren of Texas, and it gives additional entertainment options for the public.”

The lottery contributed $1 billion to the Foundation School Fund, which helps fund public schools in Texas, in fiscal 2009, according to the commission.

Lottery watchdog Dawn Nettles, however, bemoaned the addition of the game.

“I think it’s awful, simply because it’s a game that people … most likely will not win, and they will be throwing away more money chasing a dream that won’t come true,” said Nettles, who owns the Lotto Report Web site.

Nettles expressed those same reservations back in November when the Commission gave initial approval to Powerball. As I said at the time, I think it’s more likely to cannibalize existing Lotto sales than to bring in a lot of new revenue, though the novelty factor may give it a boost at first. But we’ll see. I know I don’t ever expect to buy a Powerball ticket, but are any of you salivating to do so? Leave a comment and let me know.

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?