Lottery defends its percentage going to HOPE, pre-k, saying more prizes ensure more players

The lottery cannot keep up with the costs of HOPE and pre-k. Should it start giving more of its proceeds to the programs?

The lottery cannot keep up with the costs of HOPE and pre-k. Should it start giving more of its proceeds to the programs?

Many of you have complained that the lottery is giving a smaller slice of the pie to HOPE and pre-k than was originally intended and urged the AJC to write about it.

The paper has a good story today on the issue of why the lottery is returning less than the third that voters approved in the statewide referendum that legalized lottery sales in Georgia. In a nutshell, the lottery officials maintain that new games and more prizes attract more players and the cite Georgia Lottery sales and earnings as their evidence.

The AJC reports that a state audit found the Georgia Lottery is fifth-highest among 42 lotteries in the nation for jackpots and still ranked seventh in total money transferred to the state because it had maintained high overall sales. The auditors found the correlation between the higher or more-frequent jackpots and better sales benefited the lottery-funded programs.

Here is an excerpt of the AJC story:

Last fiscal year, just 26.1 percent of lottery money went to the reason voters approved state-sanctioned gaming in the first place.

The fluctuation occurs because the law authorizing the lottery has a fudge factor. The statute states that net proceeds of the lottery should be 35 percent of gross revenue “as nearly as practical.”

“The reason they put 35 percent in the original bill is that they thought that’s what they needed to tell people in order to pass it in Georgia,” said state Sen. Jason Carter, D-Decatur.

Earlier this month the freshman senator offered an amendment to the HOPE scholarship bill to gradually increase the percentage of lottery money to the state to 30 percent by 2015.

“That’s the promise that we made as a state and that the people of Georgia accepted when they allowed the lottery,” he told his fellow senators.

The amendment was defeated 35-20 in a party-line vote. Carter was not surprised since legislative leaders had been told that cutting the percentage of money going to prizes would ultimately hurt revenue by decreasing the popularity of the games.

Officials with the Georgia Lottery Corp., the quasi-governmental entity that runs the game, would not comment on the amendment.

Instead, they provided a “fact sheet” supporting higher jackpots, especially on scratch-off or “instant” games. Lower payouts would cut into overall revenue as customers fall away, the lottery claims.

Richard McGowan, a Boston College economics professor who has written critically about state lotteries, said there is something to the argument. Lotteries have life cycles, and Georgia’s mature game needs to reward gamers to keep their interest, he said.

Criag Lutton of Peachtree Corners has one child at the University of Georgia on HOPE and another who is a high school junior. He said he can see both sides of the argument, although he is not entirely convinced more money could not be shifted to education. “I don’t think that lottery buyers have any idea how much money goes into jackpots,” he said.

A state audit of the lottery released just before the HOPE vote in the Senate offers further evidence that less is more. The audit found the Georgia Lottery is fifth-highest among 42 lotteries in the nation for jackpots and still ranked seventh in total money transferred to the state because it had maintained high overall sales.

The auditors found the correlation between the higher or more-frequent jackpots and better sales benefited the lottery-funded programs.

–Maureen Downey, for the AJC Get Schooled blog

35 comments Add your comment

Double Zero Eight

March 23rd, 2011
9:04 am

Why don’t they make the lottery employees state
employees, and eliminate the bonuses?

Or could it be that the state does not have the caliber
of employees needed to run the lottery?

MannyT

March 23rd, 2011
9:25 am

It makes sense that bigger prizes get more people to play. You see lottery stories on the news when the jackpots get large. I suspect that the scratch off lottery players get more interested when they can win more money as well. Bigger prizes lead to bigger demand & more revenue.

The key is focusing on how much money the lottery transfers to education each year. That will give a better indicator of how well the revenue side does. Is it growing as fast as inflation? As fast as tuition increases? We already know that there has been amazing growth in the number of students getting HOPE money since the start of the lottery.

MannyT

March 23rd, 2011
9:38 am

I didn’t stop to calculate the education funds each year, but 36% growth since 1999 (from 647 mil to 884 mil) seems reasonable until you see that the revenues have gone up more than double that amount 73.8% in the same time (from 1.95 Bil to 3.39 Bil)

Maybe you eliminate some low revenue games and put a higher % of that growth into education.

Meanwhile, I suspect the politicians stop funding other educational things when they got lottery money, so not all of the educational money is an increase. Some is a replacement. Didn’t lottery money flow into other things like educational technology at some point?

Another view

March 23rd, 2011
9:52 am

And even greater unconscionable bonuses – - -
@008, don’t know. I’m one of those lazy incompetent state employees you imply, with a research & statistics Ph.D. from a tolerably decent school; haven’t gone toe to toe with the well-compensated geeks at lottery. I do know from experience I’m somewhat on par with many faculty from Tier 1 research schools. The lottery geeks must be pretty smart to get paid that much – - – -.

Inman Park Boy

March 23rd, 2011
10:06 am

The ONLY reason my wife and I play the lottery is to support HOPE. We have no illusions about getting “rich,” but we do want to help young people go to college in Georgia. The real scandal is the way Georgia colleges have raised tuition JUST because of HOPE funds.

A Conservative Voice

March 23rd, 2011
10:07 am

Get rid of the lottery as it is nothing more than an entitlement that hurts the less advantaged more than it helps. Subsidized housing, welfare, food stamps, free cell phones and all other giveaways to people standing there with their hands out should be cancelled after a one year warning. These services could be better provided by churches and other help agencies. The government has to get out of the business of taking care of people cradle to grave……it has bankrupted us. As far as pre-K is concerned, it’s nothing more than a free baby sitting service and no public funds should go to fund the program.

Pluto

March 23rd, 2011
10:26 am

Ever since the inception of the state sponsored gambling otherwise known as the Lottery, it was only a matter of time before this venture would run its course. Now that it is not generating enough money for all the junkies involved, there’s an allocaion problem. Kinda reminds me of the NFL where the players and owners can’t figure out an equitable arrangement to divvy up some $9 billion.

APS Parent 3

March 23rd, 2011
11:08 am

Okay 33% to Hope with what 55% to operational budget with 12% for whatever the head of lottery wants to fund. I wish I could get a job with the Lottery or the Teacher Retirement System. Even the secretaries get bonuses.

Cobb History Teacher

March 23rd, 2011
11:10 am

Question is how much of that lost percentage has gone into hefty bonuses for lottery officials?

get it together georgia

March 23rd, 2011
11:11 am

like i wrote in the other political blog…allow local county voters to vote whether they want ALL forms of gambling in their area. Degenerate gamblers are gonna degen whether it be lottery or any other form of gambling. This would especially help fulton county and more specifically downtown Atlanta in attracting conventions which leads to more people which leads to more spending of money (assuming you have something worth spending money on ie not the college football hall of fame) which leads to more tax revenue. I really believe that turning underground Atlanta into a casino/entertainment area w/hotel will not only clean up that cess pool of an area but create more funds for HOPE and maybe things like MARTA.

The lottery is going to shoot itself in the foot by not getting involved in other forms of gambling……..

What's best for kids

March 23rd, 2011
11:11 am

@Conservative Voice,
I have to agree with you on the free, government funded cell phone. Ridiculous.

get it together georgia

March 23rd, 2011
11:17 am

Another revenue stream Georgia lottery will hurt itself on is by not getting involved in the legalization of online poker….thats tens of millions of dollars right there. Look at all the other states trying to get legislation passed (hawaii, california, florida, maryland, new jersey, nevada, etc) and also on the fed level (which I’m sure georgia would opt out of thanks to the right wing christian fundamentalists).

Listen, you arent going to stop people from gambling online….why doesnt the georgia lottery be forward thinking and get involved in this area as another revenue stream instead of being opposed to anything they feel will hurt lottery sales? It just doesnt make sense.

catlady

March 23rd, 2011
11:36 am

How about a comparison taking into account the percentage of poor or uneducated folks? Those are, disproportionately, the ones who play the lottery. I am willing to bet good money that if you control for those two variables (of which Georgia has high numbers) you will find that the GA Lottery isn’t really “all that.” That is, we owe our high participation rate in poverty and ignorance, rather than the great job the lottery corp has done.

catlady

March 23rd, 2011
11:39 am

INman Park Boy–avoid the middleman. Just give the money directly to a deserving kid. That way they will get 100% of the money, instead of about 25C on the dollar.

catlady

March 23rd, 2011
11:49 am

“The auditors found the correlation between the higher or more-frequent jackpots and better sales benefited the lottery-funded programs.”

Auditors are not social scientists. They might also find that more job losses and a worsening economy might raise the participation. Because that is, in fact, what has happened.

David Hoffman

March 23rd, 2011
12:43 pm

I will start a campaign to tchange the Georgia lottery law to please the unimpressed percentage complainers. The lottery will go full parimutuel. All the scratch off games will be eliminated. The Keno game will be canceled. Pick 3, Pick 4, and any other similar game eliminated. You get your 35% off the top of each ticket sold. You will be pleased to sell $1 billion, netting $350 million, instead of selling $3 billion, netting $750 million, because you get those evil GLC people to give you your 35%.

Pluto

March 23rd, 2011
2:03 pm

@ Inman Park Boy The ONLY reason my wife and I play the lottery is to support HOPE. We have no illusions about getting “rich,” but we do want to help young people go to college in Georgia.
Are you kidding me? Start a scholarship fund or some other vehicle but don’t jive us with that cosmic debris.

Dr. Craig Spinks/ Augusta

March 23rd, 2011
4:07 pm

Maureen,

Why don’t we have a competent, disinterested, out-of-state organization evaluate the lottery to determine whether the lottery’s present marketing strategy maximizes monies for HOPE et al.?

By the way, KPMG would be ineligible since they currently audit The Georgia Lottery.

Jezel

March 23rd, 2011
5:03 pm

Don’t want to hear all the excuses. Commit the 35% as you did at the lotteries inception. Otherwise you have broken a unwritten contract with the public.

InEd

March 23rd, 2011
7:00 pm

The pre-K piece of the lottery has been in place since 1995 as a free program for all 4-year olds in the state. That means any student in our current middle and high schools would have had the opportunity to have received this benefit. My question is: have veteran teachers who have been in the classroom before statewide pre-k and after statewide pre-k seen any significant increase in student achievement? My bet would be that the veteran teachers would say that students today are less able than the generation prior to state-funded pre-k. If that’s the case, the money should be diverted to fully fund HOPE scholarships. (I know the push-back that’s coming from other bloggers: that the state of today’s student is drastically different from prior generations, socio-economic, greater influx of ELLs, etc. – and that could be seen as a reason to have the state funded pre-k. However, if we are not seeing achievement results increase, our money is not well-spent and there is no data to support greater increase in student ability, send the money to where it will have its greatest impact, to colleges and technical schools)

Light

March 23rd, 2011
8:46 pm

I agree with Jezel. To me, the excuses from the Georgia Lottery Corp and the Legislature are b.s. and unacceptable. There is something more political going on behind the scenes and it’s not about the children and everyone knows this. Once it became apparent, the decision to screw kids out of HOPE scholarships was imminent, I stopped fighting it because the people with the power to stop it already cut a deal to change it. And I still don’t get why people on the blog keep referring to the HOPE scholarships as entitlements. It’s funded through private dollars that people use to play the lottery, and the state is involved to regulate the lottery system and distribute the money to the kids; the government is not funding HOPE…the people who play the lottery are…kids expect HOPE because it was promised to them if they earned a certain grade point average and to encourage them to attend a school of higher learning in Georgia. That’s just like a boss telling you he’ll give you a certain salary if you meet a sales quota but then decides he doesn’t want to give you as much of the profits and decreases your salary. You’d be pissed because a contract of some sorts was involved and your boss is reneging. Stop being wusses and give the college kids a break!!!! The real culprit here is the Georgia Lottery Corporation.

catlady

March 23rd, 2011
8:59 pm

I disagree with you, Light. The real culprit is the Legislature, who has the power of oversight of that exclusive charter. They have ALLOWED the Lottery Corp to do EVERYTHING they have done, including the blackmail they have engaged in. All the Legislature has to do is invalidate the charter, since the LC has not lived up to its promises. ANY other lottery group would be THRILLED to take over the exclusive charter for the state of Georgia.

And why has the Legislature allowed this? I am not saying there is anything sub rosa going on (though there may be, with our legislators ideas of “ethics”) but the lottery has allowed the legislature to divert funds from education to other things. Don’t believe me? Well, the state used to have a federal match of money targeting low income college students. However, because of HOPE (which goes disproportionately to wealthier students) the state cancelled their participation in the program.

ScienceTeacher671

March 23rd, 2011
9:32 pm

I agree with Catlady & Jezel, and furthermore, I think there is something shady going on. Otherwise, why would the General ASSembly totally ignore the fact that the Lottery Corp. has not lived up to its part of the deal, and put all of the cutbacks on students and retailers?

Jezel

March 23rd, 2011
10:11 pm

Science Teacher…And…why is the AJC just now beginning to kick around this issue…after the fact. Thought news papers were supposed to uncover shady dealings. Who is stuffing whose pockets in this backward state? The General Assembly can say a lot of things…but what they do is an indication of what they are really about. They just pay lip service to having a first class public school system while appropriating a billion dollars each year to the prison industry in south Georgia.

ScienceTeacher671

March 24th, 2011
6:13 am

Jezel, true. One would think this would have been front page news a few weeks ago while there was still time to influence the HOPE and Pre-K discussions in the General Assembly.

catlady

March 24th, 2011
8:06 am

Jezel and SciTeach: However, while the AJC hasn’t blazed it across their headlines, they have mentioned it the last several years. I know I have been commenting on this blog about it for 3 years myself.

I have decided I want a “Georgia Lootery Special”: I want to be able to change the terms of my employment so I get more money any time I want. Furthermore, I will pay less of my bills than required. AND, I will tell you you are lucky I am even paying any at all! And, I will give myself a raise based on my not paying my bills fully!

A Conservative Voice

March 24th, 2011
10:45 am

@Light

March 23rd, 2011
8:46 pm

The lottery may not be a state agency, but it is sanctioned and regulated by the state, it lives and dies by the actions of our legislature and governor, so therefore, funds expended from it for HOPE and Pre-K are properly called “entitlements”. Stick that in your pipe and smoke it……..

[...] Many of you have complained that the lottery is giving a smaller slice of the pie to HOPE and pre-k than was originally intended and urged the AJC to write about it. The paper has a good story today on the issue of why the lottery is returning less than … read full article… [...]

FC Teacher

March 24th, 2011
5:07 pm

@Inman Park Boy: If you want to help students attend college, don’t waste your money on the lottery. Give to a foundation or university scholarship fund instead.

norman ravitch

March 24th, 2011
7:44 pm

The poor need many things but not lotteries. They need discipline, work, good role models. Instead to finance kids whose parents should themselves pay for their college the poor are given yet another demoralizing hobby. Shame on the state and the voters.

Jezel

March 24th, 2011
11:27 pm

In this economy …who is poor? In this world…what is moral? Our nation is driven by unregulated greed from top to bottom. The shame lies in the immorality of it’s institutions and in the fact that the corporate leaders, elected officials and the press fail to challenge unethical practices. Lotteries, at least, provide something positive from something questionable.

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March 27th, 2011
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