So what’s wrong with putting the State in the gambling business?

• First, it gives the State an unfair monopoly on an industry.
• Secondly, it puts the State in a position of preying on its citizens.
• And finally, it makes the State increasingly susceptible to corruption and outside influences.

When I say that the Arkansas Lottery gives the State an unfair monopoly on the gambling business, I don’t want that to be interpreted to mean that I support casinos run in a free market; I don’t. I believe the destructive elements found in a lottery are present everywhere gambling of any kind is—and that includes at the casinos in Hot Springs and West Memphis. However, people who claim to be “libertarian” on the whole state lottery issue need to realize that there’s nothing libertarian about this lottery. The State of Arkansas is running a gambling ring all its own, with no competition whatsoever in all but two cities in Arkansas. Monopolies and bureaucracy always create problems—after all, how many of us wish the cable company or the Revenue Office were easier to deal with? I believe they would be, if they had a competitor to deal with.

Second, having a lottery puts Arkansas in the position of preying on its citizens. The State of Arkansas is now encouraging behavior that they acknowledge is addictive and destructive. They’re enticing Arkansans to spend money on lottery tickets—counting on them to lose all along. Government is supposed to serve the People. It’s simply wrong for any government to prey on its citizens like that.

Finally, it makes the State susceptible to corruption and outside influences. When I went to the public hearing on lottery ticket vending machines, I saw representatives from the gambling industry—in particular Intralot, who had sold Arkansas the machines—sitting in the back of the room. Based on what I heard them saying to people present at the hearing, I got the distinct impression they had been lobbying the Lottery Commission.

Intralot is based in Greece; their business revolves around lotteries and manufacturing gambling machines. They aren’t an Arkansas-based company, and they don’t have Arkansas’ interests in mind—they’re primary concern is Intralot.

When companies like these send lobbyists to Little Rock, they send with them all the wealth and influence of the gambling industry. It’s hard to fight that much money. It may sound like a bad joke, but mixing politicians with gambling and a big pile of money seems like nothing more than a recipe for corruption to me.

There’s simply no reason Arkansas has business in the gambling business. We need to abolish the state lottery right away.

It’s not a stretch to say that the lottery is contributing to divorce in Arkansas. Financial problems are often cited as the number-one reason for divorce in America. If the Arkansas Lottery is doing financial harm to any of its players—and evidence suggests it is—then we can safely conclude that the money problems are likely hurting marriages.

The social damage goes beyond the divorce rate, though. Problem gambling and gambling addiction are major consequences of having a lottery. When people play the lottery out of desperation, keep gambling in order to win back their losses, or routinely gamble and lose more than they intended to, that’s “problem gambling” in action. When they can’t stop gambling—or when they begin seriously neglecting necessities in order to afford lottery tickets—that’s a sign of gambling addiction.

This sort of behavior affects more than just the individual buying the lottery tickets. It affects children who go hungry because their parents spent the grocery money on scratch-off tickets. It affects families when their car gets repossessed or their home goes into foreclosure because of out of control gambling addiction.

I’ve heard stories from people who have seen parents buy as much as $50 worth of scratch-off tickets while simultaneously telling their children there’s not enough money to buy bread or milk. In the last year, all of us have seen or talked to someone who has seen similar situations in gas stations and grocery stores across the state.

The Arkansas Lottery Commission knows this sort of thing happens. Otherwise, they wouldn’t at least make the token effort to encourage people to “play responsibly,” and they wouldn’t allocate money to treat gambling addiction—although I’m told the amount they’ve allocated would treat very few cases, in reality. They openly admit that their “product” is destructive.

All of this bears the question: If we know gambling causes harm, why is the State of Arkansas in the gambling business? The State has an obligation not to do anything that directly harms its citizens.

This is just another reason why Arkansas has no business in the gambling business. We need to abolish the lottery right away.

The Arkansas Lottery pays only 21.5% of its revenue in college scholarships.  Even though that figure is low, the Arkansas Lottery Commission still expects to dole out $100 million each year in scholarship money.  So how much money do Arkansans have to spend on lottery tickets in order to make that happen.

Using a little 9^th Grade Algebra, we know that 0.215 x Gross Revenue = 100,000,000.  That means that Gross Revenue = 100,000,000/0.215, which equals roughly $465,116,280.

That means that in order to award $100 million dollars in scholarship money, Arkansans will have to spend nearly half a billion dollars on lottery tickets.

That’s nearly half a billion dollars that could have been spent on groceries, clothing, housing, gasoline, or any number of other products.  In other words, that’s nearly half a billion dollars taken out of the Arkansas economy and dumped into the State Lottery’s coffers.

Removing half a billion dollars from the economy just doesn’t make sense—especially when our economy is still struggling to recover.  The State of Arkansas should promote economic growth by encouraging people to spend their money at Arkansas businesses, not dampen the economy by stripping it of so much money.

Our lottery is hurting Arkansas’ economy, and it’s time we put an end to it.

There are several reasons Arkansans should repeal the lottery—and we will touch on some of them in the coming days.  One very good reason to consider abolishing the lottery is the fact that even though it’s called the “Arkansas Scholarship Lottery,” the money isn’t exactly going for scholarships.

Now, lottery proponents will stop us here and point out that the lottery is planning to hand out roughly $100 million in scholarship money each year—and this is true.  $100 million is a lot money—until you look at how many students are standing with their hands out, expecting to get the scholarship they were promised.

The fact is that Arkansas’ lottery allocates less than 22% of its revenue for scholarships (the third worst in the nation)—and there’s nothing in the law that could keep them from allocating less if they wanted to.  What’s more, in order to give money to as many students as possible, the lottery only awards each student $5,000 or $2,500 per year.  There aren’t very many schools in Arkansas where that amount of money will cover all your expenses.

Arkansas’ lottery was pitched as a lottery for education—something that would open the doors for students to go to college.  Lottery officials, however, have made it clear that scholarships are among the least of their concerns—that’s why they allocate less than 22% of their revenue for the kids and talk more about prizes than they do education—and that they aren’t interested in helping students who truly cannot afford a college education.  Otherwise, they would set aside more money for scholarships and would be sure that scholarship recipients at least got enough money to cover tuition costs at most Arkansas colleges.

Lottery proponents knew the best way to pass a lottery was to tie it to education.  In Arkansas’ case, however, the connection between the lottery and education is tentative at best.  That’s not what we were promised, and that’s why Arkansans should abolish it and find another way to send kids to college.

To read about these events, please see the links below from KATV-7 and the Arkansas Democrat-Gazette.

Comp Time for Execs an Issue at Arkansas Lottery: http://www.katv.com/Global/story.asp?s=13120254&

Arkansas Lottery Director Survives Dismissal Vote: http://www.katv.com/Global/story.asp?S=13121069

Lottery Director Survives Job Vote (He’s Chastised Over Comp Time): http://www.arkansasonline.com/news/2010/sep/09/lottery-director-survives-job-vote-20100909

The fact is, as we’ve pointed out before, Arkansas’ lottery—whose foundational purpose is supposed to be providing college scholarships—is paying less than 22-cents on the dollar toward scholarships.  That puts Arkansas’ lottery at the 4^th lowest in the nation when it comes to revenue allocated for education.

Arkansas Lottery Director Ernie Passailaigue defends Arkansas’ position by stating that allocating a larger percentage of revenue for scholarships would require them to pay out less money in prizes, and that paying out prizes is what makes people play the lottery.  So ensuring there are plenty of prizes is the key to scholarship revenue. But there are two huge problems with his logic.

First, there is no lottery law that says you have to spend less on prizes if you want to increase revenue for college scholarships. The Arkansas Lottery could take that money from anywhere they want.  They could have paid Passailaigue less—he is, after all, the third-highest-paid lottery director in the nation at $324,000 per year; they could have chosen not to buy the lottery ticket vending machines we’ve been talking about; they could reduce or eliminate their advertising budget; or they could tighten their belt in all these areas, and provide more scholarships for students who need them.  His argument just doesn’t work.

Second, the Arkansas Lottery is pinning their hopes on selling large volumes of lottery tickets. They believe if they sell enough tickets, they can get enough money to make up for only paying out 21.5% in scholarships.  There are some serious implications here, though.

First, Passailaigue has told members of the press that he expects lottery ticket sales to decline after the lottery’s novelty has worn off (he and I agree here).  That means there’s really no way anyone can say for certain that the lottery will ever be able sell enough tickets to make up for the anemic scholarship budget they’ve set aside.

On top of that, if the Arkansas Lottery is going to provide the amount of scholarship money everyone expects—roughly $100 million—by only giving 21.5% of its revenue to the students, they will have to sell between $400 and $500 million worth of tickets every year.

That’s nearly half a million dollars taken out of our already struggling economy—money that would have been spent on groceries, gasoline, housing, or any number of other products.  Instead of being spent in a way that would boost Arkansas’ economy, this money is going straight into the Lottery Commission’s pocket, and less than 22% of will ever get to a student.

The bottom line is that the Arkansas Lottery has been disingenuous with the People of Arkansas, and now they’re answering for it. People expect a group called the “Arkansas Scholarship Lottery” to actually put scholarships first.  As it is, Lottery Officials seem to indicate the scholarships are what they pay for after everything else is covered.

They promised Arkansas a “world-class” lottery, but instead they’ve given us a lottery that won’t even pay out an average percentage of its revenue for education.

Where You Won’t See Them

Despite the lottery director’s desire, we do not expect lottery ticket vending machines to show up in large retail stores in Arkansas. Walmart has a longstanding corporate policy that doesn’t allow for the sale of lottery tickets in their stores, so don’t expect any machines there. We are not sure yet about Target, Home Depot, or any other “big box” stores.

Commission officials, including the lottery director, have said that they’re trying to target “non-traditional locations” (i.e. new markets) for the vending machines, so you probably won’t see machines in convenience stores that already sell tickets over the counter.

Where You’ll See Them

In a story from the Associated Press this morning, lottery spokesman Julie Baldridge “declined to say which companies” would be approached about the machines, but did say that, “Fred’s and Dollar General do have lottery vending machines in their stores in other states, so it is something they’re already familiar with.”

Based on other comments made by lottery officials over the past few months, we expected this to be the case. That’s why we sent letters yesterday to over 400 small retail stores in Arkansas—including Dollar General and Fred’s—warning them of the controversy surrounding the machines.

Additionally, Lottery Director Ernie Passailaigue has expressed desire to see the machines in “big retail chains, grocery stores and airports.” Our best guess is that he means Kroger grocery stores and the Little Rock National Airport.

Bottom Line
The bottom line is that anywhere you see a Coke machine, Red Box, or video arcade game, you could one day see a lottery ticket vending machine. That could include malls, restaurants, and many other places of business. For the time being, though, you can probably expect vending machines to appear in discount retail outlets and places that do not typically sell lottery tickets in Arkansas.

Today, Family Council Action Committee President Jerry Cox mailed letters to Arkansas’ Dollar General, Family Dollar, Fred’s Discount, and Walgreens stores.  In the letter, he outlined some concerns his group and others have expressed about lottery ticket vending machines.

Cox said, “All we want to do is make sure that store owners get the whole story on these vending machines.  The machines are very controversial, and Arkansas’ store owners need to know that.”

Cox went on to say, “Over 1,220 Arkansans sent comments to the Arkansas Lottery Commission saying ‘we don’t want these machines.’  Comments against the machines came from 69 of Arkansas’ 75 counties.  That means if you’re a store owner in Arkansas, chances are good that someone in your community doesn’t like the machines.

I firmly believe that some store owners are going to lose customers if these machines pop up in their stores.  They are that unpopular.”

Cox said there were reasons to be concerned about the vending machines besides their widespread criticism. “Machines like these will lead to illegal, underage gambling.  In other states, it’s not uncommon for people to loiter around lottery machines for extended periods of time, buying lottery ticket after lottery ticket.  The Arkansas Lottery Commission evidently expects the same to be true here in Arkansas—otherwise they would not have authorized the ‘continuous play’ feature on these vending machines.  If I were a store owner, I wouldn’t want people loitering around a vending machine.  I would want them buying merchandise.”

Cox also said store owners need to be aware of the possibility that these machines could be outlawed when the legislature convenes in January.  “The tide of public opinion is turning against the Lottery Commission and these machines.  I firmly expect legislation to be passed in 2011 that will rein in the Lottery Commission, and I believe banning these machines will be part of that legislation.  These machines are already illegal in South Carolina and several other states.  If I were in the store owner’s position, I would at least want to wait and see what our legislators do before making a decision.  It’s just common sense.”

Cox said in all about 420 letters had been mailed to stores across Arkansas.  “We went to Google, and we found every Fred’s, Dollar General, Family Dollar, and Walgreens we could.  Most of them should get their letters by Friday or Saturday.  My hope is that the letters will help raise awareness about how controversial these vending machines really are.”

Recently, we told you about Lottery Spokesman Julie Baldridge’s statement that the 100 lottery vending machines they purchased cost $50,000 each.  But Arkansas Lottery Director Ernie Passailaigue recently told the Legislative Oversight Committee the machines only cost $16,500 each.

The sudden change in the machines’ price tag was news to me—and, from what I could tell, to some of the legislators on the committee as well.  When they pressed Mr. Passailaigue about the change in price, Passailaigue said that Baldridge’s statement on the radio was “misinformation”.

Well, I broke down the cost of the vending machines, and I think Julie Baldridge was probably being much more honest and accurate than Passailaigue gave her credit for.

According to the costs the Lottery Director outlined yesterday, the 100 machines they purchased were $16,500 each, but the Arkansas Lottery has to pay Interlot, the company who sold them the machines, a percentage of the gross sales for each machine over the next 7 years.

When I combined the projected payments Arkansas will be doling out to Interlot with the $16,500 they paid up front, the total cost of each machine comes out to approximately $50,000.

In essence, the machines do cost $50,000 each—it’s just that the Arkansas Lottery is buying them on more of a payment plan (with a $16,500 down payment) rather than paying cash for them up front.

I will admit that I was incorrect when I said last week that the Arkansas Lottery had already spent $50,000 on each machine, but I was simply working with the numbers I heard Lottery Officials give out on the radio; if they had been more transparent in purchasing the machines, and explained to the Public in detail how they were going about paying for each one, there would have been no misunderstanding.  However, there’s no way that any lottery official can stand up and, with a straight face, say that these machines only cost $16,500.  Based on their projections, $50,000 is the cost of each machine after all the payments are made.

No one puts 10% down on a 30-year mortgage, and then tells their friends, “This house only cost me $12,000.”  We all know the real price tag on a home is the down payment plus the monthly payments.  These vending machines are no different.

It appears that Julie Baldridge was telling the truth on KARN last week.  That’s something we could use a lot more of from our lottery officials.

The Arkansas Lottery Commission’s Legislative Oversight Committee refused to weigh in, this afternoon, on the decision to roll out 100 lottery ticket vending machines across Arkansas.

The committee’s decision came on the heels of the Arkansas Lottery Commission’s vote to move forward with the machines, despite intense public opposition.

Family Council President Jerry Cox was at this afternoon’s committee meeting, and issued a statement saying, “The committee’s decision not to weigh in on the machines is very disappointing.  We had hoped the legislators on the committee would voice some of the same concerns their constituents did during the comment period a couple of weeks ago.  They had a very real opportunity to speak up for Arkansans, and decided not to take it.”

Cox also criticized the Arkansas Lottery Commission, saying, “The Arkansas Lottery Commission is trying to protect itself by telling everyone ‘we’re just trying to provide scholarships,’ and that is leading some lawmakers to remain silent on some of the decisions the Commission is making because they don’t want to be portrayed as ‘anti-scholarship’.  Just this week, however, the Associated Press released a news story stating that the poorest and least-educated regions of our state are purchasing the most lottery tickets.  The Arkansas Lottery Commission needs to quit hiding behind students and scholarships, and address the fact that their so-called ‘product’ is ruining lives in parts of Arkansas.”

Cox went on to say, “When someone talks about these vending machines leading to underage gambling and increases in gambling addiction, we need to take that seriously.  These aren’t just statistics and stories we’re talking about. These are real people.  They’re our children, our neighbors, our family members, and our friends, and they’re lives are slowly being ruined because the Arkansas Lottery Commission doesn’t know how to exercise restraint.  The Lottery Commission has been so blinded by the money that they aren’t asking themselves whether or not the decisions they’re making are ethical—and it shows.”

Cox said today’s committee meeting has not dissuaded him from pursuing legislation to ban lottery ticket vending machines in 2011.  “There are 12 legislators on the Oversight Committee,” Cox said, “but there are 135 in the Arkansas Legislature.  I’ve already spoken with some legislators who would like to see the Arkansas Lottery Commission reined in, and I believe that’s what’s going to happen when the lawmakers come to Little Rock this January.”