Legislative critics on Thursday chided state lottery officials for trimming back the percentage of proceeds going to education and emphasizing the long-term jackpot payout over the one-time cash payout that many winners receive.
“If this were not a government-run operation it would be shut down by the Federal Trade Commission,” Rep. Paul “Skip” Stam, R-Wake, said, referring to the Powerball advertisements that display the long-term annuity payout.
Alice Garland, executive director of the North Carolina Education Lottery, told a joint legislative oversight committee that the lottery office reports both the cash payout figure and the larger long-term jackpot payout.
“We cannot control what the media chooses to report,” Garland said.
However, Rep. Nelson Dollar, R-Wake, said that billboards generally show only the larger jackpot figure.
“People play more when they do see this huge number,” Dollar said. “They get it in their head that hey, I can be a billionaire. Well, you’re not going to be a billionaire.”
Rep. Pat Hurley, R-Randolph, lamented the declining percentage of lottery sales actually paying for education programs.
Garland told the oversight committee that 26 percent of sales now go to education.
“I know it’s not going away; I’m living with it,” Hurley said of the lottery. “However, I think it needs to be used for education.”
“Percentages do matter,” Hurley continued.
Garland said a larger share lottery receipts are going to pay for lottery prizes in an attempt to encourage more sales.
“The prizes that we pay is the product that we sell,” Garland said. “That’s what we’re in the business to do. They’re not going to purchase our games if they do not feel like they have a decent chance to win something.”
Garland said that the focus of the lottery officials is the dollars that are returned to the state for education.
“Every year, we have returned more dollars than the previous year,” Garland said.
According to the N.C. Education Lottery web page, the amount of lottery proceeds going for educational purposes has increased, from $315.56 million in the 2006-07 fiscal year to $521.2 million in the 2014-15 fiscal year. Currently, 62.4 percent of lottery sales goes toward prizes.
After Thursday’s meeting, Jon Sanders, director of regulatory studies at the John Locke Foundation, also criticized the decreasing proportion of lottery proceeds going to education.
“At first, 35 percent of lottery proceeds went to education funding,” Sanders said. “By 2013, only 28 percent did. Now barely one-quarter of lottery proceeds actually go to education funding.”
Sanders also questioned wisdom of establishing a state-run lottery.
“The lottery thrives off economic distress, as the most reliable predictors of lottery sales are poverty, unemployment, and property tax rates,” Sanders said. “Now it seems we have to treat it like the unwelcome guest we’re too polite to usher out the door, so we’re scrambling to find some other ways of making it tolerable. I wonder if state leaders would have made this gamble years ago if they knew then what we know now.”
Rep. Jason Saine, R-Lincoln, who co-chairs the legislative oversight committee, said he understands that some people, including legislators, would like to do away with the lottery. But he doesn’t see that happening anytime soon.
“There are varying opinions on the lottery,” Saine said. “There are some that want to end the lottery. So instead of ending it in a quick fashion, death by a thousand cuts [through regulations] would be a legislative strategy, possibly.”
During much of Thursday’s meeting, responding to a request from the committee, Garland offered a presentation on games and strategies used in other state lotteries.
Garland said that some states offer Keno games. Others offer an “ILottery,” she said, allowing lottery games to be played online, including on tablets, laptops, and smartphones.