Politicians and industry officials guessed that figure could be upwards of $150 million per year, depending on how likely Oklahomans were to buy tickets. But no one really knew, and if you asked for a wager, they would say, Wait until its started.
As it turns out, the lottery has sent about $70 million to schools annually. Now, after a relatively steady stream of revenue for seven years, lottery officials fear sales of some tickets are about to fizzle out at the same time as their cost of business goes up. With an uncertain future, some state legislators are calling for a second look at the lotterys structure.
The Oklahoma Lottery Commission projects that overall revenue, which is the sum of all lottery ticket sales, will drop by more than $16 million from nearly $200 million in fiscal year 2012 to $183.6 million in 2013. The profit sent to education could fall by more than $5 million. Revenue is expected to drop again next fiscal year.
Hedging a bet
Rollo Redburn, the commissions executive director, said predicting numbers that are inherently unpredictable is difficult. For instance, a sudden craze over a Powerball jackpot could boost revenue, but he is most concerned about more manageable sales of tickets for such lottery games as Scratcher or Instant Win.
Were at the bottom of the industry on the payout of our Scratcher games, he said.
Unlike online games, in which players can win ever-changing jackpots by randomly matching numbers, Scratcher games offer set prizes instantly. That prize money comes from ticket sale revenue, which is the same source of funding for education.
The state requires that 35 percent of all revenue must go directly to public schools, colleges or related education funds. That profit restriction limits how high prizes on Scratcher tickets can go, which Redburn said results in limiting sales.
If the profit restriction was removed, we could put more money into instant payouts, he said. Players will have more fun. Our sales will go up, and our profits will go up.
Most state lotteries dont require that a specific percentage of their revenue go toward education. Eliminating that requirement has long been a goal of Oklahomas Lottery Commission, but the idea is gaining more urgency as the agency and the lottery funds shrink.
The agencys operating expenses, which are also drawn from ticket sale revenue, have dropped annually since 2008.
Redburn said the staff has been reduced through attrition, with advertising expenses down by 71 percent to $1.6 million from a peak of $5.6 million in 2008.
Now the commission hopes to reduce the cut retailers get for selling a ticket from 6 percent to 5.5 percent.
We are at the point that we have to consider all of our expenditures as a way to protect prizes, he said.
Negotiating a win
Just getting a lottery started in Oklahoma was rough, said former Gov. Brad Henry. In his first run for governor, he campaigned vigorously for it.
He said the lottery would create a new stream of money to schools, and he pitched it as a way to recapture money spent by Oklahomans on game tickets in bordering states.
It made sense to me because we had all kinds of gaming in Oklahoma, he said.
Eventually, the Legislature approved a bill allowing a statewide vote on the matter, and voters overwhelmingly passed two state questions creating the lottery.
Getting the bill to that stage, however, required compromises.
Henrys original version of the lottery included video gaming, often available in other states, but that was removed to win legislative support for a state vote. If video gaming had been included, Henry contends, the lottery would have made more money. The 35-percent requirement was also a compromise intended to reassure legislators that schools would see cash.
What we didnt realize was by setting that arbitrary number, we were holding down revenue that could go to education, he said.
A quiet House
A measure in the state House would have removed that 35-percent requirement, but its author, Rep. Mike Shelton, D-Oklahoma City, pulled it from consideration when it became apparent there was no appetite for passing it.
In the Senate, Clark Jolley, R-Edmond, won approval of two lottery-related bills. One, Senate Bill 863, could lead to a privatized lottery, a trend in other states.
My legislation simply empowers the governor to accept bids and proposals. It doesnt require it to be done, Jolley said. We dont want to force something if the plan isnt right.
A private contractor might take issue with some of the changes proposed in Jolleys other bill, SB 955.
Among other things, it would prohibit the sale of lottery tickets online, a popular feature of some private lotteries, and it would redirect more lottery money go to gambling-addiction treatment programs.
Pluses and minuses
addiction is one reason some will continue to oppose the lottery
outright. Andrew Spiropoulos, an Oklahoma City University law professor
and a fellow at the right-leaning Oklahoma Council of Public Affairs,
said the social and economic costs of a lottery are too high. Even if
education received more money, he said, it wouldnt be worth it.
say it just doesnt matter how much you raise, Spiropoulos said. The
fact that we cant have a perfect society ... doesnt mean that the
state should encourage gambling.
prey on the weakest members of society, he said, and money spent on a
lottery ticket is removed from an active market. If voters knew how
small its contributions to education are relative to the state budget,
he said, they might rethink it now.
lottery funds for common education, which have been around $30 million
annually, are supposed to be used only as additional funds, not as a way
of replacing funds that otherwise would come from state appropriations.
practice, however, thats difficult to quantify. State education
funding has been flat for two years, leading some to suggest its been
folded into the budgeting process, replacing money that would have been
included either way.
the more than $500 million sent to education from the lottery so far is
still a significant number, said Henry, and if that money hadnt been
there, then cuts to school funding over the past few years could have
The cuts would be deeper at the local schools in everyones hometowns without the lottery, Henry said.