Florida Lawmakers Deadlocked On Lottery

Florida legislators are stuck between increasing lottery proceeds and the appearance of expanding gambling. Although it sold $5.37 billion in tickets in the last fiscal year, the lottery could offer online sales, increase the number or retailers, raise marketing funds and offer new games to increase funds for education, recent reports indicated.

For the past two years, Florida state Senator Gwen Margolis of Miami has filed legislation allowing online lottery ticket sales. But she said officials at the 27-year old lottery do not support the idea. “It would seem to me that we could come into this century and start doing what we should be doing and we could probably double the amount of money that we make on the lottery tickets for education. The Lottery hasn’t seen fit to even look into the issue.” The legislature’s Office of Program Policy Analysis and Government Accountability recently reported internet ticket sales could generate an additional million annually for the state.

But the legislature is deadlocked between raising lottery proceeds and expanding gambling, or at least giving the appearance of it. In the last fiscal year, the Florida Lottery sold $5.37 billion in tickets. But recent projections indicate revenue growth will drop from 7.1 percent in 2014 to 2.2 percent this year. By 2017, growth will be a mere at 1.2 percent a year, according to state economists. The declines highlight the fact that state officials embrace the $1.5 billion a year the lottery generates for education programs, but are ill-at-ease with the idea of expanding gaming although Florida essentially operates a $5.5 billion gambling operation statewide.

The lack of online ticket sales is just one of the issues facing the lottery. In addition, Florida officials have been reluctant to aggressively promote it. In his latest budget, Governor Rick Scott recommended $38 million—the same amount as last year–for lottery advertising and promotion.

Also, Florida ranks 21st out of the 42 domestic lotteries in the ratio of retailers to the population. The lack of retailers is especially noticeable among minority-owned retailers, who represent 15 percent of ticket sellers. A new report from the state Auditor General shows 66 percent of those minority retailers are Asian-Americans, although state law limits that ownership to no more than 35 percent for any minority group. In addition, the OPPAGA report showed an additional $5 million in revenue would be generated for every 200 retailers added to the network. Also, another $3 million would be gained for every additional 300 vending machines that sell all types of lottery tickets.

Retailers who currently sell lottery tickets have issues with state system, too, said Rick McAllister, president of the Florida Retail Federation, whose 6,000 members sell lottery tickets at their grocery stores, convenience stores, drug stores and gas stations. “The current sellers of lottery ticket are not particularly happy with the amount of money they get for doing the work,” McAllister said. They’d like to see more vending machines in use beyond the lottery’s 1,500 scratch-off ticket machines and the 500 scratch-off and online vending machines.

Furthermore, the lottery is reluctant to add new games. The OPPAGA report indicated adding games like Fast Keno, where players can make bets every four or five minutes, could add $111 million in annual revenue. But the report also noted although Fast Keno is available in 15 other U.S. lotteries, it is considered more addictive than other games. Also, “New lottery games could generate substantial revenues, but could represent expanded gambling,” the report said.

Compared to other states, however, the Florida lottery could be doing worse. Lottery revenue rose $119 million last year while Texas’ lottery revenue, for example, fell by $682 million. Most U.S. lotteries had a growth rate of 1.8 percent last year, with a gain of $1.27 billion. Thomas Garrett, a lottery expert and economist at the University of Mississippi, said, “I think, in general, established state lotteries can expect 1 to 2 percent growth per year. Most state lotteries have reached the mature stage of their life cycles, and this rate of growth is what one would expect. Of course, states can tweak their games in order to generate more revenues in the short run, but trend-growth will return to 1 percent to 2 percent per year.”