The Oregon House Revenue Committee recently heard a presentation by Lottery Director Barry Pack, who said the state could lose much-needed lottery revenue due to increasing competition from tribal casinos and an aging player base.
Pack said with more than 3,900 lottery retailers, the lottery is projected to generate $1.2 billion for the state in the next two years, with video lottery accounting for 70 percent. However, sales are only starting to recover from 2007 when legislators pass a bill banning smoking in bars, followed by the recession. Half of lottery revenue goes to education and the rest pays for economic development, parks and natural resources and gambling addiction treatment.
Pack said in Oregon, as in other states, the biggest challenge is attracting younger players. “They’re looking for skill-based games, they’re looking to play on their mobile devices. So I think one of the future revenue risks is how do we stay current with the player base, and how do we reach out across broader demographics to attract a different set of players than may be playing now?” He continued, “Any future growth is going to have to come from new product offerings. It’s not just about bringing in more retailers, or being able to tap players for our current product offerings.”
Pack noted Oregon has reached the gambling saturation point with the state lottery and tribal casinos. He said lottery sales are expected to fall by $100 million annually when the Ilani Resort near La Center opens this spring. A proposed casino in Jackson County and a potential Grand Ronde entertainment center in Wood Village also could impact lottery revenue.
Another challenge, Pack said is gentrification in the Portland area. He explained when older, larger neighborhood bars are sold and torn down to make room for mixed-use developments, the newer, smaller bars have less room for the games, Pack said.
State Rep. Greg Smith inquired about lowering lottery payouts. Pack said video lottery games pay out as much as 94 percent on average. Smith suggested a decrease of 1 percent over two years could help the bottom line. “During times of budget shortfall, what if you went from optimal to an ‘A’ performance?” he asked. Pack responded, “We exist in a competitive marketplace. So if we’re paying out more or less than our competitors, there’s an impact to be felt.”
Pack concluded, considering all the factors and challenges the lottery faces, “We just don’t know what’s going to happen.”
