MANDATED PROFIT PERCENTAGE RESTRICTS LOTTERY FUNDS FOR EDUCATION
OKLAHOMA CITY (March 18, 2008) -- Speaking at the Lottery Board of Trustees public meeting on Tuesday, March 18, the Secretary of the Florida Lottery and the Executive Director of the North Carolina Lottery each stressed to the Board that mandating a profit percentage, such as that in the Oklahoma Education Lottery Act, actually restricts the real dollars that can be raised for lottery beneficiaries.
Leo DiBenigno, Secretary of the Florida Lottery, indicated that up until July 2002, Florida prize payouts had been restricted to 50 percent of sales and transfers to education had been mandated at 38 percent for scratcher games, and 39 percent for online (computerized) games.
“With these profit restrictions removed, we are projecting profits from our scratcher games to be about $235 million higher (93 percent) this fiscal year than they were in 2002,” DiBenigno said. “In the six years that Florida has had flexible prize authority the Lottery has generated $822 million more for education from its scratcher product than would have been generated under the pre-2002 set percentage restrictions.”
According to DiBenigno, the increased profits began to be realized almost immediately after implementation of the variable prize and profit authority.
“I can say without reservation that this has been an excellent deal for our players and for Florida education beneficiaries,” he said.
Tom Shaheen, Executive Director of the North Carolina Lottery said, “When the North Carolina Lottery began (2006) we had a mandated profit percentage of 35 percent, much like the Oklahoma Lottery currently has. This mandate was removed during the first legislative session after our start-up, which allowed us to increase prize payouts in our games, particularly the scratcher games. In the past three months, since we increased prize payouts our weekly scratcher sales have increased 94 percent.”
Shaheen attributes this growth to players winning more prizes, more often, which in turn encourages them to play more often.
The Board of Trustees invited DiBenigno and Shaheen to appear at its March quarterly meeting so Board members could hear first-hand the results of other states that had removed previously mandated profit restrictions from their law. The Board quizzed them about details of their law change and revisions to their sales and marketing plans once the profit restrictions were removed.
Bill Paul, Chairman of the Board, said he found it hard to understand why Oklahoma would continue to mandate a profit restriction when it is clear that the need for education funding continues to grow each year.
“Just recently I have read several stories in the press about the funding crisis facing Oklahoma schools,” Paul said. “I am hopeful that the Oklahoma Legislature will act favorably in removing the 35 percent profit restriction from the Lottery Act so that Oklahoma can begin to realize some of the benefits that have been achieved in other lottery states that either don’t have a profit restriction or have had them removed.”