Legislation Proposed to Boost Lottery Sales and Entice Lease – Teachers, Tribes Concerned

Sen. Dean Florez, D-Fresno, has introduced two bills that would allow the lottery to loosen prize payout rules, permit gambling themes such as blackjack and poker, clear the way for phone wagering, and allow electronic ticket dispensing terminals that don't determine the outcome of the bet like slot machines.

The purpose of this would be to relax restrictions on the lottery to lure more gamblers and help the underperforming lottery. It also might entice outside interests to consider leasing the operation from the state — an idea floated by Gov. Arnold Schwarzenegger to help erase the budget deficit.

Indian gaming tribes immediately questioned whether such changes would illegally undermine their agreements with the state and State Teachers Association officials, though not yet taking an official position, are wary about a provision in Florez's Senate Bill 1679.

That provision would delete the current guarantee that 34 percent of lottery revenue goes to schools. Instead, education would get as a minimum the current level of $1.2 billion per year. The policy-setting Lottery Commission could award more funds.

"Whenever there's been anything that looks like it might reduce funding to education, we are concerned and want to take a closer look at it," said California Teachers Association spokeswoman Sandra Jackson.

Florez said his legislation, largely based on lottery officials' suggestions for raising sales, would "help the agency find ways to maximize its contribution to the state and to schools in these tough budget times."

The senator said the lottery "clearly holds more promise and value for this state" than it has produced due to restrictions. Lottery Director Joan Borucki laments that her agency toils under "legal restrictions that no other state lottery in the nation has."

Representatives of Indian tribes with casinos questioned whether lawmakers have the authority to alter the voter-approved constitutional amendment that created the lottery in 1984, without going back to the ballot.

Legislators' lawyers said Proposition 34 allowed for changes on two-thirds votes of the Legislature as long as proposals further the purpose of benefiting education. Moreover, they said, some of the rules Florez wants to alter were put in place by lawmakers or courts.

Howard Dickstein, who represents several tribes with casinos across the state, said the plan also may conflict with signed Indian gaming compacts that assure tribes a monopoly on slot-machine operation.

"I know there's a lot of desperation at the Capitol," Dickstein said, "but trying to rely on gambling is not the answer."

A second Florez measure, Senate Bill 440, calls for the state to hire a financial adviser to study the revenue potential for a lease of the lottery to a private company and to report on ways the operation can maximize its value.

Schwarzenegger spokesman Sabrina Lockhart said that although the governor is not involved in the bills, "he is very much interested in making whatever changes we can to make the lottery a more profitable asset to taxpayers.

"We're open to looking at any options to achieve that goal," including Florez' bills, if they reach the governor's desk, Lockhart said.

Wall Street analysts have told the governor that restrictions on the lottery are hurting sales and its overall value. California lottery sales, per capita, are about half the national average.

The governor has estimated that leasing the lottery could bring in up to $37 billion — with half up front and the rest in fixed annual installments. But financial experts say that estimate is greatly overestimated.

SB1679, in general, would lift many of the restrictions intended to curb the spread of lottery gambling and the social problems, such as addiction, associated with it.
Fred Jones, of Californians Against Gambling Expansion, said it would be "irresponsible policy."

The legislation is so new that no dates have been set for initial committee hearings.

Full Article:
http://www.insidebayarea.com/oaklandtribune/ci_8427993