Tuesday, December 26, 2006

Recent developments indicate the state-run lottery may be headed toward
participation in a gigantic global online gaming system - with giant
jackpots - never envisioned by California voters, says a watchdog group. At
the same time, Republican Gov. Arnold Schwarzenegger - who appoints lottery
leaders - is on record in support of expanding the games to some unspecified
degree, as well as the revenue it brings public education. "We learned in
litigation last year \ that there are people at the lottery who believe
current law allows them to enter into international lottery games," Fred
Jones, an attorney for the California Coalition Against Gambling Expansion,
told lawmakers at a recent hearing. Lottery officials have said such a move
is not part of current plans. Even so, Democratic lawmakers are seeking to
rein in a lottery they feel is running amok after controversial decisions to
join the multi-state Mega Millions lotto game and approve the takeover of
California's lotto contractor, which is now indirectly controlled by two
Italian families. "They \ make decisions and we get to react to them," said
Sen. Dean Florez, a Fresno-area Democrat, who grilled lottery officials at
the hearing Florez said afterward he will introduce a bill that would
subject big changes in the state lottery to a vote of the Legislature. "We
ought to be in a more proactive situation," he said. The struggle over
control and oversight of the lottery is not new. It began with voter
approval of a state-run lottery in 1984. The outcome of the latest and
biggest surge in the battle, however, may well shape California's lottery
for years to come and determine whether it maintains the trust it says is
essential to its success. "What is important to us is the continued
integrity of the lottery," the agency's legal counsel, Donald Currier, told
lawmakers. The Lottery Act places integrity as second only to the sale of
tickets. At least one-third of the lottery's revenue goes to public
education and half is returned to players in prizes. Industry experts say
that without an untarnished image, gamblers lose trust in whether they have
a fair chance at winning lottery prizes, sales fall off, and schools don't
get the comparatively small but important stream of money they receive from
the games.
But lottery officials have consistently argued over the years that their
operation is unique - the only government entity set up solely to make
money. It's more like a business, they say, that needs independence from
legislative and political meddling to do its job. The tug of war has gone on
for years, until the lottery's recent approval of joining Mega Millions.

The move triggered an outcry from lawmakers and a lawsuit by a public-policy
advocacy group that resists gambling expansion, alleging the lottery had
exceeded its constitutional authority by extending a game outside the state.

A judge ordered a minor change in prize-claim periods to make Mega Millions
more fair to Californians.

But in the wake of the flap, the Schwarzenegger administration replaced many
of the lottery's top officials.

On the heels of that controversy, the new clash came over Italy-based
Lottomatica's purchase of U.S.-based GTECH, the lottery's on-line game
operator.

Despite questionable business practices by both firms, lottery officials
have assured critics that operations in California will continue unchanged.

The now foreign-owned GTECH is an industry giant, serving lotteries in 26
states and 50 countries.

"Our lottery has now taken on an international scope" and with it, the
possibility of global games, said Jones. Jones said voters over two decades
ago had no way of knowing where the lottery was going.