Wednesday, March 07, 2007

The state-run lottery has run out of luck with its in-state lotto and
controversial participation in multistate Mega Millions, suffering a drought
of big jackpots, and is being forced to cut allocations to schools - $136
million less than last year. At the same time, a new study indicating
taxpayers may be the biggest losers in the California gambling industry has
also drawn the attention of lawmakers. The benefit of government cuts of
gambling revenues may be nearly outweighed by the costs of gaming-related
woes, such as crimes by problem gamblers and caring for poor families torn
apart by those afflicted with the disease, according to a California
Research Bureau report. The booming, $13 billion-plus business of gambling
in California - from the lottery and Indian casinos to card rooms and horse
racing - is under scrutiny by lawmakers who believe the state is doing too
little to ease the impact. We have to figure out what is most important,
said Sen. Dean Florez, a Fresno area Democrat who chairs the government
committee that oversees gambling. In the lotterys case, players havent won
any monster jackpots lately, despite Californias much-touted entrance into
Mega Millions lotto in mid-2005. Lottery officials said the problem thats
hurting their operation and allocations of revenue to schools is puzzling -
there just havent been any huge jackpots. At an unusually fast pace, players
have been nabbing Mega Millions and in-state Super Lotto prizes while they
are still relatively small and before they can build up. The lottery says it
is going to have to cut back scratch-off ticket games because it cant afford
to pay the prizes. Retail outlets will make less in commission. And lottery
officials are rethinking their overall strategy. But effects go deeper -
schools will receive less funding. During the last half of 2006, there was
an unusual absence or drought of large jackpots to fuel lotto mania - ticket
buying sprees that bolster revenue for the state agency that runs on a July
1 to June 30 fiscal year, according to lottery spokesman Rob McAndrews.
Jackpot levels are out of the lotterys control and have been significantly
below average this year, the Lottery Commission said in a statement. The
panel, largely due to drops in lotto game sales, lowered projected 2006-07
revenues by $400 million, from $3.6 billion to $3.2 billion. Its the first
such mid-year change in a decade and follows a record sales year in 2005-06
of nearly $3.6 billion. At the outset of Mega Millions participation, there
were jackpots of $170 million, $258 million and $315 million. But recently,
there have been fewer attention-grabbing prizes. As a result, public
schools - which are required to get at least 34 percent of sales - will
receive less too. Education will get an estimated $1.13 billion - $136
million less than last year.

State Superintendent of Public Instruction Jack OConnell says lottery
funding provides only a small fraction of the education budget but that
every dollar counts.

Occasional dips in lottery revenue mean trouble for some local districts
that have been pressured into putting the fluctuating money flow into fixed
teacher salaries, according to education officials.

The allocations are supposed to be used for instructional materials and
other items that can easily be cut back.

Due to developments, the lottery is researching its games more intensely,
dropped plans for some offerings such as the Saturday Big Spin TV show and
slashed its administrative spending reserve.

Meanwhile, at a Senate government committee hearing, lawmakers were handed a
troubling California Research Bureau Report, ordered by the attorney
generals office, which regulates gambling.

The report found Californias efforts to deal with gambling-related problems
is inadequate and underfunded.