Good news for lottery players in California, the vendors, promoters, sellers of the tickets. Not such good news for education—the excuse used for government to run gambling in California.
“When California voters approved the lottery in 1984, they required 34 cents of every dollar go towards education. That remained the law until state legislators eliminated the requirement eight years ago. The new mandate for school funding? To “maximize” the dollar amount.
Lawmakers made the change to free up the lottery to sweeten jackpots and pump up sales, which had lagged during the Great Recession. The thinking went like this: the percentage of lottery dollars going towards schools would dip, but the extra ticket sales would push the dollar amount higher.
These days, just 23 cents of every dollar go towards schools. So despite all the additional revenue, the money for schools has crept up more slowly.
The changes have meant that, in the current fiscal year, it took an additional $2.3 billion in ticket sales to reach the same level of support for schools, $1.6 billion, that the lottery provided in FY 2006, adjusting for inflation.”
The California Lottery is just another scam for the special interests to make money—using children. Shame on us for allowing this.
How California Lawmakers Goosed Jackpots To Create Record-Setting Lottery Sales
by Aaron Mendelson, LA 1st, 6/19/18
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The California Lottery is minting money. This year, revenues will soar to $6.9 billion.
That not only breaks a record, it more than doubles the amount from just a few years before. The California Lottery’s revenues now top those at Fortune 500 companies like Clorox, Yum Brands and Harley Davidson.
The recent boom has been fueled by a wave of gigantic jackpots. Newer games like Powerball and a $30 scratch ticket offer huge prizes, and California’s lottery players have responded by gambling more and more.
That should be good news for the state’s schools, the lottery’s only beneficiary. Yet even as ticket sales have skyrocketed, California schools aren’t seeing much of a return on that investment. A KPCC/LAist investigation found contributions to education by the lottery are essentially unchanged from 12 years ago, even though revenues are up by billions.
Why? Lawmakers changed the rules governing the lottery in 2010.
Lottery revenue shot up after law changed, money for schools didn’t
When California voters approved the lottery in 1984, they required 34 cents of every dollar go towards education. That remained the law until state legislators eliminated the requirement eight years ago. The new mandate for school funding? To “maximize” the dollar amount.
Lawmakers made the change to free up the lottery to sweeten jackpots and pump up sales, which had lagged during the Great Recession. The thinking went like this: the percentage of lottery dollars going towards schools would dip, but the extra ticket sales would push the dollar amount higher.
These days, just 23 cents of every dollar go towards schools. So despite all the additional revenue, the money for schools has crept up more slowly.
The changes have meant that, in the current fiscal year, it took an additional $2.3 billion in ticket sales to reach the same level of support for schools, $1.6 billion, that the lottery provided in FY 2006, adjusting for inflation.
Is that increased churn benefitting Californians?
“It doesn’t surprise me that, as the state has jacked up prizes that purchasing has gone up,” said Zahava Stadler of the non-profit EdBuild, which studies education funding. “But the fact that education dollars have remained pretty flat tells you that more and more what the state is doing here is running a casino, rather than funding public schools.”
The lottery declined our request to interview an official for this story. But in an email, California Lottery spokesman Russ Lopez expressed a different viewpoint.
“This strategy has worked,” Lopez wrote, referring to tickets with increased jackpots. Lifting the cap on how much the lottery pays out in prizes “has resulted in increased net revenues available to supplement funding for public education.”
The strategy relies on selling more and more tickets that are, on the whole, money losers for Californians. (Your odds are better in a casino.) And those losses are felt more acutely in certain neighborhoods: KPCC/LAist reviewed store-by-store sales data from the lottery, revealing that those booming sales happen disproportionately in census tracts that are low-income and non-white.
“MY MAIN THING”
Customers stream through the door at LaunderLand on a sunny Monday morning.
The shop serves Orange County’s Little Saigon, and sells a little of everything: SIM cards, Vietnamese newspapers, soda, water, alterations and more — but the biggest draw is gambling.
The California Lottery is a cash business, and customers sling ones, tens and even the occasional hundred across the counter at LaunderLand.
Some players buy in a steady rhythm, shuttling back and forth between the clerks and the counter as they scratch off tickets. Another group of older men sits outside, keeping an eye on a TV with the latest Hot Spot numbers. That game’s draws flash on-screen every four minutes.
Other players snap up scratchers from the vending machine in back. One man even roots through a garbage can where players toss out tickets, hoping to find an overlooked jackpot.
“The lottery is my main thing,” said LaunderLand owner Randy Chung, who keeps an eye on the action from across the store’s glass counter. When Chung bought the store 18 years ago, it was a laundromat — you can still wash and dry clothes in the back. He’s gradually expanded, but the biggest change came when he got the go-ahead to sell lottery tickets in 2010.
Chung has watched sales rise ever since. Initially, LaunderLand sold around $40,000 in lottery tickets each month. These days, the store beats that in a week. Retailers like Chung keep around 6 percent of each sale, plus bonuses connected to winning lottery tickets.
Monthly lottery sales have soared at LaunderLand
“This was a much easier thing to sell,” said Connie Chung, who helps her father run the store. “I actually sold the very first ticket. And I just remember it was a day of celebration for us.” She framed the first dollar spent on the lottery, which remains right behind a display case boasting dozens of varieties of scratchers.
“I just didn’t know how big of an impact it would have in our lives,” Connie Chung said. LaunderLand has grown into one of the state’s biggest lottery retailers, with sales of more than $6 million over the past two years.
It’s not just LaunderLand. Sales at lottery retailers from San Diego to Crescent City are on an upswing. And they will continue climbing if the California Lottery achieves its goal of becoming the largest lottery in the country.
MODERNIZE AND MAXIMIZE
The outlook was bleak at the California Lottery in 2010.
The agency was underperforming, with per-capita sales lagging far behind states in the Midwest and on the East Coast.
Still, voters in 2009 soundly rejected a ballot proposition to “modernize” the lottery by emphasizing jackpots and advertising. Arnold Schwarzenegger, who was governor at the time, was even floating the idea of privatizing the lottery.
Then AB 142 arrived. The bill, introduced by Assemblymember Mary Hayashi (D-Hayward), promised to goose lottery sales by loosening rules around jackpots. Her measure proposed allowing more than 50 percent of revenues to go towards prizes for the first time.
To free up a bigger share of the pie for jackpots, the bill eliminated the requirement that 34 percent of revenues flow to public education. Instead, the lottery simply had to balance revenues and prize payouts at a level “that maximizes the total net revenues allocated to the benefit of public education.”
One supporter of the changes was GTECH, the gambling conglomerate that contracts with the California Lottery, providing the equipment and infrastructure that allows the lottery to run smoothly. GTECH spent half a million dollars lobbying around AB 142 in 2010. The company had a backup plan in case legislators sat on the proposal: it dumped another $2.8 million into an effort to create a ballot proposition with similar language to AB 142.
That wasn’t necessary. With the support of GTECH, the grocers association and education groups, AB 142 sailed through the statehouse. Only one legislator voted against the bill, which was signed into law by Schwarzenegger in April 2010.
The impact was immediate. GTECH’s parent company noted in its annual report that “our efforts to reform prize payouts in California supported sales in the last few months of 2010.”
Tschools.”
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