| In a letter to Chairman Pete Gallego sent yesterday afternoon, Chairman Garnet Coleman has requested a hearing and investigation into the Texas Lottery and its $100 million contract with GTECH. From the Coleman letter: I am writing to ask that your Select Committee immediately investigate exactly what the state is getting for the $100 million per year we are paying to Gtech. Why are fewer people playing the lottery? Why are Texans who can least afford it spending more, proportionally, on tickets? Are low-income Texans being targeted deliberately? If more tickets are being sold, why are schools getting less money? Ever since Texas implemented the lottery and hired GTECH as the operator, it has been a constant source of controversy. Earlier this year, Kelley Shannon with the AP reported on an apparent conflict of interest where GTECH was paying a consultant who was simultaneously helping write the Lottery RFP. I guess that is one way to increase your chances of being the winning bidder – hire the guys writing the rules. In September, Eric Dexheimer with the Austin American Statesman published a comprehensive investigation regarding just how poorly the Lottery was performing. Coleman referenced the article extensively in his letter to Gallego. These conclusions are disturbing, and quite sad, actually. - In 1994, 70 percent of adult Texans reported buying tickets. Today, it's closer to 40 percent, meaning the lottery must extract more dollars from fewer people to keep raising the same amount of money. In 2004, the state's estimated 9 million lottery players each spent an average of $390. Last year, an estimated 7.4 million players averaged $500 each.
- The state has become increasingly dependent on instant scratch-off games, which today generate 75 cents of every lottery dollar. Yet such games are more likely to be played by "less educated and lower income" residents, according to the Texas Lottery Commission's research. The latest analysis found that "unemployed (players) were more likely to purchase scratch off tickets than employed and retired" players.
- Because the state's take is smaller on instant tickets, it must sell more to make the same profit. Last year, the lottery sold nearly $700 million more in tickets than in 1998 — and gave schools $160 million less.
- As a percentage of education spending, the lottery's contribution is shrinking. In 1996, lottery proceeds paid for about two weeks of schooling for Texas students. This year, the money raised by the lottery will barely cover three days.
As we enter a legislative session where Texas faces an $18-21 billion budget deficit, Coleman is exactly correct; the GTECH lottery contract must be scrutinized. We hear more elected officials will weigh in on this issue in the next few days and ask Gallego for hearings. We will keep you posted on additional developments. Update: Just got my hands on the full letter. Read the request in full here. |
