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Opponents of lottery say 'I told you so'

Sep 19, 2007, 1:35 pm

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Editorial / Opinion

A database consultant alleges the N.C. Lottery didn't deliver the money promised

By Frank Koconis

The N.C. Education Lottery has been in operation for barely a year, and so far the state has seen little benefit from it. The promised boost in education funding is much smaller than expected, and for certain programs, nonexistent. Even worse, some of the ominous predictions of those who originally opposed the lottery appear to be coming true.

The lottery simply isn't bringing in nearly as much money as it was expected to. Back in January of this year, with the lottery not even six months old, sales were already falling dramatically. In July of last year, $52 million of scratch-off tickets were sold, but by January, that had fallen to only $37 million. At that point, lottery officials stated that they would miss their sales target of $1.2 billion for the first year by $200 million. A few months later, they admitted that the results were even worse than that — at least $300 million below their prediction.

This means schools aren't getting as much money as they expected — an unpleasant shock to school systems that planned budgets based on lottery officials' estimates, especially in poorer counties. Robeson County, for example, may get $400,000 less than expected. Across the state, funding for more than 400 elementary teaching positions, promised from lottery proceeds, may not appear.

And, in a sneaky type of political bait-and-switch, some of the lottery money that is going to education programs turns out to be replacing, rather than increasing, their funding. This has occurred in almost every state that has a lottery, and it's happening here now. One example is the "More at Four" pre-kindergarten program: it was originally paid for out of the general fund but it is now largely funded by the lottery. Our crafty politicians in Raleigh are now using that general fund money for other purposes.

Legal problems? You bet

The lottery has had internal troubles. State-run lotteries are supposed to be a way of allowing gambling in a controlled form, without increasing crime. The NCEL didn't live up to that ideal, however. Before the first ticket was even printed, there was already scandal: lottery commissioner Kevin Geddings was convicted of illegal lobbying and mail fraud.Lottery ticket sales to minors is another problem. In a recent statewide "sting" operation, undercover teens were able to successfully purchase them 98 times, in 348 attempts. Thirty-eight of the stores that were caught illegally selling tickets to minors were in Charlotte.

Since the lottery is bringing in much less money than expected, the state is now trying to come up with creative ways to boost ticket sales.

One new idea is ticket vending machines; these are now being installed in hundreds of supermarkets and convenience stores. And how, exactly, will the machines enforce the no-minors rule? According to one lottery official, each machine has a remote switch that allows a store clerk to shut it off if he or she sees a minor attempting to use it. (And how will this clerk be able to tell a 17-year-old from an 18-year-old from 30 feet away?)

Miss goals? Collect raise

In spite of the lottery's problems and its significant shortfall in revenue, the man who runs it just got a big fat raise! Tom Shaheen, executive director of the NCEL, got a salary increase of almost $6,000 a few months ago, bringing his total salary to nearly $250,000, almost twice what the governor makes! What a head-scratcher: Only in government can somebody who missed his goals by 20 percent get a pat on the back and a bigger paycheck.

In another interesting twist, the lottery had been challenged in state court. A lawsuit, filed by a group of people who never wanted the lottery in the first place, claims that the lottery is actually a type of tax (or at least, the portion that funds education is). If that is true, then it should have been passed using the legislature's special approval process for taxes, which it wasn't.

Although the suit failed in lower court, it has been appealed. If the lawsuit finally succeeds, then the appeals court could order that the lottery be halted. It would then be necessary for the legislature to re-approve the lottery, using the tax-increase procedure.

If that happens, it is possible that the lottery might not pass a second time and might be dead for good. Remember, it only barely passed before (only a two-vote margin in the House, and only one in the Senate). Considering that it has had problems and hasn't lived up to its promises, that might be a good thing.

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