State Auditor's Oct. 1997 report on the Colorado Lottery, page 40
Read the lottery statutes and all parts of the constitution dealing with the lottery. You will NOT find this "mission" language. In fact, the word "maximize" NEVER appears in the statute or the constitution's lottery language.
The Concise English Dictionary says "maximize" means to "raise to a maximum" and "maximum" means "the greatest quantity or degree attainable in any given case."
There was never any mandate from the legislature either in the original law or since requiring revenues to be "maximized", but that has been the approach even when the lottery's own statistics show harm resulting to the most vulnerable.
There are two types of lottery games: The scratch game provides instant rewards. The lotto game (and its cousins, Cash 5 and Keno) requires some wait until the winning numbers are revealed.
The auditor's 1997 report profiles the state's lottery players. Native Americans, African-Americans, Hispanic-Americans, and Asians are eleven percent of the state's adult population. But they are sixteen percent of the lottery scratch game players. That's nearly fifty percent more than is justified by population.
And Colorado adults who earn between $10,000 and $30,000 are 31 percent of the state's adult population. But they are 43 percent of the lottery scratch players. That's nearly 40 percent greater involvement than is justified by population. (The auditor also reports three percent of the adult population earns zero to $9,999 and has the lowest percentage of scratch players and the highest percentage of lotto players.)
According to the auditor's report, scratch games in 1997 accounted for $212,220,000 from players ($28 million more than in 1996). Lotto, Cash 5 and Keno accounted for $148,680,000 ($9 million more than in 1996). So a population of minority heritage and of lesser income is disproportionately playing the major lottery in Colorado: The scratch game.
Mark Zamarripa is presently director of the state lottery. He has been an enthusiastic advocate of the lottery and of its continued growth. As the CEO, he is constantly looking for new ways to "maximize", to promote interest in lottery games. And there has apparently been no effort on the part of Revenue Director Renny Fagan, nor Gov. Romer to temper that enthusiasm.
If the lottery was a private business, the push for "maximizing" growth would be "right on". But the lottery isn't a private business. It's run by the state, and it is being run to "maximize" more citizens to part with their money. And the state auditor seems to share Zamarripa's push for even greater revenues.
The auditor's Recommendation No. 7 urges the Lottery to "work with the general assembly to establish an instant bingo game". The audit report gushes "Thirty-three of the 38 U.S. lotteries have instant bingo games...and have generated high sales."
The auditor quotes the Lottery Commission "that an instant bingo game would generate at least an additional $24 million in sales ..annually" and these "projections are conservative". In turn, the Lottery agrees "to explore the possibility of implementing this new game" even though Gov. Romer vetoed the bill in 1997 "to send a clear and consistent message about my beliefs on gambling".
There is no mention in the report by the auditor as to what effect an instant bingo game (a scratch game) would have on compulsive gamblers. But the gambling study done for Gov. Romer in April of 1997 found less than 30 percent of social gamblers played the lottery during the previous week compared to 56 percent of compulsive gamblers. And for every dollar spent by a social gambler on a lottery ticket, a compulsive gambler in Colorado spent $2.20.
One of the tools Zamarripa and the lottery plan to use in 1998 to increase sales is a research product called "Mindsort". Joanne Conte, a reporter for radio station KGNU in Boulder, exposed the $25,000 study in July as focusing on the "core" players who are "lower on trial (reluctant to start playing) but once hooked, hooked. They have the highest playership, highest volume (and) highest consistency."
"Mindsort" was given to the lottery in 1996, but was not provided to reporter Conte until she specifically requested it under the Open Records law, after a whistleblower tip as to its existence. Zamarripa, in his capacity as lottery director, wrote to KGNU officials in August, informing them "the Colorado Lottery will no longer grant live or taped interviews to Joanne Conte."
If the Colorado lottery was a private business, Zamarripa would be within his rights as CEO to decide who his subordinates will or will not talk to. But the lottery is a PUBLIC agency, and radio station KGNU should really order Conte back to the lottery offices. If rebuffed, KGNU will have the basis to file a lawsuit.
The auditor did have some unkind remarks to make concerning abuses in the lottery's bonus program. "In fiscal year 1997 the lottery spent about $234,000 on staff bonuses" covering 42 staff members with maximum annual bonuses of $8,000 to $12,500 in addition to their baseline salaries.
For the past five years the lottery paid close to 100 percent of the maximum bonus amount available, except for fiscal 1997, and "about 100 percent of the sales staff received a bonus for the past five years". Also, "The lottery has been unable to demonstrate if the incentive plan is effective in increasing sales." The auditor then pointed out the annual state survey of private sector wages reported "do not include bonuses or commissions."
Here Zamarripa gets a "bum rap". It's a system he INHERITED from lottery directors George Turner and Bill Russell, right out of "The Prince" where Machiavelli urges his master to retain the loyalty of subordinates by providing them with additional comforts. And why hasn't the auditor reported on this abuse of bonuses "for the past five years" ?
Meanwhile, State Sen. Tilman Bishop, R-Grand Junction, will introduce a bill in 1998 to continue the lottery, even though the lottery does not expire until July l, 1999. Colorado law gives state legislators until Jan. 15, 1999 to ask the State Auditor for additional materials before deciding whether or not to continue the lottery. But that right vanishes if the decision is made in 1998.
Putting in a bill to extend the lottery in 1998 makes sense from the viewpoint of lottery supporters. First, Great Outdoors Colorado (GOCO) of which Sen. Bishop is a board member, will get heavy money beginning in fiscal 1999 and could make better long-range plans.
Second, 27 of the present legislators including Senator Bishop will be leaving because of the term limit law, and who knows what kind of "anti-lottery" legislators might be elected?
Third, if for some reason the bill doesn't pass (such as a veto by the governor) it won't affect another lottery bill from being introduced in 1999. Bishop has told the Colorado press he "expects opposition" to continuation of the lottery, but that's a "false scare". Colorado is a follower, not a leader, in the arena of state lotteries. One of the other 36 states (or the District of Columbia) with a lottery will have to be the first to repeal.
Lottery fiscal year revenues have nearly doubled in the past seven years, from $185 million in 1991 to $361 million in 1997. And scratch bingo isn't the only potential source of reaching new "maximums". The state auditor points out the Lottery Commission could, without going to the legislature, use "VLTs", video lottery terminals described by the auditor as "electronic game devices similar to slot machines".
Currently seven lottery states use these slot machines. (The Arizona lottery director tried to bring these machines into their lottery a few months ago, and was fired.) If our state lottery tried to do so, Romer would definitely go ballistic. But looking over the five present candidates for governor, there is only one who would definitely follow Romer's lead and one other who "might".
If the legislature doesn't want the lottery (under a new governor) to set up slot machines in 1999, it should say so in Bishop's bill or live with the consequences.
This coming year might well be a time to determine exactly what the legislature expects from the lottery. Is it to be a money making organization to "maximize" revenues each year regardless of who gets harmed? Or is the lottery to be "entertainment" with modest revenues to be spent on good causes?
Jerry Kopel writes a column for the Statesman based on 22 years past experience as a state legislator.
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