Before the first state lottery ticket was ever sold in 1983, Dept. of Revenue Director Alan Charnes described the lottery, which would be under his department, as "their toy store."
Well, the mom and pop toy store (like the supposed mom and pop casino) is now a department store. In November, Colorado voters will decide whether to add another floor, called multi-state lotteries. First we had the "scratch game", and then came "lotto".
The legislature didn't approve lottery video slot machines at race tracks in 1999 when Governor Bill Owens warned he would veto the bill. This year the legislature by-passed the governor and put a multi-state lottery on the ballot. It's a numbers game played jointly in several states, guaranteeing larger prizes for winning tickets and tempting more people to part with their money. The Colorado lottery is the only government operation that openly desires to become bigger and bigger every year.
Ads will tout the multi-state Powerball (20 state lottery) and Cash 4 Life (10 state lottery) as for "a good cause", generating money to fix health and safety hazards at public schools, plus more funds for open space. Have you ever heard of a lottery promoted for "a bad cause"?
The ads won't mention how many more compulsive gamblers a multi-state lottery will produce. Rachel Volberg directed a $65,000 study for the Dept. of Revenue in 1997 called "Gambling and Problem Gambling in Colorado." There were 1,810 residents aged 18 and older interviewed by phone. Naturally, none of the calls went to persons already in prison.
Compulsive gamblers do play the lottery. Volberg's study found less than 30 percent of social gamblers played the lottery in a given week compared to 56 percent of compulsive gamblers.
The study defines compulsive gamblers as "pathological gamblers who are linked to other addictive disorders like alcohol and drug dependence" and score five or more points out of ten abusive patterns established in 1994 by the American Psychiatric Assn. But if they only score three or four points, they are labeled "problem gamblers".
Those patterns include preoccupation with gambling, gambling more and more money, borrowing money to gamble, committing crimes to get more money, etc. Volberg lumps pathological and problem gamblers into one category for interview purposes. They total between 36,700 to 84,900 in Colorado, an average of about 61,000. The study found 8.7 percent admitted crimes such as forgery, fraud, embezzlement, and theft, in order to gamble. That's 5,307 undiscovered criminals in 1997, even without adding a multi-state lottery.
The lottery costs more in Colorado as a way to collect money than anything else the state does. From July 1, 1995 through June 30, 1999, the Colorado lottery took in $1 billion, $435 million and gave back $852.5 million in prizes. It spent $222 million in overhead, leaving $360.5 million for "good causes". That's 22 cents spent to produce 36 cents. But hidden costs placed on government by 61,000 pathological and problem gamblers are never counted.
Along with crimes, pathological and problem gamblers have much, much higher rates of bankruptcy, unemployment, divorce, child and spousal abuse, and attempted suicide. And guess who pays the bill? The gambler's family plus every taxpayer.
According to the Legislative Council (the legislature's research arm), the amount collected during the first two years of a multi-state lottery would be no more than $49.4 million. Of that, $24.7 million goes for prizes, and $5.9 million for overhead. Only $2 million of the money left will be used to help school construction and $16.8 million goes for "open space". The council believes multi-state lottery sales "will reduce sales of other existing lottery games." So the whole effort could be a wash.
Meanwhile, the legislature has allocated $190 million over the next ten years to address school construction needs, an average of $19 million per year. That's $38 million over the same two year period that the multi-state games produce $2 million for school needs.
And there are constitutional problems. The state constitution requires surplus lottery funds go into the state's general fund, but the bill says "no way. It's going to school construction."
The constitution requires that our lottery always be state-supervised, but the bill allows the state lottery commission to contract with other states to run a multi-state lottery. That means Colorado may not control (1) when games are played, (2) the price we pay to make tickets, (3) whether Colorado winners can choose between an annuity or lump sum payment, and (4) the price paid by lottery ticket buyers. A multi-state lottery could illegally take supervision away from our lottery commission.
Volberg summarized her study stating "...there is little doubt that efforts to expand the availability of legal gambling in Colorado will continue." Let's hope the voters say "nuts."
Jerry Kopel served 22 years in the Colorado House of Representatives.
Copyright 2015 Jerry Kopel & David Kopel