“Oregon Lottery: Lawmakers, counting on the cash, resist reforms”
Rep. Carolyn Tomei (in 2013) was finally getting traction on reining in the Oregon Lottery.
The 77-year-old Democrat, who represents Milwaukie and a wedge of Southeast Portland, had spent years fighting for tighter controls on state-sponsored gambling, angered by the lives it ruins and the Legislature’s see-no-evil complicity.
She poured it on during the 2013 legislative session, rounding up experts and recovering addicts to talk about the lottery’s swath of destruction. She gathered support for bills that would require the agency to hire a problem-gambling specialist and to scale back its “maximize revenue” mission.
She found an ally in House Speaker Tina Kotek, who went after the lottery’s lax rules on “delis” that offer video slot and poker machines and little else. “Some lottery retailers operate as de facto casinos,” Kotek, a Democrat who represents North Portland, testified at a House committee hearing.
Tomei, who chaired the House Human Services Committee, also won strong backing from her vice chair, Clackamas Republican Bill Kennemer, a counselor who has seen the damage of gambling addiction up close.
Things were looking up for Tomei. But she was about to learn a hard lesson about power, money and a state agency’s ferocious will to protect itself. When all was said and done, Tomei landed in a place she never imagined.
If Oregon has political sacred cows, count the lottery as part of the herd. Despite years of hand-wringing by policymakers, from the governor on down, the state’s multibillion-dollar gambling enterprise has done little but GROW.
Lottery revenue timeline
A generation after Oregon voters agreed to allow scratch tickets and number-picking games, video lottery machines blink and jingle in bars, restaurants and strip malls across the state. Colorful slot games, known in casino circles as the “crack cocaine of gambling,” hook growing ranks of problem gamblers.
Yet with the lottery pumping more than a half-billion dollars a year into the state’s general fund, few are willing to touch it. Lottery officials say the games offer harmless entertainment while raising millions of dollars for schools, parks, and big construction projects. Critics call it a pathway to addiction.
Les Bernal, head of the national anti-lottery group Stop Predatory Gambling, says that when he gives talks about the harm caused by state-run gambling, he often ends with a slide of the Oregon Lottery’s good-luck logo.
“During the Greatest Generation, we had posters of Rosie the Riveter,” Bernal says. Outside military recruitment, he says, “the dominant voice of government today is urging citizens to lose money.”
“We’ve gone from a biceps flex to two crossed fingers.”
Scratch tickets to slots
In the grip of a recession that saw dozens of timber mills close and home values tank, Oregonians voted in 1984 to create the Oregon Lottery to raise money for economic development. The constitutional amendment called on the lottery to operate “so as to produce the maximum amount of net revenues” but added the phrase “commensurate with the public good.”
Scratch tickets and Megabucks rolled out in 1985. Six years later, the Legislature gave the nod to video poker, setting in motion the spread of machines in taverns, diners and thinly disguised delis. Along the way came Keno drawings every four minutes, sports wagering (later eliminated) and multi-state games such as Powerball with the potential for huge jackpots.
Among the earliest to sound the alarm against the state’s growing dependence on gamblers was Gov. John Kitzhaber. Early in his first term, he convened a task force to study the impact of gambling. The task force, led by then-Attorney General Ted Kulongoski and Peter Bragdon, who later became Kulongoski’s chief of staff, warned that the lottery was doing just fine on the “maximize revenues” part but was addicting too many players to claim it was balancing the “public good.”
Kulongoski and Bragdon teamed up to write a withering condemnation of state-run gambling as a way to fund state programs. “States that rush to raise revenues from gambling without thinking more than we did are playing a potentially addictive game of chance,” they wrote in a 1996 Op-Ed piece published in The New York Times.
But the biggest expansion since video poker came after Kulongoski took over as governor. Seeking a dedicated revenue source for state police, Kulongoski acquiesced to pressure to add “line games” — electronic slot machines — to the lottery’s video offerings. The first slot game was introduced in 2005, and lottery revenues soon soared. A year later, revenue surpassed $1 billion for the first time. The money never was earmarked for police. The Legislature made sure it got absorbed into the state’s general fund.
As predicted, state gambling profits have become an integral part of the state budget. The bulk goes to education, but lottery dollars have refurbished dilapidated state parks and allowed the state to open new ones. It has provided cash or backed loans for dozens of projects, from a $50,000 theater renovation in Baker City to a $1.8 million expansion of Daimler Trucks’ corporate headquarters in Portland.
To remind Oregonians, the lottery spends millions of dollars a year on ads, such as its “It does good things” campaign.
“People are terrified”
After trying and failing to tighten rules on state gambling in previous legislative session, Tomei sensed an opening in 2013. Two years before, outrage over the lottery’s ill-fated attempt to launch an Internet game site, The ORcade, prompted the agency to form a task force on problem gambling.
The panel, led by Jeff Marotta, a Portland consultant who works with states to develop problem-gambling programs, took its mission seriously. It issued a 25-page report full of recommendations aimed at making problem gambling a higher priority within the lottery.
Among the recommendations: Add a problem-gambling expert to the lottery’s staff and include responsible gambling training for alcohol servers. Tomei introduced bills to do both, plus one to replace the lottery’s “maximize revenues” mission with a revenue ceiling to ease pressure to grow. “The public is not aware what a big problem this is,” Tomei says. “Most legislators are not aware on what a big problem it is.” She set about educating them. With Kotek getting attention for her anti-casino bill, Tomei thought the Legislature might finally take action. Then two things happened that sent lottery bills into a tailspin.
Lottery Director Larry Niswender asked the state Justice Department to rule on whether Tomei’s bills overstepped the Legislature’s authority, given that voters had enshrined the agency in the state constitution. The ruling – yes — was a victory for Niswender and a setback for problem-gambling advocates. The Justice Department wrote that the lottery could not spend money from its budget to “mitigate harms” caused by its games. Niswender interpreted the decision to mean it could no longer run problem-gambling outreach ads.
The lottery not only pulled the ads, it dropped its membership in the state’s main problem-gambling council. Problem-gambling advocates felt all their work had backfired. Tomei was furious. That wasn’t all. Legislative budget writers told Tomei no way were they going to threaten any part of the $1 billion the lottery funnels into the state’s general fund every two years.
Tomei hit a brick wall.
“We are so damned dependent on the income,” she says. “People are terrified — if we lose that income, how are we going to replace it?”
The only lottery-related bill Tomei managed to get through is one that sets a floor for how much the state spends on problem-gambling treatment. Kotek’s bills died in committee. Kotek, through her spokesman Jared Mason-Gere, declined to comment for this story. “She is focused on other issues,” Mason-Gere said.
Rep. Peter Buckley, D-Ashland, one of the two co-chairmen of the budget committee, says there was little interest in passing laws that would blow a hole in state finances, regardless of the source. “You cannot help but be appalled by the impact that the addiction of gambling can cause,” Buckley says. But without the money the lottery brings in, he says, the state would have to cut more out of schools and other programs. “You have to look at what is the overall good for the state as a whole,” Buckley says. “Problem gambling is definitely a negative. But underfunding of education is also a negative. How do you find the balance?”
Defending the status quo
Lottery critics say that’s the wrong question. What state officials should be asking themselves, they say, is whether government should be pushing a money-raising method that depends so heavily on a small segment of gamblers, many of them addicted. Niswender told The Oregonian his agency cares about people who lose more than they can afford on video slots and poker. But he has a bottom line, which goes like this:
“The Legislature authorized the lottery to have video,” says Niswender, who is retiring from his job at month’s end. “That was a policy choice. We’re here to carry out the will of the people and the Legislature’s directive and do it in the most efficient and effective way we can.” Kitzhaber, like Kulongoski, softened his opposition to slot machines as a source of state revenue. He may not like it, he says, but he’s in no position to reverse history.
“I never supported the notion of funding state programs through gambling,” Kitzhaber told The Oregonian. “But we voted for the lottery. It’s with us. … As much as I dislike the whole notion, I’m not going to put at risk a billion dollars in our education budget.”
In reality, the lottery provides about $600 million every two years to education, including K-12, schools, the education stability fund, community colleges and universities. Of that, about $480 million comes from video slots and poker. Parsing the numbers further, the lottery’s contribution to the state K-12 school fund over the current two-year budget cycle is projected to be about $327 million out of a $6.55 billion budget, or about 5 percent.
That’s not small change, by any means. Lawmakers often wrangle bitterly over smaller amounts, such as a cigarette tax increase that will raise $10 million in 2013-15. But they’ve also made bigger cuts, such as $800 million to the Public Employees Retirement System over the next two years. “Nonetheless, the lottery’s revenue stream appears all but untouchable.”
Kitzhaber says he wants to put the brakes on any further expansion of the lottery. His picks for Lottery Commission chair – Portland attorney Elisa Dozono – and lottery executive director – former state Labor Commissioner Jack Roberts — share his goals. Still, the governor says he approves of the lottery’s “modernization” plan to replace its 12,000 video slot machines with new ones but “not increasing gaming opportunities.”
Tomei wants another run at putting a ceiling on lottery revenue and ordering the agency to curtail the number of slot and poker machines it offers. The Legislature also could require the lottery to ensure that machines come with technology that might curb compulsive behavior, such as screen pop-ups that tally how much players have lost or how long they’ve played, she says.
“We’ll probably never get rid of the lottery,” Tomei says. “It seems to me we have a direct responsibility to make sure it is less addictive.”
– Harry Esteve, Journalist Portland, OR