Oklahoma's Education Lottery: Underperforming Or Undercut?

Wednesday, October 22nd 2014, 9:47 pm
By: News 9

Six hundred twenty-five million dollars is a lot of money -- to most people.

To critics of Oklahoma's education lottery, however, $625 million is nothing -- nothing more than proof the lottery has NOT delivered what voters were promised.

Next month will mark 10 years since voters approved the lottery and nine years since then Governor Henry bought the first lottery tickets and officially started the flow of dollars into the state's education trust fund.

Since the first games debuted in October 2005, almost $1.8 billion has been spent on lottery tickets in Oklahoma. By law, $0.35 of each of those dollars has gone to education.

"I think we've done very well," Rollo Redburn, executive director of the Oklahoma Lottery, said.

Redburn has been with the lottery office from the start and said they are proud of the contribution the lottery has made to education.

"More than $625 million that otherwise wouldn't have been there has been raised for education programs in Oklahoma," Redburn remarked.

Not everyone shares Redburn's rosy view of the lottery's impact on our schools.

"It is not a game-changer," stated Sen. David Holt, R-Bethany. "It is not even really a drop in the bucket." 

Sen. Holt said he is not necessarily opposed to the lottery, but it does concern him that the social cost of state-endorsed gambling is not being outweighed by the lottery's benefit to our schools. Holt said he can't quantify the social cost but said quantifying the dividend to our schools is easy -- just do the math.

The legislation that created the lottery stipulated that 45 percent of the funds generated for education go to common education.

$625M x .45 = $281M

Holt points out that must then be divided by the 520 school districts in the state.

$281M / 520 = $541K

Finally, that gets divided by the nine years that the lottery has been bringing in revenues.

$541K / 9 = $60K

Thus, on average, school districts have received $60,000 annually from the lottery.

"That's a teacher, maybe, probably not including benefits," said Holt. "You'd rather have it than not have it, but that's not anything like what was promised leading up to the vote in 2004."

In 2001, Brad Henry, then a State Senator representing Shawnee, suggested a lottery in Oklahoma could gross $500 million a year. In 2003, following his election as governor, Henry was campaigning for the lottery and claimed it might generate $300 million a year for education. And in 2005, after voters had approved the lottery, and legislators had finalized the parameters for lottery games, the Henry administration was still saying it would bring in between $100 and $150 million annually.

It's those estimates that cause many to question how it could be that the most Oklahoma's lottery has ever generated for education in one year is $71 million. And why, last fiscal year, it hit a new low of $66 million?

See annual funds generated for education

"I'm glad you asked that," Redburn said.

Redburn said neither he nor his predecessor, Michael Scroggins, ever made any estimates to revenues the lottery might produce.

"There's no one at this lottery that was involved in any of those calculations," Redburn stated.

The answer to any question about unfulfilled revenue estimates, Redburn said, would have to come from those who made them.

9 Investigates went to former Governor Henry and asked him if he felt that he had misled voters as to how much money the lottery would raise for education.

"I don't feel that I misled voters," replied Henry. "Based on the information that I knew at the time, I think our estimates were pretty good."

Henry said his administration's projections were sound and were based on real data from other lottery states. What's more, he said, the estimates might have been more accurate, if not for partisan lawmakers.

"They have consistently, over the years, done things to restrict the lottery," Henry said.

The most significant restriction, according to Henry and lottery officials, is the requirement that 35 percent of gross revenues go to education. They argue that lifting that restriction, as many states have done, would allow the lottery to put more money into prizes, which, in turn, would result in increased sales.

"Look at any state that's done it," said Henry. "You're actually going to create substantially more revenue for education."

See case studies from other states that have lifted this restriction

Lottery officials have been lobbying lawmakers for years to ease the 35 percent requirement and have introduced legislation annually at the Capitol to that effect. The bills have never made it out of committee and, in fact, only once has ever even been given a hearing.

“It's a political issue,” State Sen. John Ford, R-Bartlesville, said.

Sen. Ford believes the state should not be in the business of running a lottery and introduced his own legislation a few years ago to privatize the lottery. His bill was defeated, and he said lottery officials shouldn't expect anything but the same for their legislation to lift the 35 percent rule.

“Those that are opposed to lottery are opposed to it, and I don't think that [bill's] going to pass,” Ford said.

Henry understands the politics but said citizens need to understand that the consequence is that the lottery will continue to generate less money than it could, and thus will continue to send less money than it could to state classrooms.

Still, he said, the money it is generating is better than nothing.

“The fact of the matter is this is new revenue for education, significant new revenue for education, without raising taxes, and I think people appreciate that,” the former governor said.