The Clinton Herald, Clinton, Iowa

July 29, 2013

Lottery profits rise but some still question games

CATHERINE LUCEY Associated Press
The Clinton Herald

---- — DES MOINES — Whether your pleasure is scraping off scratch tickets, playing the Pick 3 game or hoping for a giant Powerball payout, the Iowa Lottery is ready to make the sale. And judging by a record year for the nearly 30-year-old operation, state residents are definitely lining up to take their chances.

But the lottery began in Iowa with some trepidation, and opposition to the games remains even as profits rise.

Lottery officials announced last week that during the fiscal year which ended June 30, the Iowa lottery sold $339 million in tickets, gave out about $201 million in prizes and yielded almost $85 million for the state, most of which now goes into the general fund. Those are the biggest numbers in the 28 years the lottery has been in business.

“I think it was because the products we had met an entertainment value,” said Lottery CEO Terry Rich, who noted that lottery tickets are an optional purchase. “I think our mix was exceptional.”

The agency’s sales have ballooned since then it was established in 1985 by the Legislature and the governor. During the lottery’s first year, just one game was offered and $85 million in tickets were sold, $39 million given out in prices and nearly $28 million in proceeds went to the state.

Even as sales have grown, some question the lottery’s value.

David Osterberg, a former state lawmaker from Mt. Vernon and a University of Iowa professor, said he thought lottery tickets were a negative for the state.

“I’m an opponent of gambling because it preys upon people who don’t have much money and can’t do math. You can do almost anything better than gamble,” said Osterberg who said he voted against the lottery in 1985, though he approved a lottery plan in a previous year. “If I were to put it on a scale, I would say casinos were much worse than the lottery. But none of them are good.”

Gov. Terry Branstad twice vetoed lottery proposals from the Legislature in 1983 and 1984, calling it “government preying on people’s false hopes for instant wealth.” He finally approved the lottery in 1985.

“The governor’s concerns remained, but thousands and thousands of Iowans sent him a message with discarded Illinois lottery tickets that were delivered to his office,” said spokesman Tim Albrecht.

A 2011 study of Iowa residents’ gambling behaviors showed that about 90 percent of state residents had bought lottery tickets in their lifetime and that playing the lottery ranked among Iowans’ favorite forms of gambling. That study — conducted by the Center for Social and Behavioral Research at the University of Northern Iowa, using state funding — said 6.3 percent of adults in Iowa have experienced at least one symptom of problem gambling at some point in their lifetime.

But it’s likely a much smaller number of people who have a problem specifically with lottery tickets. Polly Carver-Kimm, a spokeswoman for the state Department of Public Health, said about 5 percent of the 367 people admitted for “problem gambling” treatment through the state Gambling Treatment Program between July 1, 2011, and June 30, 2012, identified lottery tickets as a problem.

Tom Coates, the director of Consumer Credit of Des Moines and a longtime anti-gambling activist, said the lottery opened the door for other kinds of gambling in Iowa, like casinos, and normalizes gambling.

“It’s not as an addictive an activity as the casinos. It desensitizes the Iowa public into further acceptance of the casinos,” Coates said.

The lottery proceeds have gone to a number of causes over the years, like economic development and environmental interests, but today the vast majority of the money goes into the state general fund, which powers the overall state budget. A small amount goes to the Veterans’ Trust Fund.

As an agency, the Iowa Lottery is a sizable operation, with 116 full-time staffers spread out across the state. Rich gets an annual salary of $195,104, which is set by the governor. The overall agency budget for operating expenses for the current fiscal year is about $13 million, another $11.7 million is earmarked for advertising and nearly $19 million will go to the retailers who sell tickets.

Lottery spokeswoman Mary Neubauer noted that playing the lottery was optional and that state residents sought an Iowa lottery for many years before it was legalized.

“Even if there were not a lottery, this type of gaming would occur. People find a way to gamble, whether or not the gambling is legal,” Neubauer said. “I don’t know exactly what the lottery will look like 5 years from now or 10 years from now, but I think there still will be a lottery.”