The lottery pie
Published: Tuesday, January 13, 2004 at 6:01 a.m.
Last Modified: Monday, January 12, 2004 at 9:36 p.m.
Some Florida legislators figure that the way to sell more lottery tickets is to reduce the size or number of prizes the players can win.
Legislators have set their sights on unclaimed prize money, which averages about $4 million a month. Under current rules, the Lottery Department can use the money for promotions and to increase the size or number of lottery prizes. And there's a lot of history, research and auditing that shows distributing unclaimed money back to the players works to sell more tickets - and thus increases the lottery profits available for education.
But last year, when an unclaimed Lotto ticket expired, the state was left with a $30 million windfall. So legislators appropriated that money for use by community colleges and state universities, which had been hard-hit by budget cuts.
Fine. There's nothing wrong with a one-time shot when a prize that size goes unclaimed. But now there is a flood of legislation prefiled for the session that would permanently siphon unclaimed money to the education pool. It's a tactic not advised by state auditors.
In an annual audit of the Lottery Department, Auditor General Bill Monroe noted that sales of scratch-off tickets increased 62 percent last year. The reason? In 2002, at the request of lottery officials, the Legislature passed a law giving the lottery more discretion over increasing prizes. Prior to the change, the lottery could offer no more than 50 percent of its revenue as prizes. The change removed the limit, letting the lottery secretary determine prize amounts.
Partly because of that change, the Educational Enhancement Trust Fund received a payment of $109 million late last year - the highest payment to date.
Monroe's audit noted that Mega Money sales, which started in 1998, dropped to $95.9 million last year - nearly a 21 percent decrease from its peak year. In response, Lottery Secretary Rebecca Mattingly made plans to revamp the game. Beginning with the last Mega Money drawing in January, the top prize will carry a $500,000 minimum guarantee, and the number of prizes are estimated to increase by 50 percent.
Lottery officials say audits and studies show that each $1 added to prize money results in $4.67 in additional ticket sales. In the 2000-2001 fiscal year, unclaimed jackpots that were offered as additional prizes brought in an additional $36 million for the education trust fund.
Diverting a $30 million unclaimed prize for education on a one-time basis is far different from permanently diverting money spent by lottery players that could be used to sweeten jackpots and increase sales. Without persuasive evidence to contradict the lottery's studies of extra money increasing sales, the Legislature should move cautiously.
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