Wednesday, February 1st, 2023
Wednesday, February 1st, 2023

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Organization questions state lottery spending

St. Paul The Minnesota Lottery is defending its operations after
an environmental group’s report that concludes it costs far more to
run the lottery here than in comparable states.

The Minnesota Center for Environmental Advocacy said that if the
portion of the lottery’s annual gross sales of $382 million
returned to the state treasury matched that of other states, it
would mean an additional $10 million a year for the Minnesota
environment and $15 million more for the general fund.

Sen. Ann Rest, DFL-New Hope, blamed “poor management.”

On Friday, the Senate State Government Budget Division heard her
bill that would subject the lottery to new oversight and a minimum
return of 30 percent of its gross sales by 2005. The current return
is 21.9 percent; the average of 39 state lotteries is 34
percent.

“Minnesota is the least efficient lottery in terms of
administration,” said John Curry, the environmental group’s
legislative director. The group is interested because 40 percent of
the lottery’s net income enters the Environment and Natural
Resources Trust Fund.

But lottery director George Andersen said state-to-state
comparisons aren’t valid for a wide range of reasons. As an
example, he said Minnesotans buy more scratch games, which have
higher prize payouts, than people in other states. “We don’t live
on the rare Powerball ticket,” he said. “We live on scratch
tickets, and they cost a lot more.”

He called the comparison with other states “unrealistic and
absurd.”

“Because of the variability, these simplistic charts of
percentages give you a very false picture,” he said.

The lottery faced similar attacks 10 years ago, and among
the

defenses raised then was that Minnesota gamblers enjoy some of
the nation’s highest payouts. That’s still true, Andersen said,
partly because of state law and partly because of tough competition
from charitable pulltab gambling and Indian-run casinos.

State law requires that 60 percent of instant-game sales go back
to the bettors, the highest payout in the nation. Andersen cited
other factors: higher advertising costs, especially for new scratch
games; a population spread sparsely over a large state, and higher
staff salaries because of Minnesota’s relatively high cost of
living.

The group’s report noted that Wisconsin, with 60 percent of its
lottery sales in scratch games, spends $14 million a year less than
Minnesota to run its lottery, yet returns $40 million more.
Wisconsin’s lottery employs barely half of the 197 workers that
Minnesota’s does, but its sales staff generates three times greater
sales per person, the report said.

A number of other states’ lotteries are overseen by commissions
or revenue departments; Minnesota’s is supervised only by the
Legislature. Andersen said that is sufficient. A governing board
was abolished in the 1990s because “it wasn’t necessary,” he
said.

The analysis looked at lotteries in Arizona, Colorado, Indiana,
Kentucky, Louisiana, Minnesota, Missouri, Washington and Wisconsin.
Each had lottery income between $200 million and $600 million and
population between 3.5 million and 6.5 million.

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