Ways to increase profits up to Legislature, Ohio panel says

Andrew Welsh-Huggins

Thursday, March 9, 2000 | 4:15 a.m.

COLUMBUS, Ohio - Participating in a multi-state lottery and reducing the 30 percent profit requirement are among the top recommendations for increasing lottery sales in Ohio, according to a draft report released Thursday.

The Lottery Profit Review Commission, created by lawmakers to study ways to boost sales, won't recommend two controversial methods: Internet sales and video lottery terminals.

Those two possibilities involve such major policy changes that further discussion should come from lawmakers, the report said.

"There probably is more support for video lottery terminals than for online sales, but either would be controversial," said state Rep. Donald Mottley, R-West Carrollton, the commission chairman.

The commission's other recommendations to lawmakers include spending more on advertising, reinvesting unclaimed prizes into higher jackpots and allocating profits from specific games to easily identifiable education programs.

The commission also recommends increasing efforts to stop problem gambling. A final report is expected within two weeks.

The lottery is trying to reverse a three-year, $53 million decline in lottery profits.

Ohio law requires all lottery profits to go to education. The state Education Department received $696 million last year, or about 6 percent of the department's annual budget.

Mottley pointed to the success of the Georgia lottery, which sends its profits to three education programs: college grants and scholarships, pre-kindergarten programs and school capital costs.

Georgia also participates in the multi-state Big Game, but doesn't have video lottery terminals.

"They're one of the most successful lotteries in the country. It's grown every year," Mottley said. "Their experience has shown you can grow without implementing video lottery terminals."

Mitchell Brown, Ohio lottery director and a commission member, said his first choice would be to change the requirement that the lottery must maintain an overall profit margin of at least 30 percent.

By law, 30 percent of all money the lottery earns must be profit, meaning there are limits on how much the lottery can spend on payouts, advertising and other expenses.

Reducing the profit percentage would allow the lottery to increase its jackpots, thereby stimulating sales and ultimately increasing profits, he said.

"A smaller percentage of a bigger pie is more valuable - because of the volume of sales - than a larger percentage of a smaller pie," Brown said.

House Speaker Jo Ann Davidson said it's unlikely lawmakers will deal with something as controversial as video lottery terminals or Internet sales before the General Assembly's summer recess begins.

Lottery officials would have to sell lawmakers on the idea that reducing the 30 percent profit margin wouldn't hurt profits and hence education, she added.

"I think the members of the Legislature would have to be convinced that 25 percent of the larger sum would be as good as 30 percent of what we're getting right now," Davidson said.