Senate considers social, legal expenses of starting lottery

Margaret Lillard

Thursday, May 12, 2005 | 9:07 a.m.

RALEIGH, N.C. -- If North Carolina joins every other state on the East Coast and creates a lottery, the cost of policing it and offering help to problem gamblers could cost several million dollars a year, witnesses told a Senate committee on Wednesday.

The state would likely use the lottery's own proceeds to pay for such programs, although that's not addressed in either the House-passed bill to create a lottery or the Senate's budget proposal, which included lottery provisions, approved last week.

And Sen. Tony Rand, chairman of the Senate Select Committee on the Lottery, said he would object to moving ahead and creating a lottery without them.

"I prefer to get it straight, and we have time now," he said. "It's obviously something we should've thought of before we got into the budget."

Witnesses before the committee, which took no action on the lottery bill Wednesday, estimated that policing the lottery -- including permitting, licensing and law enforcement -- could cost $3 million in the lottery's first year, then settle to just over $1.5 million annually.

The startup costs would mainly be related to hiring and training new agents and support staff, and buying equipment, said Michael Robertson, director of the state Alcohol Law Enforcement Division.

Policing lottery-related crimes -- such as stolen tickets, embezzlement, and attempts to forge tickets -- would probably absorb only a small part of the annual enforcement budget, he said. Tennessee, for example, has had 404 lottery-related crimes in the 15 months since its lottery program began.

"Most are very low-level misdemeanors," he said.

The cost of programs to discourage or help with problem gambling would depend on what type of services the state wants to provide, witnesses said. Programs in the 48 states that provide them range from a hot line in Virginia that costs $23,400 annually to treatment and education services financed through percentages of lottery proceeds.

Oregon pays roughly $3.2 million, or $1.04 per resident, annually for a respected program that includes free counseling and an educational advertising campaign, according to Smith Worth, a clinical instructor at the University of North Carolina-Chapel Hill's School of Social Work. One percent of the lottery's proceeds finances the program.

Rand pointed to the program as something he'd like North Carolina to emulate.

"We should certainly do as much as anybody else," he said.

Rand said the omission of aid programs in the Senate budget -- where all sections that address the lottery depend on passage of the separate House bill -- was the result of senators lacking the time to investigate how much such programs would cost.

Rand said the committee can use information it is gathering to recommend an amendment to the House bill before it goes to the Senate floor -- though too much rewriting could endanger the measure's chances of passing again in the House, where the original bill was approved by a tight 61-59 vote.

Funding mechanisms could instead be included when the House releases its budget proposal or in the final version that will be negotiated by both chambers. Lawmakers could also give the lottery commission the authority to set the programs, Rand said.