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Wyoming gambles on lottery to increase revenues

By KARLA POMEROYlotto

Editor

Earlier this month Governor Matt Mead signed the bill allowing Wyoming to enter into a multistate lottery or start a state lottery. The law creating a lottery corporation goes into effect on July 1.

“This is a way to keep Wyoming money in Wyoming. Right now we are seeing many people cross the border and spending their dollars in out-of-state businesses. I want to keep those dollars here,” Governor Mead said. “This is a form of gambling and I commit to keeping a close eye on any social impacts of the lottery when it gets up and running to see if there are ways to address those.”

After July 1, Governor Mead will appoint a nine-member board, which will hire a CEO.

Exactly how the lottery will be set up is up to the board, but Gov. Mead’s Policy Advisor Nephi Cole provided insight into the process in an interview last week.

The board

The Wyoming Lottery Corporation begins to exist July 1. The nine members of the board are basically the corporate board for Wyoming Lottery Corporation.

He said the 38-page legislation does not spell out specifications for the members and no political affiliations are required.

The bill spells out that the board will be compensated the same as legislators, only for days they are working or meeting.

As for nominations for the board, they are the same as any board, people can be nominated or send a letter of interest to the governor’s office. He said Wyoming’s lottery legislation was modeled after Georgia in which the board “answers to the state but is not an entity of the government.”

He said he can’t speak for the governor on exactly when the board will be appointed, saying only, “July 1 the corporation officially exists; it’s likely he will have made his decision on who he probably will appoint by then.”

Once the governor selects the board, with each member appointed to four–year terms, that board is responsible for the lottery and the executive branch role ceases, Cole said.

As for the makeup of the board, Cole said, other states have ensured that there is an attorney, accountant, law enforcement and marketing experience on the board but he emphasized again that Wyoming law does not specify any qualifications for the board.

He said he expects Wyoming would like “leaders in professional fields and areas of business endeavor.”

Duties of the board

The board will be required to develop a budget for the upcoming year and present the budget to the governor; but governor has no standing on any decisions by the board, Cole said.

The board will develop standard operating protocol like any corporation would. The Wyoming Department of Revenue will prepare different reports for them.

The board will hire a CEO and other positions, as they deem necessary.

Cole said, “There’s not a lot of guidance in the statute for what the board is required to do.”

As for their budget and paying a CEO, Cole said, “No state funds have been appropriated for the Wyoming Lottery Corporation. The pay for a CEO will be an interesting issue for the board. It is likely they will seek financing.” He added that it is not difficult for lottery corporations to solicit and obtain financing.

The legislation states the CEO of the lottery will provide technical advice to the board in making decisions.

The lottery

Along with employees, one of the major decisions for the Wyoming Lottery Corporation Board will be whether to join a multistate lottery or develop an instate Wyoming lottery.

Either way, Cole said, the bill does not allow for any games of instant gratification such as scratch games.

Cole said a Wyoming lottery is a less likely scenario, but the board could make either decision. He said when he was doing research for the governor and in looking at the legislation he looked at Georgia and North Dakota. North Dakota, he said was a great example because it was similar to Wyoming in population and makeup and they participate in a multistate lottery.

“We were able to get an idea how their program runs,” Cole said. North Dakota developed a request for proposals to join a multistate lottery and decided on what games they wanted to participate in. Large-scale vendors then submitted proposals on what they would offer to run the lottery in that state.

In North Dakota, for every lottery ticket they sale 8 cents on the dollar goes to the company operating the lottery and they provide 400 lottery machines and four technicians responsible for upkeep of machines, programming and the computer expertise to make sure it runs and synchs with the multistate game.

The North Dakota agency/corporation that is in charge of the lottery has eight employees including a director, administration staff, security, marketing, customer service and a licensing renewal specialist.

As for where the 400 machines go, Cole said North Dakota charges a $500 application fee with background checks and other costs incurred by the retailer. Each retailer with a machine is then charged $150 annually to keep the machine. Each retailer must sell $250 worth of tickets to keep the machine.

“They have far more folks that want machines than they have machines available,” Cole said.

Revenues

According to the legislation at least 45 percent of the lottery proceeds will go toward prize money. The rest will go toward funding of the corporation which would include board costs, administration costs, staff costs, cost of contracting a vendor if they opt for that route and other costs.

By Wyoming’s new statute retailers will recive will receive a commission of not less than 6 percent of gross sales.

The first $6 million of total net revenue will be divided among towns, cities and counties, based on the same formula used for sales tax distribution, Cole said. The remainder of any net revenue goes into a permanent trust fund for education.

He said in North Dakota, about 25 percent to 33 percent of sales comes back to the state in net revenue. In its first year in 2004, North Dakota sold $6 million worth of tickets with $2.7 million paid out in prize liability and $1.7 million that came back to the state.

“In general, lotteries are pretty lucrative,” Cole said.

He said the board will have the ultimate decision on how quickly a Wyoming lottery is up and running. He said it will be less time-consuming if they opt for the multistate lottery program, estimating three months to a year after the board is formed.

Cole emphasized that the governor will be looking at any social impacts the lottery may have but said the biggest reason he signed the bill was to keep Wyoming dollars in the state and give Wyoming businesses a fair shot at keeping Wyoming dollars here.

He said one of the largest lottery ticket retailers is just 10 miles south of Cheyenne in Colorado.

Wyoming, until this legislation was passed, was one of five states without a lottery, with all neighboring states except Utah participating in some type of lottery.

“When people buy lottery tickets they don’t just buy a lottery ticket they buy hot dogs and drinks at the retailer. In Fort Collins they go to dinner and movie,” Cole said.

Cole added that another factor was this type of lottery is, according to psychologists, less addictive than scratch games because it doesn’t have the immediate gratification. He said there is entertainment value, however, because people always like to discuss what if … what would they do if they won.

This is the first in a series of articles on gambling in Wyoming.

1 comment to Wyoming gambles on lottery to increase revenues

  • Carolyn Hawxhurst

    Hello! A couple friends and I over here on the western shore of Wyoming have previously conversed about the possibility of sharing the reward with more people. I don’t know the psychology of the lottery but wouldn’t a million $ be appreciated and ease the financial strain of some families/individuals? When the accumulation mounts to 40 – 250 million, why can’t that be distributed differently so that more people benefit? I recognize taxes contribute and some people do get a portion based on “x” number of matching numbers.

    I’m a rank beginner in all of this, but you probably understand what the basic premise of this comment…

    Thank you!