Critics: Planned Ind. lottery profits prey on poor
The Associated Press November 4, 2012 11:16PM
Stephanie Dowell/Post-Tribune A customer makes a non-lottery purchase at the Smoke Shop on U.S. 30 in Merrillville September 24, 2009. Hoosier Lottery proceeds have dropped more than 17 percent in the last year. ptmet
Updated: December 6, 2012 11:45AM
INDIANAPOLIS — Critics question whether a private manager’s plans for the Hoosier Lottery may profit from those least able to afford to play.
Rhode Island-based GTECH last month won the deal to manage key state lottery operations. The company said it could dramatically increase lottery revenue in part by expanding the player base.
Much of the material in a copy of the company’s first-year plan obtained by The Indianapolis Star is blacked out, including new games GTECH plans to introduce, advertising spending, the number of new retailers it intends to add to the lottery network and their locations by ZIP code. Lottery officials said the redactions were done to protect trade secrets.
However, the plan does list six retail chains as potential targets for expansion: Dollar General, Family Dollar, Dollar Tree, Wal-Mart, CVS and Walgreens.
Julia Vaughn, public policy director for Common Cause Indiana, noted that some of those stores aren’t likely to locate in affluent neighborhoods.
“Everyone knows lotteries prey on low-income people,” she said. “There aren’t a whole lot of Dollar Generals up in Carmel.”
While studies show that low-income people play the lottery in disproportionate numbers, the Star reported Sunday that a disproportionate amount of lottery profits go to affluent counties because the revenue is targeted based on the value of motor vehicles in the county, not on where tickets are purchased.
“I believe it would be a mistake for the Indiana General Assembly to stand by while a private company attempts to target the lottery sales growth based on any particular socio-economic pattern, especially those who are disadvantaged,” said state Sen. Brent Waltz, R-Greenwood. “My guess would be, if you cross reference those ZIP codes (of retailers targeted for expansion) with the lowest income areas, you’ll find they have a lot in common.”
Hoosier Lottery spokesman Al Larsen said it’s unfair to focus on one section of the plan.
“In order to understand how the plan is implemented to simultaneously grow and do so responsibly, one must consider multiple facets,” he told the Star in an email. “Most importantly, and regardless of the specific topic, it is imperative to note that one of the core values of this entire model is that of social responsibility.”
He noted that social responsibility was a key portion of GTECH’s proposal.
GTECH’s proposal also includes an “enhanced business plan” that lottery officials stress is only speculative at this point — ideas for things the lottery might want to try to make more money in the future.
“The state asked for an enhanced business plan — things that are not included currently, things that would have to legislatively have to be changed,” GTECH spokeswoman Angela Wiczek told The Associated Press. “But those .... are not included in our projections for the next 15 years.”
The enhanced plan included a proposal for video lottery terminals, which resemble slot machines, and a pledge to lobby state legislators to change Indiana law to make the machines legal if lottery officials decide to pursue the idea.
“If they want to change significantly the nature of the games, the lottery or the target audience, I think the Legislature would like an opportunity to weigh in on that,” Senate Appropriations Chairman Luke Kenley, R-Noblesville, told the AP.
Last month, the State Lottery Commission chose GTECH over Scientific Games to run the lottery’s marketing, sales and distribution services. GTECH will take over day-to-day administration of those key operations on or about Feb. 1, 2013, making Indiana only the second state to outsource management of its lottery.
GTECH promised in its contract proposal that it would generate $1.76 billion in profits for the state over the first five years of the 15-year private management contract. That sum is about $500 million more than lottery officials projected the lottery would bring in on its own.
Lottery officials have said GTECH will be required to make up the difference if it doesn’t meet its goal.