Why Shouldn't Nevada Have a Lottery? (Let Me Explain.)

Yesterday, we touched on both the threats and opportunities to Nevada posed by online gaming. Today, we need to look at another form of gambling that's been getting quite a bit of attention lately.



Northern Nevadans and Southern Nevadans are rushing to buy those "Mega Millions" tickets and catch "Lotto Fever". And we have our next door neighbors to thank for this.

"The amount of money we send to schools is a small drop in the bucket, everyone would admit that," Lopez said. "But during an economic downturn when school districts are looking at what they have to cut, every little bit helps."

Officials are projecting the lottery will provide more than $1 billion for public education in California this fiscal year. For the fiscal year 2010-11, California received $3.4 billion in lottery revenue. The state returned about $1.1 billion of that to K-12 schools, community colleges and University of California and California State University systems.

So we all have a chance to live like the OC Housewives while schools get plenty of money. What's not to love? And why can't Nevada cash in on California's good fortune?

Bottom line: It's unconstitutional.

Yet despite our constitutional ban on state lotteries, many Nevadans are again talking up the possibility of bringing the "Mega Millions" here. Is it time to finally amend the constitution and start selling lottery tickets here in Nevada?

Not so fast. While forty states, including California, sell lottery tickets on the premise that more money will be going to public education, it's not really as simple as that. Earlier this year, there were questions of what's happening with money that the State of Florida has been netting from its lottery.



Looking back at California, here's what often happens with state lottery funds.

"That's a question that is frequently asked. A lot of people think [the state lottery] provides more revenues than it does," said Margaret Weston, an expert in K-12 school finance for the Public Policy Institute of California.

The state Lottery and its myriad games got started in 1985 as a way to generate funds for public education without adding another tax. It's one of the only state funds that are doled out equally to everyone. At least 50 percent of tickets sales go back to the public as prizes. Public schools get about 34 percent of revenue from sales.

Each school gets $135 per student, though they pass it out in different ways. The peak of Lottery funding for kindergarten through 12th grade hit during the 2005-06 school year. The average each year hovers between $40 to $45 billion, less than two percent of the state's public school funding. [...]

Students at Millswood Middle School use their daily planners to keep track of homework and assignments. Funds from the California Lottery provided the $4,000 to dole them out at the beginning of the school year.

"We receive a whopping $8,000 from Lottery funds. Half of that is spent on the school planners the students get at the beginning of the school year. The other approximately $4,000 was spent on a teacher computer and projector," wrote Sheree Flemmer, principal.

Now I'm sure it helps to have that extra change in school pockets to pay for things like daily planners and projectors. However, we have to realize that we're only talking about pocket change here. Lotteries are no panacea for public education.

In October 2007, The New York Times investigated state lotteries and found that, on average, they only deliver about 30 cents for every dollar spent on tickets and games.

For years, those states have heard complaints that not enough of their lottery revenue is used for education. Now, a New York Times examination of lottery documents, as well as interviews with lottery administrators and analysts, finds that lotteries accounted for less than 1 percent to 5 percent of the total revenue for K-12 education last year in the states that use this money for schools.

In reality, most of the money raised by lotteries is used simply to sustain the games themselves, including marketing, prizes and vendor commissions. And as lotteries compete for a small number of core players and try to persuade occasional customers to play more, nearly every state has increased, or is considering increasing, the size of its prizes — further shrinking the percentage of each dollar going to education and other programs.

In some states, lottery dollars have merely replaced money for education. Also, states eager for more players are introducing games that emphasize instant gratification and more potentially addictive forms of gambling.

And so far, it doesn't look like that's changed for the better. Rather, as state lotteries have pumped even more money into building up "Mega Millions" style jackpots and promoting them with ever flashier TV, radio, and billboard ads, the overhead costs are quickly gobbling up money that was originally promised to fund K-12 schools and college education.

Let's go back to my old stomping grounds in "The OC" for a moment and see how local schools are looking forward to that huge lottery windfall.

In Orange County, the lottery provided an additional $135 per student for K-12 schools last school year. The county received a total of $88.6 million from lottery revenue last year, or about 1.2 percent of the $4.2 billion local schools spend annually. Local schools are expecting to cut more than $250 million combined from their budgets for next year alone, on top of the more than $1 billion cut since 2008.

"I want the whole $540 million jackpot all for Orange County. That would really solve all our funding problems," county Superintendent William Habermehl said. "The lottery has never really provided as much money to schools as what was sold to the public when it was implemented. If you look at all 6 million students in California, an extra $100 million will only give you a few extra dollars per student."

Yes, that's really all California is getting when Nevadans line up in Primm and Verdi to cross the state line and buy their "Mega Millions" tickets. Perhaps a school in Lodi will get to buy a few more boxes of day planners, and perhaps another school in Costa Mesa will get to buy a computer. That's really it.

So before we again hear another round of complaints on why Nevada doesn't have a state lottery, remember this. At least with our state sanctioned gambling, the casinos have to pay for their own advertising and their own upkeep. But when the state becomes the casino, we flip the bill and we don't always win the jackpot we were looking for.

Sure, the likes of MGM Resorts CEO Jim Murren are looking out for their own bottom line. But again, under the current system MGM pays to run its own casinos. And considering that we've already had to learn the hard way that casinos alone won't save our economy or our schools, should we really expect a state lottery to solve our budget problems?