Selling the lottery

Two proposals are worth a serious look

Published April 20, 2007 at midnight

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Selling the state lottery may well be a great way to get more money into public education - and especially into the State Education Fund, which is sliding toward insolvency.

But questions about two late-blooming proposals must be resolved before any constitutional amendment can be sold to the voters. That's why we're happy to hear that it's unlikely the legislature will push to put any such measure on the 2007 ballot.

The legislature has less than three weeks to finish its business, and there are plenty of other issues that still await resolution. A public vote on a possible lottery sale can wait until 2008.

A bipartisan plan pushed by two freshman senators, Democrat Chris Romer of Denver and Republican Josh Penry of Grand Junction, would purportedly raise $2.2 billion or more by selling the operation of the lottery to private investors.

Their intent is to invest perhaps two-thirds of the proceeds in a trust fund, the interest from which would fund college scholarships as well as the current beneficiaries: Great Outdoors Colorado (now 50 percent), the Conservation Trust Fund (40 percent) and the state Division of Parks and Outdoor Recreation (10 percent).

Senate Minority Leader Andy McElhany and Sen. Nancy Spence, both Republicans, are floating an alternative proposal for selling the lottery with a different distribution formula. It would put at least $330 million of the proceeds into the state's permanent school lands trust fund, meaning the interest couldn't be diverted by future legislatures into non-education programs.

The McElhany-Spence plan is being touted as an alternative to Gov. Bill Ritter's proposal that school districts be allowed to freeze their mill levies, giving them an extra $55 million or more per year and freeing revenue for the struggling State Education Fund.

Ritter maintains his proposal is not a tax hike, but Republicans argue that if the freeze had been implemented five years ago, residential taxes would have gone up an average of 40 percent. Current law forces the mill levy down, offsetting the effect of rising appraisals.

We don't know whether to be amused or impressed by the effort the Republicans are making to help save Ritter from this potentially unpopular move.

The sponsors of both proposals assure us that neither would be a self-executing mandate. In other words, a deal wouldn't automatically go through upon approval of the concept by voters, regardless of the return to the state. An amendment would include a specified minimum bid, and the details would later be worked out by a special committee. Its recommendation might then have to be approved by the entire legislature. We don't know all the specifics because the measures haven't been introduced.

Various other questions would have to be addressed. What, for instance, would happen to current lottery employees? If they might simply be cut loose by the new operator, that would antagonize all state employees. And they'd be a powerful, well-heeled opposition to any ballot initiative.

And will the influential environmental community oppose the proposal if they believe GOCO and the Conservation Trust Fund would get less money each year?

Finally, there is a philosophical question for those of us who find state-run lotteries or state-protected monopolies disturbing to begin with: Do we really want to tempt lottery players, who are disproportionately lower-income citizens, into spending even more of their limited resources on these long-shot games?

After all, a private firm is very likely to be more efficient and to promote the lottery more heavily in order to generate additional sales.

And as every gambler knows, the lottery is a sucker bet, distributing only 50 percent of the take as prizes. The slots in Las Vegas return about 95 cents on the dollar and although the house always wins, all other games offer the gambler a better chance than the lottery.

Proponents respond that those crummy odds will exist whether the lottery is sold or remains run by the state. Which is true enough. It's also why we're intrigued with an idea that offers a shot of finding real money for the State Education Fund that doesn't involve raising everyone's taxes.

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