Defending Lottery Retailers & Commission Rates
Every time the Lottery contract in Oregon comes up for renewal, it gets more contentious. The Legislature continues to introduce bills to lower commissions or negatively affect retailer operations, but to this point not one bill has made it to the floor of either chamber for a vote. The last contract was the first time the Lottery Commission did not cut rates, and there has been no growth in the Lottery.
Retailers have changed their business plans, as well as spent resources attracting and serving lottery customers. If retailers do not place focus on these customers, programs supporting schools, parks, and economic development all suffer. The constant attacks on retailers by legislators, editorial boards, and school groups are making retailers more frustrated. If the attacks continue, the state's entire lottery system will be negatively affected.
Since 78 percent of the money produced by retailers goes to state programs, the decision by a restaurant owner to give up their lottery machines would mean major losses for schools and other services. Restaurant employees could also be impacted, because the reduction in lottery revenues will cause lost jobs and lost benefits.
The Oregon Lottery has been one of the most consistent revenue sources for the State of Oregon and schools since it began in 1984. The only major decline in revenue to the lottery was based on a legislative action, SB 571, which banned smoking in bars and taverns. Even with that decline, it has remained one of the most successful lotteries in the country. Under the current pay structure, the state gets the best deal in the country and retailers are paid the lowest rate of any retailers nationwide. The lower tiers of the two tiered rate structure are starting to impact the Lottery’s market share in Oregon’s gaming market. While gaming in Oregon is growing at about seven to eight percent annually, lottery sales are flat and the state is losing more retailers every year.
The State of Oregon needs to encourage increases in sales and retailer base to grow the lottery. Lowering commission rates runs a larger risk of costing state programs much needed revenues. The State needs to protect and encourage its retailer base, an important partner that has helped to make Oregon's Lottery the most successful in the country.