- Associated Press - Saturday, July 5, 2014

ALBUQUERQUE, N.M. (AP) - The head of New Mexico’s lottery system wants the state Legislature to cut the 30 percent minimum it is required to provide in revenues to the college scholarship program, noting such a move could increase lottery sales and create an even larger revenue stream for the program.

However, the director of a Santa-Fe based think tank, whose 2006 study led state lawmakers to set the 30 percent minimum, said the move would only put more money in the pockets of lottery vendors and administrators and won’t enrich the scholarship program with additional funds, the Albuquerque Journal reported (https://bit.ly/1q5LgLB ) Saturday.

The Legislative Lottery Scholarship program provides tuition money for students at state-funded institutions.

The 30 percent mandate prevents the lottery from offering higher payouts on its instant-win scratcher tickets, lottery CEO David Barden said. Higher payouts would attract more players and increase sales, he said.

But Fred Nathan, founder and executive director of Think New Mexico, noted that of the 12 states that mandated minimum contributions from their lottery systems in 2007, including New Mexico, only North Carolina and California have eliminated the benchmarks.

Since then, “the percentage of revenues delivered to beneficiaries in California has fallen from 34 percent in 2010 to 28 percent in 2013,” Nathan said.

“The proponents of this change point out that it resulted in more absolute dollars going to beneficiaries, which is true,” he said. “But only 20 percent of the increase went to beneficiaries, with the remaining 80 percent going to prizes and overhead.”

He noted that part of that increased overheard could go to Barden, who earns an annual salary of $145,000 but stands to make thousands more in bonuses if sales increase.

The New Mexico lottery system has raised more than $610 million for education, helping pay for the scholarships of more than 90,000 students, lottery officials said.

Barden said that by reducing the mandated contribution amount and increasing sales, the lottery likely could provide even more toward education. “Unfortunately, the 30 percent requirement makes it impossible for the New Mexico Lottery to provide scratcher prize levels that have driven success in other states,” Barden said.

Nathan suggested the lottery should simply reduce its overheard to keep pace with the growing demand for lottery scholarships and increase sales.

“While their argument that higher prizes equal higher sales may well be valid, our question is: ‘Why do they need to take that additional prize money from the students?’ ” Nathan said. “Why not cut the lottery’s overhead and administrative costs and reallocate more of those dollars to prizes?”

Lottery officials said that’s just not an option.

“In 2014, there simply isn’t enough left to cut that would enable us to take scratcher prizes where they must be in order to push up profits,” lottery spokeswoman Linda Hamlin said.


Information from: Albuquerque Journal, https://www.abqjournal.com

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