Jerry Kopel

Lottery Payment

Oct. 30, 2008

By Jerry Kopel

There is a lot wrong with the Colorado lottery, according to the state auditor's five-year performance audit report released in late September. There were 16 recommendations on what needed fixing. By counting subsection recommendations, there were 31 problems

This identified point-by-point review on regulated lottery gambling in Colorado was almost lost in 2000. There was a repeal of obsolete reviews in a bill amending the state auditor's statute. Lottery officials included the required five year performance audit without any reason as to why it was an "obsolete" review.

The-House Speaker Doug Dean, (R), Colorado Springs in 2002, was visibly upset at the confession by lottery spokespersons as to what had been done. It came about during a House committee hearing on a lottery bill Dean was carrying to change the Sunset review date.

Thanks to Rep. Dean, the five-year performance audit by the state auditor was restored in time for the 2003 audit as well as 2008.

One area I have been harping on repeatedly is supported by the state auditor:

"Consider cost-saving opportunities related to the lottery's retailer compensation plan by evaluating the potential effect of lowering commission rates to better align with national averages and determine the impact on the retailer base and on lottery net proceeds, taking action as appropriate."

My comment would be stronger. When the lottery began it was vital to have sales in supermarkets, gas stations, convenience and liquor stores to acquaint the public with the instant games.

Today, the retailers NEED the lottery in their stores to bring customers in to buy other goods. Whatever millions of dollars that can be saved will not be countered by stores giving up their licenses to sell lottery tickets.

The state auditor found 2,900 licensed retailers statewide in fiscal year 2007 including 1,602 convenience stores, 512 liquor stores, 427 grocery stores, 83 tobacco stores, 58 bars and restaurants, and 196 other type locations.

Since the state auditor's report was actually published in August, 2008, it did not contain the separate independent auditor's annual finance audit presented in September, 2008.

In round numbers, commissions in 2008 of $33.7 million, and bonuses of $4.7 million tied the previous highest percentage in 2006, of 7.6 percent of gross ticket sales. It was the highest amount of money, $38.4 million, ever paid to retailers in the 25 year history of lottery sales in Colorado.

The auditor was only able to provide national statistics for fiscal 2006 when Colorado placed fourth in the nation for large amount paid to retailers at 7.4 percent. Assuming no higher percentage changes nationally: At 7.6 percent, Colorado would rank third.

In 2004,under the then-Gov. Bill Owens administration, the lottery commission was changed from a Type One board having independent charge of policy, to a Type Two weakened "advisory board to the lottery director". The commission also retains power basically to adopt and review rules and hold hearings on violators.

The result? Retailer commissions and bonuses went from $30.3 million in 2004 to $38.4 million in 2008, an $8.1 million increase.

The lottery response to the state auditor's recommendation was tepid, pointing out the benefits of high commissions and bonuses, stating "while the lottery believes its current retailer compensation is fair, it agrees to evaluate the lowering ... and the potential impact of doing so."

The Chinese civil service outlasted Genghis Kahn. I expect the lottery will evaluate and act on the recommendation only if pressed by the state auditor, and then the lottery will decide not to reconsider.

More on the state audit's report in a future column.

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So far this year, we have had four yard signs stolen from our front lawn, two Udalls, one McCann, and one No48.

All thefts, of course, are violations of CRS 1-13-113, which include yard signs along with numerous other materials such as printed candidate brochures.

There is a penalty, a misdemeanor fine of up to $750, which to my knowledge has never led any district attorney to file an action. At least I have never read of any. That is understandable, since going to trial would cost the district attorney's office more than $750.

I did not use yard signs in any quantities until 1978. In the 1980s I attempted to pique interest by just using my name on a long, thin sign, 8 1/2 inch by two feet, with no explanation of who I was or what I was running for. The sign was attached to a thin wooden stake. It worked.

A candidate should always order at least three times more signs than he or she thinks is needed, because the signs will be stolen.

A suggestion for the 2009 legislative session. Along with the present "crime" penalty, provide a "no less than $1,000 " civil damage penalty plus attorney fees for the yard sign victim (being the landowner, not the candidate) who is successful in tracking down the culprit.

After several news stories with damages awarded, the volume of yard sign thefts will diminish.

(Jerry Kopel served 22 years in the Colorado House).


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