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.
* **
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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