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Context:

According to the Oregon Lottery, at least 200 of its 1,850 retailers took in more than $400,000 in gambling receipts last year.

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WILD CARD
 
Portland has no casinos.
Instead, we've got Dotty's Delis.

The results are in from the Oregon Lottery's 1997 operations, and the biggest winner is...

Craig Estey, of course. For as long as this newspaper has been tracking video-poker statistics, Estey's gaming dens have been the lottery's leader ("Video Poker's Biggest Winner," WW, July 6, 1994).

Estey currently operates 22 Dotty's Delis in the metro area. According to documents filed with the Internal Revenue Service late last month, the Oregon Lottery paid Estey's company $4.72 million in commissions last year. While many lottery retailers complain vehemently about competition from Indian casinos, Estey's 1997 lottery commissions represented a gain of more than $700,000 over the previous year. According to a recent industry study, at least half his total take should represent pure profit.

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Photo: STEVE LANE

Craig Estey as he appeared on the cover ofWW in 1994

Though 1997 looks to have been a banner year, all is not copacetic at Dotty's Delis. An audit released a year ago showed that one outlet (Dotty's No. 4, on Southeast Division Street) didn't comply with state rules limiting lottery commissions to 66 percent of total revenues. The rule exists to prevent gambling from becoming the dominant use of any lottery retail outlet.

Now, Willamette Week has learned, the rest of Estey's gambling parlors have failed the test, too. In December the lottery audited nine Dotty's Delis. All were "out of compliance," says lottery spokesman David Hooper.

That led to audits of the remaining 12 Dotty's locations. Hooper says they, too, failed to comply; approximately 70 to 90 percent of their revenues came from lottery commissions.

Hooper says Estey is challenging the lottery's rule in a lawsuit recently filed in Marion County Circuit Court. Calls to company headquarters were unable to locate Estey for comment. "Craig isn't here," said the receptionist. "He's probably in Vegas right now.... He spends most of his time in Vegas."

Even if all 22 Dotty's Delis had been in compliance, their operation still would make mockery of the state constitution's prohibition against casino operations on non-Indian lands.

A casino has been defined as a place whose dominant use or purpose is gambling. The current 66 percent rule clearly exceeds the spirit--if not the letter--of the law. As a result, the lottery commission is about to begin a review of the rule. It is considering lowering the limit to 50 or 55 percent.

Yet, given the convoluted way the lottery commission does the math, even a 50 percent rule would allow fully three-quarters of a retailer's business to come from gambling. In light of the experience of places like Dotty's Delis, a 25 percent rule would be more appropriate. That, at least, would ensure that gambling accounted for less than half of a lottery retailer's total annual take.

Originally published: Willamette Week - February 11, 1998

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