Oregon Lottery Director Dale Penn today made a lengthy argument
[PDF] for renewing the current commission structure paid to retailers.
Penn's conclusion that lottery rates should stay the same over the six-year period after the current contract expires next June is a big win for the Oregon Restaurant Association, if the five-member Lottery Commission agrees with him. The association represents more than 2,000 bars, taverns and restaurants that carry Lottery's video poker and line games.
The current commission structure pays retailers about 23 percent of the take. In 2008, Lottery sales reached an all-time high of $895 million but have slumped 20 percent this year.
About two-thirds of the net proceeds goes to K-12 education and so schools advocates have long argued for lower retailer commissions.
Those advocates have gotten some of what they wanted—although not all of it. The average commission has fallen from 33.5 percent in 1998 to 23.6 percent last year. Despite that dramatic drop in compensation, the number of retailers has increased every year and in a recent interview, Penn told WW
that retailers basically never dropped Lottery machines because of lower commissions.
In his report released today, Penn attributed the 20 percent decline this way: "there is a smoking ban reducing sales, Oregon is burdened with high unemployment, and our country is facing the worst economic environment since the Great Depression." He offered no evidence that lowering commissions as education activists have asked him to do, would lower the state's take.
Penn's strongest argument that retailers are in trouble—the fact that the number of new retailers signing up to carry Lottery machines is only half what it was last year—is not exactly a strong argument that increasing the state's take would endanger the golden goose.
Still, the ORA managed to convince Penn that lowering commissions now would be "too risky."