Last week, the state Senate Finance Committee took testimony on the appropriate level of commissions for the Oregon Lottery to pay
the retailers who carry video poker and video slot machines.
The current six-year retailer contract expires next June and the Lottery Commission is expected to decide on the level of commissions by the end of this month. Commissions have fallen from 33.5 percent in 1998 to an average of 23.6 percent last year (there is a sliding scale that decreases with revenues).
Since two-thirds of the state's take —$681 million last year— goes to K-12 education, that education lobby favors lowering commissions. The powerful Oregon Restaurant Association, which represents bars and taverns in addition to eating establishments, wants commissions as high as possible.
Although ORA lobbyist Bill Perry testified last week in Salem, he sent this letter
[PDF] to Finance Committee chair Sen. Ginny Burdick (D-Portland) in an effort to rebut the arguments made by his opponents, Steve Novick and Dana Hepper of the advocacy group Stand For Children.
I am still trying to find an economic theory that promotes how cutting your sales force will sustain or increase revenues. The proposal our industry presented brings much-needed stability to business, the Lottery and Oregon's schools. The approach does not change the blended rate paid to retailers, nor change the basic rates in the system. I believe it will increase transfers to the State in Fiscal Year 2011 by more than $50 million. I feel strongly that this is a simple solution for the Lottery, and I hope it is their final decision. The main goal for the Lottery is to “maximize revenue to the state.” You can certainly get bogged down with a discussion on retailer compensation percentages, but you can not make the case that reducing your sales force during this challenging economy gains you “more revenue.”
We are all looking for more revenue, and the Lottery Commission clearly has a way to produce more by combining their “two option” system into a blended tier system. Fixing the current rate structure is a solution to maximize revenue, and no one has to get “punished” in doing so. Cutting commissions and machines in the field is the real gamble and the odds are against you!