Numbers Game

Experts disagree on how to create a state lottery—or if it can be done

Damon Hodge

"Except as otherwise provided in subsection 2, no lottery may be authorized by this State, nor may lottery tickets be sold."

—Nevada Constitution, as adopted in 1864

"The economics of a lottery suck."

Gaming oracle and UNLV public administration professor Bill Thompson is taking dead aim at Nevada Democrats' proposal to create a state lottery to fund education.

• "Governments should not be in the gambling business. Gambling enterprises should be conducted by private concerns that can be regulated and severely disciplined if they ever violate critical canons of integrity."

• "We, in Nevada, have gambling shoved in our faces each time we go into our grocery stores. But the lotteries are even worse. Lottery outlets are ubiquitous and pervasive."

• "Lotteries are rotten games. Typically, a lottery ticket that costs $1 will return 50 cents to players in prize money, expend 10 to 15 cents in expenses and leave 35 to 40 cents for government causes. On the other hand, even the worst games in Nevada casinos return 90 cents of each dollar played to the players."

So, naturally, Thompson opposes this latest legislative lottery proposal, the 27th since 1970, right?

Of course not.

"I support the idea of a lottery because one poll showed two-thirds of Nevadans want it and about half of the games played in the casinos are lotteries ... for instance, bingo is a lottery game, so is keno, so are all roulette and big-wheel games, Caribbean stud ... all meet the definition of the lottery, which is a game based on luck, where you win a prize," says Thompson, whose proposal for an alternative to the traditional lottery backed by Democrats calls for the state to contract with Lotto America Powerball or other super lotto games (which return 85 to 90 cents on the dollar to players, as opposed to 50 percent). Thompson's proposal would give the casinos a 7 percent sales commission. There are no such provisions in the Democrats' plan.

"We're the only state in the nation that allows lotteries to be called something else."

The Legislative Counsel Bureau estimates first-year lottery revenues would top $70 million, money state Democrats would earmark for textbooks, supplies and class-size reduction. Thompson says a system could be set up sooner (four months) rather than later (four years, requiring legislative approval in 2005 and 2007, up and running by 2009) if the state Gaming Control Board authorized casinos to be the sole lottery ticket providers. Thompson contends that such a move could be done without legislative approval, which he says might be moot anyway.

"The super-prize online computerized progressive lotto games such as the Powerball game did not exist in 1864 ... the constitution writers in Nevada were addressing paper-ticket-sale lottery games popular at the time and sold outside of casinos," Thompson says. "With such a lottery program, ticket sales would not directly compete with casino games. Additionally, like casino games, the sale of these tickets in casinos could result in gaming activity by many nonresidents. "

But wouldn't usurping state law irk legislators?

Nevada Gaming Control Board Chairman Dennis Neilander says it won't get that far—without a constitutional amendment establishing a lottery, there'll be no lottery.

"The only exception is for charitable entities and there was an amendment to the constitution to set up laws regarding charitable entities," Neilander says. "The way the constitution is set up, gaming is an option provided to the counties. Each county can decide whether to allow gaming. Boulder City has decided not to allow it. In the constitution there is a clear demarcation between gaming and the lottery."

As for Thompson's contention that the lottery ban doesn't apply to electronically dispensed tickets? "That's not the advice we received from the attorney general's office," Neilander says.

Tony Cabot, an attorney who specializes in gaming law at Lionel Sawyer & Collins, Nevada's largest private firm, acknowledges the appearance of legal ambiguity on the issue. Yes, casino games like roulette and keno could qualify as lotteries; however, they simply don't under state law, largely because they're found within licensed gaming establishments and thus don't meet the barometer of "widespread pestilence," a term coined by Congress in the 1900s to describe the rampant availability of lotteries.

Thompson thinks the legal obstacles will eventually be removed and Nevada will have a lottery: "What the politicians want is easy money. What the public wants is to have a chance to win $100 million."

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