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State Lottery Director Says Budget Restrictions Would Decrease Revenue

NC Education lottery at the Carrboro Food Mart.
Laura Candler

The North Carolina state House’s budget plan includes a provision that would double the amount of money the state lottery can use to advertise. Proponents say that would encourage people to buy more tickets and boost revenues to the tune of $106 million, which would be used for teacher raises. But this morning, the state lottery director told lawmakers that restrictions on advertising (that are also written into the House budget proposal) would result in bringing in far less money. 

The Senate Appropriations Committee was the first public meeting of the morning. The conference room was packed with lawmakers, lobbyists and reporters. The star speaker, Lottery Director Alice Garland, didn’t mince words.  

"I will tell you that the author of this language wants to see the lottery fail, and wants to put the lottery out of business," said Garland. "And that is why those restrictions were put into the House budget."

Garland is referring to Representative Paul Stam, who’s made his opposition to the lottery known for years. He developed the language in the House budget that would restrict the kind of advertising the lottery can use. Garland says those rules include everything from limiting advertising during college sports events to replacing the expensive electronic jackpot signs in store windows.

"So if the lottery is to operate like a business, which we very much try to do... then these restrictions would seriously impact our ability to do so."

Lottery officials sent legislative staff members a fiscal memo last week warning that Stam’s advertising restrictions would result in generating only $59 million  next year. This morning, Republican Senator Harry Brown asked Garland whether House budget writers were being reasonable.   

"Obviously the budget that the House put together used an additional $106 million of lottery proceeds," began Brown. "So what you’re saying is with the restrictions that they put also in their budget that that’s just not a feasible number in your opinion?"

"That is correct," said Garland. "We will not be able to hit $106 million with those restrictions."

During the hearing, state senators enjoyed discussing the irony of House budget writers proclaiming they had enough money for teacher raises despite their inclusion of Stam’s restrictive language. Senator Tom Apodaca took pleasure in asking Senator Brown about business at his car dealership.

"If you’re going to have a big sale at your car business next month, would you go and cut your advertising budget in half and expect to sell a substantial amount of cars more than you did this month?" Apodaca asked. "Uh, absolutely not," replied Brown. "I do have a big sale and would like you to buy a car." 

For the most part, the House leadership hasn’t really addressed the controversy. But Republican Representative Paul Stam, who was rushing from one meeting to the next, was able to chat. He refuted the lottery director’s claims, saying his proposed advertising restrictions wouldn’t cause the games to lose money in the short term.

"The lottery commission is talking out of both sides of its mouth if it says it will produce $50 million less out of its budget," said Stam.

Instead, Stam thinks what will really cause the lottery to lose revenue in the long run is truth in advertising. He thinks if prospective players understand how much money they’re actually winning and how it gets paid out, they’ll be less inclined to buy tickets. But other lawmakers are doubtful that will deter people from trying their luck.

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