Mississippi special House panel studying the pros and cons of a state lottery

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A special House panel studying the pros and cons of a state lottery heard mostly cons and caveats during in its final hearing on Thursday.

The main pro of a state lottery, the panel has heard over the past few months, is that it would net the state an estimated $80 million to upwards of $100 million.

But State Economist Darrin Webb told the panel that while a lottery would help fill state coffers, "It would create a slight decrease in total economic activity within the state." He said lottery sales would largely come from a reduction in existing economic activity and there would be "leakages" due to the state's contribution to multi-state lottery payouts and costs of operations.

Webb estimated a lottery would bring $101.4 million to $116 million to the state general fund, offset by a decline in retail sales tax collections of $18.8 million to $22.2 million. While this would be a net gain for state government, Webb said economic research is fairly clear that a lottery would bring a decrease in retail sales, which would reduce employment, income and gross domestic product over time.

The House Lottery Working Group asked people from about a dozen groups or agencies to speak at its final meeting. Web, along with representatives of the Stennis Institute of Government at Mississippi State University, the Department of Revenue, the state casino and convenience store associations and the state council on problem gambling spoke Thursday. The state Baptist Convention, Methodist Council, Catholic Diocese of Jackson, American Family Association, Humanities Council and Mississippi Economic Council all declined the invite or did not respond.

Mississippi has debated having a lottery since statehood in 1817, but for most of its history has prohibited them by law or constitution. In 1992, as legal casino gambling began to flourish in the state, 53 percent of voters in a referendum removed an 1890 constitutional prohibition against lotteries. The Legislature has debated the issue since, but never changed state law to create a lottery, as governors, religious leaders and even casinos opposed it.

But recently support has appeared to grow, as the state struggles to fund government services. Republican Gov. Phil Bryant and Democratic Attorney General Jim Hood have both advocated a state lottery, as have numerous lawmakers. Twenty-five years of legal casino gambling in Mississippi appears to have tamped down active opposition to a lottery.

House Speaker Philip Gunn opposes a lottery, but called for the creation of the study committee to gather facts and report to the Legislature. House Gaming Chairman Richard Bennett, R-Long Beach, head of the study group, says he expects a report will be delivered before the start of the Legislative session in January.

But Bennett repeated Thursday, "We are presenting a report on the facts, not making a recommendation one way or another on a lottery." 

Bryan Ferrell, with the Stennis Institute, warned the panel Thursday that a lottery, while voluntary, is a "regressive" tax that impacts those who can least afford it and "increases income equality. He said that looking at other states shows 77 percent of lottery revenue goes to "above normal" government spending, not funding existing expenses.

Ferrell said: "It's hard to claim one way or another whether the ends justify the means."

Betty Greer, director of the Mississippi Council on Problem and Compulsive Gambling, didn't advocate specifically for or against a lottery but told the panel about the 4 million to 6 million people considered problem gamblers. She noted casinos or lotteries don't cause gambling addiction any more than "liquor stores cause alcoholism." But she urged that if lawmakers approve a lottery, they also budget more for helping problem gamblers.

Larry Gregory, director of the Mississippi Gaming and Hospitality Association, said the casino industry is not necessarily against a standard lottery, but strongly opposes video lottery terminals or any other electronic or online games or free-standing lottery vending machines — anything that resembles a slot machine — being allowed outside the state's casino resorts. He said that if lawmakers approve a lottery, it should be a standard "paper lottery," and any new law should forbid VLTs.

In a letter to the study panel, Gregory said, "Mississippi's regulated commercial casino gaming industry, which has operate successfully for 25 years, has been limited to adults at least 21 years old in counties along the Mississippi River and the Gulf Coast. A lottery would spread its form of gambling to every community of our state with a minimum age of 18. This would be a seismic shift in Mississippi's public policy on gambling."

Philip Chamblee, director of the Mississippi Petroleum Marketers and Convenience Stores Association, said his industry supports creation of a state lottery, but has concerns over accompanying regulations and terms of commissions or sharing of jackpots with vendors. He said his association opposes the use of credit cards for lottery tickets.

"We think this would be a bad idea," Chamblee said. "The credit card fees will probably be higher than the commission on the sale of a ticket."

After he presented the economic projections of a lottery, Webb also warned of the potential social costs.

"Mississippi is already plagued by people making poor choices," he said.

http://www.clarionledger.com/story/news/politics/2017/11/16/lottery-mississippi-legislature-study/870292001/