The push to legalize casino gaming in Kentucky fizzled this session, but lawmakers found a way to potentially boost receipts from the Kentucky Lottery Corp. by allowing the agency to advertise the government programs that benefit from the sale of lottery tickets.
House Bill 445, a revenue bill passed by the General Assembly Monday that awaits Gov. Steve Beshear’s signature, strikes language from state law prohibiting the Kentucky Lottery Corp. from mentioning programs such as the Kentucky Educational Excellence Scholarship or the College Access Program in promoting lottery games.
Other states don’t have restraints in advertising their lotteries, said Chip Polston, spokesman for the Kentucky Lottery Corp. So why has Kentucky been handcuffed until now?
Polston said the issue traces back to 1988, when legislation creating the Kentucky Lottery Corp. was passed. Lottery proceeds were dedicated to elementary and secondary education at the time, and the prospect of publicly linking schoolchildren with the games made some legislators squeamish.
“There was a fear that we were going to run ads that said, ‘If you don’t buy lottery tickets, your kids aren’t going to be able to go to school.’ It would be a threatening scenario because it was an unknown,” Polston said. “There had really never been a modern day lottery in Kentucky. They didn’t understand how we were going to operate or how we were going to advertise, and there was a fear that we would do it irresponsibly.”
Promoting the games’ connection with public education programs is expected to generate an additional $1 million in fiscal year 2015 and $2 million in fiscal year 2016 for the General Fund, according to an analysis by the Legislative Research Commission.
Polston said the state lottery expects sales to reach $875 million in fiscal year 2015 with $238 million to the General Fund. The sales figure is a 6.6 percent jump from last fiscal year, when $846.6 million in tickets were sold and the General Fund’s share of lottery receipts hit $228.3 million, he said.
“It’s absolutely something that we’ve started to look at,” Polston said of advertising state programs that receive lottery proceeds. “We’ve been waiting for several decades to have the ability to do this, so we want to make sure that we’ve got a good, solid program ready to go here pretty quickly.”
Allowing the Kentucky Lottery Corp. to advertise beneficiaries will also answer an oft-asked question from the public about where money spent on lottery games is appropriated, he said, citing a survey of players in December that found 70 percent did not know how lottery proceeds were spent.
Carl Rollins, a former Democratic state representative from Midway who now heads the Kentucky Higher Education Assistance Authority and the Kentucky Higher Education Student Loan Corp., said the subject of lottery proceeds “came up more often than I thought it would” during his time in the General Assembly.
“I remember this from prior years; we’ve always argued for this when I was in the legislature,” Rollins said. “It will allow the people to know actually where the money goes, and once they know it goes to education, by theory anyway, more people will buy lottery tickets.”
He said he supports the increased exposure for the educational scholarship programs funded through the lottery, such as KEES, CAP and the Kentucky Tuition Grant Program, all of which KHEAA administers. The General Assembly originally slated 45 percent of lottery proceeds for KEES and 55 percent for CAP, but Rollins said those proportions generally have been flipped since 2009.
Because KEES — a program that grants scholarship money annually to students who maintain at least a 2.5 grade point average in high school and stay in-state for college — must be fully funded, additional proceeds would benefit CAP, KTGP and other need-based scholarships, Rollins said.
In the biennial budget brokered by lawmakers this week, KEES is slated to receive $101 million in fiscal year 2015 and $104.5 million in fiscal year 2016 while CAP will get $58.8 million each fiscal year and KTGP $31.7 million per year.
CAP and KTGP combined are set to get about $1.5 million more in state dollars in the upcoming biennium, which would add about 1,000 more recipients to the need-based programs, Rollins said.
“We have more people who qualify who don’t get funded because there’s not enough money in there,” he said of the programs. “And it’s not just kids. You get adult students, too.”
But Martin Cothran, spokesman for the Kentucky Family Foundation, said advertising the beneficiaries of lottery proceeds will be deceptive since KEES is guaranteed to high school students with good grades. He suggested the Kentucky Lottery Corp. also advertise the odds of hitting the jackpot in each game.
“The bottom line is while we won’t engage in any truth in labeling as to the odds (of winning the lottery), we’re willing to encourage people to buy lottery tickets because of where the money’s going to go,” he said. “… The lottery is actually the worst form of gambling in terms of being a poor tax. This is going to encourage more poor people to waste their money on lottery tickets.”
Polston, however, pointed to the Kentucky Lottery Corp’s Play Responsibly campaign, which partners with the Kentucky Council on Problem Gambling and advertises a hotline for gambling addicts, 1-800-GAMBLER, on lottery tickets and advertising materials.
He noted the lottery has sent more than $4 billion to the General Fund since its inception.
“It’s something that we’re very proud of, by helping to create a better-educated workforce here in Kentucky that’s able to realize that dream of higher education and then hopefully stay right here in Kentucky,” Polston said. “We think that it’s going to be something that’s going to raise the economic benefit for everybody here in the state.”