Texas joins Mega Millions lottery

After many twists and turns, Texas will be joining a multistate lottery system. It just won't be Powerball.

Texas is placing its bets on the multistate lottery Mega Millions, noted for its record-setting jackpots and 1-in-135 million odds, the Lottery Commission decided Tuesday.

Commissioners gave Lottery Executive Director Reagan Greer approval to negotiate a contract for Texas to join the 10 other states that form the Mega Millions game, meaning the well-known Powerball lottery appears out of the running.

The Legislature, seeking a way to climb out of a $10 billion budget hole, authorized Texas last spring to join a multijurisdictional lottery.

I confess, I've never heard of Mega Millions, a name which unfortunately sounds to me like it came from a Make Money Fast! chain letter. I've probably read about them and just assumed it was Powerball. Silly me. In any event, a multistate lottery with bigass jackpots is what the state Lottery Commission was looking for, and it appears they've found one.

The game is expected to ring up $372 million in ticket sales in Texas during its first 10 months of operation, the commission's study shows.

It is also expected to generate $91.5 million in state revenues in the budget year that starts Sept. 1, far better performance than the legislative prediction of $101 million over two years, said Greer.

Anyone want to bet me that actual revenue falls short of projections? I don't have a lot of faith in lottery commission projections. This doesn't ease my mind any, either:

Dawn Nettles of Garland, who publishes the Lotto Report and is a self-described Texas Lottery Commission watchdog, said she's concerned that public accountability is lacking with Mega Millions and joining it would be "a tragic mistake."

After e-mailing the Mega Millions Web site to request sales figures, she was informed that "Mega Millions is not a public body and is therefore not subject to the requirements of freedom of information statutes."

Rebecca Paul, president and chief executive officer of the Georgia Lottery Corporation and a leader in the Mega Millions organization, said the only way to obtain Mega Millions ticket sales records, if someone wished to check the accuracy of the payoffs, would be to contact each state for its individual report.

Texas Lottery Commission spokesman Bobby Heith said that if the commission has documents about the total sales figures for Mega Million, it will release them if required under the Texas Public Information Act. He noted sales figures for other lottery games are public record.

Chuck Strutt, executive director of Powerball (a nonprofit association), said that Nettles also asked for detailed ticket sales information from Powerball, and it was provided to her.

Frank Ferguson, general counsel for the Virginia Lottery, said Tuesday that he wrote the response to Nettles' request for information. He said Mega Millions is "the product of an agreement which is essentially a contractual agreement among the participating states."

Since Mega Millions lacks the organizational structure of Power Ball, he said it does not have to spend money on staffing and can therefore return more dollars to participating states.

Why, exactly, should Mega Millions' sales information be exempt from public scrutiny? There's a lot of money involved here. What assurances to we have that they're telling the truth? We ought to be able to infer from future state budgets and the Texas Lotto public records how much revenue was derived from Mega Millions, but without sales figures that won't tell us if Mega Millions is a better performer than Lotto Texas is. Lotto Texas is not going away, and everyone believes (correctly, in my view), that Mega Millions will cannibalize Lotto Texas sales to an extent. How can we know what our return on this investment is if we don't have full information? This smells fishy to me.

I could be making something out of nothing here. Other states are using Mega Millions, and presumably they're happy. I'm sure the Lottery Commission did some due diligence and came away satisfied. All I'm saying, though, is that we've learned quite a bit over the past two years about what can happen in institutions with lots of revenue and not much oversight. I fear we're at risk of setting ourselves up to have to learn those lessons all over again.

Posted by Charles Kuffner on August 06, 2003 to Jackpot! | TrackBack