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Feeling Lucky, California Joins 11-State Mega Millions Lottery

February 09, 2005|Nancy Vogel | Times Staff Writer

SACRAMENTO — In pursuit of ever-bigger jackpots and higher ticket sales, the California Lottery Commission voted Tuesday to join Mega Millions, an 11-state game whose record prize was almost twice as big as that generated by the California lottery.

The move is expected to boost lottery sales by half a billion dollars a year, of which at least 34% must by law go to schools.

But consumers who play the new game instead of SuperLotto Plus -- which will continue to exist -- face much steeper odds. The chance of winning a SuperLotto Plus jackpot is 1 in 41 million. The chance of hitting a Mega Millions jackpot is now 1 in 135 million -- and it will probably rise once California, the nation's most populous state, joins the game sometime this year.

The push for California to select either Mega Millions or the 30-state Powerball game came quickly and with little public scrutiny after Gov. Arnold Schwarzenegger appointed Chon Gutierrez interim lottery director in December. Gutierrez had headed the lottery from 1986 through 1991. More recently, he had overseen Schwarzenegger's extensive proposal to overhaul state government, called the California Performance Review. That review, published in August, included the recommendation that California join a multi-state lottery to increase sales.

The unanimous vote was cast by three Schwarzenegger-appointed commissioners so new that none has yet been confirmed by the state Senate. Two other board seats are vacant.

The action caught gambling opponents by surprise.

"There hasn't been any formal discussion over this issue until today," said Fred Jones, an Auburn lawyer and member of the California Coalition Against Gambling Expansion.

He attended the commission hearing after learning about the possible vote from a reporter Monday. Jones questioned the commission's authority to sign lottery agreements with other states without approval from the Legislature, though lottery attorneys said they were confident that the 1984 initiative that created the lottery allowed such an expansion.

Another critic, Keith Whyte, executive director of the National Council on Problem Gambling, based in Washington, said there was an inherent conflict in government's role as protector of the public well-being when it also promoted gambling.

"Governments nowadays are very reluctant to raise taxes," said Whyte, who did not attend the hearing. "They've increasingly turned to gambling. It's sort of seen as voluntary -- a tax on the willing. But it's also a tax on the unwell."

Comparing the lottery to consumer products such as soft drinks and cereal, commission officials said the state lottery hadn't introduced a brand-new game since 1998 and needed a fresh product to counteract "jackpot fatigue" -- the tendency for players to wait until a jackpot gets to a certain size before they are willing to buy a ticket.

That tipping point -- when sales shoot up -- rose from $60 million in 2002 to $100 million last summer.

Californians voted to create a lottery in November 1984 with an initiative largely drafted and financed by a lottery ticket supplier. By law, at least 34% of lottery revenue must be used to supplement public school spending and one-half must be returned to players as prizes. Lottery administration can cost no more than 16%.

The California Lottery reached record sales of nearly $3 billion last year. But its overall sales rank only fifth in the country. New York lottery sales, for example, are nearly $6 billion.

"We can do better," said Lottery Director Jim Hasegawa.

Though agreements must still be negotiated and software updated, lottery officials said they expected to launch Mega Millions in the state before the end of the year. Its addition will not change existing lottery games. The vote leaves Florida as the only state with a lottery that has not joined a multi-state game.

Roughly half of each dollar California players spend on the Mega Millions lottery will stay in the state and go toward public schools or lottery administration, officials said. The rest of the money will be used to pay the multi-state jackpot.

Last year, the California Lottery transferred more than $1 billion to public schools, or $131 per pupil. But lottery funds account for less than 2% of total public school spending.

If lottery officials hit their target of $500 million in increased sales, an additional $170 million will flow to schools.

"This is good," said California Lottery Commissioner Loretta Doon, controller for the California Teachers Assn. "But it is in no way ... a solution to funding for education in California."

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