Against the Odds

Referendum E is a sucker bet, but the state's hooked on lottery games.

"Powerball tends to take a huge jump the first two or three years and then withers away," says Jerry Bauerkemper, executive director of the Nebraska Council on Compulsive Gambling.

Bauerkemper takes a keen interest in Powerball sales figures in his state because funding for his council's efforts and gambling treatment programs is directly tied to the game's success. When Nebraska set up its own state lottery in 1995, offering Powerball and scratch tickets, 1 percent of the proceeds were designated to help problem gamblers; the rest goes to educational and environmental funds. But the legislature soon decided that the 1 percent allocation was inadequate and began to funnel additional money to the council from bingo proceeds and other sources.

The council now has an annual budget of about $1.45 million, roughly two dollars for every adult in Nebraska. That's a "good rate," Bauerkemper concedes, when compared to what other states are doing, but he says it's still not enough.

Glenn Hilario
State senator Ken Chlouber is the power behind the Powerball push.
State senator Ken Chlouber is the power behind the Powerball push.

Seven years ago, the Nebraska hotline for compulsive gamblers fielded around 500 calls a year. Now it handles 6,000 a year, and more than a quarter of them are from people who say that the lottery is at least part of their problem. The lottery calls are almost evenly divided between scratch players and those who are chasing the Powerball jackpots.

"We know that Powerball goes across economic lines," Bauerkemper says, "but lower-income players are more lured to the larger jackpots, from what we hear anecdotally. They call it 'investing.' When you can't get in the stock market, you can get in on a $100 million Powerball. Of course, the percentage of discretionary income those players spend on this is much greater, and they get in trouble quicker."

The funding arrangement has put the Nebraska council in a peculiar position. As the novelty of the lottery has worn off, so have sales in the state, which has a direct impact on the council's budget. At the same time, the number of people calling for help continues to rise. So the council has to hope, perversely, for larger Powerball jackpots or seek other sources of money for its treatment programs.

"If we had to do it over again, we would ask for 5 or 10 percent of those beneficiary funds," Bauerkemper says. "It sounds like a lot of money, but not if the sales are declining. Unfortunately, the only way to get that money to be put aside is to do it in the original bill."

Colorado offers an even wider range of gambling opportunities than Nebraska, including the lottery, bingo, casinos and illegal sports betting. ("I know you have sports-betting problems in Colorado," Bauerkemper says. "We used to answer your helpline.") But the state doesn't fund any programs to deal with compulsive gambling, not even educational or preventive measures, and the passage of Referendum E won't change that -- even while raising the stakes for potential problem players.

Bauerkemper believes that state-sponsored forms of gambling have an even greater obligation to address the problem than private operations. "There is a sense that this is okay because it's state-sanctioned," he says. "And once you have it on every street corner, people see it's available and think it's harmless."

Nancy Lantz agrees. "The message that's given to everyone in Colorado is that if you buy lottery tickets, it cuts down on taxes and helps parks and recreation," she says. "If you're looking at it that way, it's almost our civic duty to buy lottery tickets. There's no indication that anyone could be hurt by this."

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