Against the Odds
Hunched over the counter of the only 7-Eleven in Widefield, an elderly black man named Leo mulls over what could be his most consequential purchase of the day. You never know; this could be the time, the magic moment, that life-altering, red-letter, once-in-a-lifetime lucky day.
You just don't know. This could be the day that pigs fly, hell freezes over, and odds of several hundred thousand or even five million to one mean diddly-squat. It could be.
Then again, maybe not.
Leo stabs a finger at the glass display of lottery tickets. "Give me three Octoberfests," he says. "Two Sizzling Sevens. Three Quick Picks. And three of those Double Downs."
He forks over thirteen dollars, collects his Lotto and scratch tickets, and heads out the door. Similar transactions are conducted every day at hundreds of stores across the state, but at the Widefield 7-Eleven, a few miles southeast of Colorado Springs, they occur with dizzying frequency. According to the Colorado Lottery's latest official sales figures, the store is the second-busiest ticket-seller in the state; only a retailer on the Wyoming border, the undisputed champ at luring dreamers from the Cowboy State to join in Colorado's gambling fever, sells more.
Store manager Greg Harrington isn't sure why his 7-Eleven consistently makes the list of the state's top lottery retailers -- particularly with a competing seller, a Safeway, right across the street -- but he has a few ideas. "There's a substantial senior population around here," he says. "They like the convenience. Some come in four or five times a day."
Convenience has been a key to the Colorado Lottery's success ever since the first scratch game made its debut in 1983. Widely promoted and available in every corner of Colorado for the past seventeen years, lottery tickets have generated more than $3 billion in gross revenues and pumped more than a billion dollars into state parks, open space, conservation and capital construction projects. But the true costs of the enterprise may be higher than anyone knows.
According to a study conducted by the Colorado Department of Revenue in 1997, up to 4 percent of the state's adult population -- between 37,000 to 85,000 people -- can be classified as "problem" or "pathological" gamblers. Although the group as a whole prefers casinos, many of its members also spend heavily on lottery games. And their numbers may soon grow substantially -- if, as expected, voters hungry for bigger jackpots approve Referendum E next week.
Heavily favored in polls, Referendum E would allow the Colorado Lottery to participate in multi-state lottery games such as Powerball or the Big Game. Compared to the current state Lotto, the multi-state games offer humongous payoffs (the Big Game hit $357 million last spring) and even more ridiculous odds (around 80 million to one, compared to Lotto's 5.2 million to one chance of hitting the big score). Lotto spending has trailed off in recent years, and backers say a multi-state game will enhance current lottery revenues and provide a new source of funding for school construction as well.
In an election season mined with explosive issues -- ballot issues dealing with growth control, abortion, tax cuts and background checks at gun shows -- Referendum E has stirred scarcely a ripple of comment. Both the Denver Post and the Rocky Mountain News have come out against the proposal, and both dailies have dutifully run the usual op-ed pieces arguing pros and cons, but the debate has been oddly muted, in sharp contrast to the outcry that has greeted previous proposals to expand gambling in the state. "Other than the 10 percent of the population who are morally opposed to gambling, everybody else seems to have other things on their mind," says Colorado Lottery spokeswoman Lisa Murray.
But opponents of the measure, including Republican state senator Doug Lamborn and Democratic ex-legislator Jerry Kopel, say that Referendum E is a bad bet on several counts, an overkill solution to a nonexistent problem. They note that overall lottery proceeds aren't dropping catastrophically -- in fact, in the latest fiscal year the lottery provided $89.5 million to the designated state funds, up from $84.7 million in 1999 -- and in the long run, a Powerball-type game is unlikely to offer a tremendous boost in revenue. But such a game would increase the state's reliance on gambling to finance conservation and recreation, add to the already impressive pool of compulsive gamblers and related social ills in the state, and prompt litigation over the proposal's constitutional problems.
Kopel, a critic of the Colorado Lottery since its inception, says the agency has an almost boundless appetite for schemes to part citizens and their cash. "The legislature never intended that," he notes. "You won't find any legislative declaration that they have to raise more money each year than the previous year. But the lottery's mission statement says exactly that -- that they're going to try to get as much money as they can."
Actually, the lottery's mission is "to maximize revenues for proceeds recipients in a way that demonstrates the integrity that is appropriate for a state agency," according to the official statement. But Kopel has a poor opinion of the level of integrity involved: "Every time their revenue falls, they add a new game. We started with scratch, and they said that wasn't enough. Then Lotto. Now they want Powerball. What happens when a multi-state game's revenue falls? I don't know where it ends."
Murray says it isn't the Colorado Lottery but the referendum's legislative sponsors and interested parties, such as the Colorado Municipal League, that are pushing for the proposal. (Local lobbyists for lottery-ticket suppliers have also toiled mightily in support of the referendum.) She contends that lottery games, unlike slot machines or bingo parlors, "don't have the play action that reinforces the pathological gambler. It's not the immediate gratification they're looking for."
The difficulty with predicting the impact of a multi-state game on Colorado is that no one seems to know much about who plays the lottery here, how much or why, or what sort of player will be attracted to Powerball or its equivalent. The state's own forays into the question, for marketing purposes or otherwise, tend to be fuzzy and off point. But the experience of other states suggests that Colorado is about to learn a lot more about the play action of the pathological gambler -- without having made any provisions to address the problem.
When the first scratch games appeared in Colorado nearly two decades ago, hand-wringing politicians made a number of dire predictions about possible fraud and corruption, welfare moms buying tickets instead of milk, and general moral decay. The only real scandal to emerge, though, was the lottery's outrageous success.
Initial estimates pegged first-year sales at between $60 million and $100 million. Actual sales topped $200 million weeks before the year was up. For the first two months, sales averaged $1 million a day, an unprecedented take in a state that then had a population of three million people.
The novelty of the scratch games quickly wore off, though. After five years, sales had declined more than 40 percent, prompting another run at the legislature to win approval for the introduction of Lotto in 1989. Fueled by rapid population growth and the lure of seven- or eight-figure jackpots, lottery sales soon doubled and then doubled again, reaching a peak of $374 million in 1998.
But in the last two years, Lotto's luster has begun to dim, too. Overall lottery sales appear to have plateaued at around $370 million, while expenses continue to rise, cutting into the proceeds available to parks and conservation projects.
Part of the problem has to do with the peculiar economics and marketing maneuvers of state lotteries. Colorado sells almost twice as many scratch tickets as Lotto chances, but the scratch tickets are more expensive to produce and offer a higher payout in prizes, leaving less for the state funds. And because more people are playing Lotto now than did in 1989, the jackpots are routinely claimed before they can swell to the kind of level that attracts a stampede for tickets. (The game achieved its largest jackpot, $27 million, more than eight years ago.) That's bad news on two counts: The lottery actually pays out a larger percentage of the proceeds to players on small jackpots than on large ones, and small jackpots keep ticket purchases down. In a society bombarded with get-rich-quick schemes, from mega-slots to day trading to that Regis guy, a paltry $1.5 million jackpot just doesn't seem like big money anymore -- especially when players learn that that jackpot translates into a lump-sum, after-tax check of $408,000, or a mere $25,500 the first year under the annuity option, rising to $61,106 in the 25th and final year of payment.
"Lotto is a mature product," says the lottery's Murray. "Industry-wide, every state is experiencing the same problem with their lottery sales. When we introduced Lotto, a million dollars was enough to quit your job. With today's economy, if you win a million -- or $1.5 million, which is our lowest jackpot -- you probably can't quit your job. Your retirement's taken care of, the kids' education -- you're going to have a lot less worries. But things have changed. When Powerball hits $250 million, that just makes the average player look at our jackpot and go, 'Hmm.'"
One of the high-rollers casting envious glances as the multi-state action reached record levels last year was state senator Ken Chlouber, who was hunting for state revenue to boost school repairs and construction. This past spring, the Leadville Republican championed the legislation that put Referendum E on the ballot.
Chlouber's bill would retain the current formula for distributing proceeds from the lottery, with one significant change. At present, state parks receive 10 percent of the net profit, the Conservation Trust Fund 40 percent and the Great Outdoors Colorado Trust Fund 50 percent; any profits in excess of a cap tied to the Consumer Price Index are designated for the state's general fund. Referendum E calls for profits exceeding the cap to be transferred from the general fund to public-school funding and makes that money exempt from the surpluses that must be refunded to taxpayers under the Taxpayer's Bill of Rights (TABOR) amendment.
"My district is rural, all pretty poor school districts," Chlouber says. "We had kids going to school with buckets in the hall and the roof leaking. We just don't fund capital construction for schools at the state level at all, and we can do a lot of good with this money."
Chlouber figures that if people want to hurl their pocket money at a $200 million jackpot, then Colorado ought to be getting its piece of the action. Never mind that the odds of winning are considerably less than those of getting struck by lightning, flipping a coin and having it come up heads two dozen times in a row or getting devoured by flesh-eating bacteria. The day the proposed legislation first hit the newspapers, he says, his office received 400 e-mails in support of it.
"The phone, the e-mail just started rocking," he recalls. "Folks from all over were saying they were excited about this. They wanted to play Powerball. They were tired of driving to Kansas, Nebraska, whatever."
The major opposition to the plan, he says, is coming from killjoys of the "extreme right" who are opposed to gambling on principle. "They want to tell everybody how to live their lives," he says. "Not only that, they don't want anybody to have any fun. But we already have plenty of gambling in this state, and there's 22 other states already involved [in multi-state games]. They're not going down the path of wrack and ruin. This is just another form of lottery."
But relentless lottery expansion has become a concern across the country. Critics have long maintained that state-sponsored lotteries, which have the worst odds of any form of legalized gambling, rely heavily on a customer base that can least afford to lose, including disproportionate numbers of elderly, poor and minority players. Last year's report by the National Gambling Impact Study Commission, an ambitious effort to assess the spread of gambling nationwide, reported that lottery players who earn less than $10,000 a year not only spend a greater percentage of their income on tickets than other income groups, but they flat-out spend more -- an average of around $600 a year. Blacks spend five times as much on lotteries as whites, the NGISC reports, and the top 5 percent of lottery players account for 51 percent of total lottery sales.
The lottery-playing seniors that have made the Widefield 7-Eleven one of the state's busiest -- big spenders like Leo -- would seem to suggest that Colorado is no exception to the national trends. But it's not that simple. For one thing, the lottery's list of top retailers is a shifty beast; with the exception of the stores on the Utah and Wyoming borders that are perennial leaders, the reported sales figures may be skewed by the size of the Lotto jackpots, the popularity of certain scratch games and other vagaries. Clerks at a 7-Eleven in Arvada that made the most recent list believe that their prominence hinges on a single heavy-spending Cash 5 player who's been hitting the store regularly in recent months.
Also, a population of retirees or minorities doesn't automatically translate into the kind of low-income players the NGISC report is talking about. Other studies suggest that, contrary to stereotypes, senior citizens may actually binge less on lotteries and bingo than other age groups. And Colorado Lottery officials point to their own demographic surveys, which indicate that the state's lottery players closely mirror Colorado's population profile in age, income levels and ethnicity.
Lottery spokeswoman Murray says the "myth" that low-income players are the backbone of the lottery stems from early research done back East, in states where blue-collar workers played the numbers before state lotteries made a comeback in the 1970s. "All the initial lotteries were on the East Coast, and it's a different cultural makeup," she says. "There was an illegal numbers game, and the lottery became the legal version. The population and the culture here are different; we don't have the centers of steelworkers or mill workers who play those games."
Yet the Colorado Lottery's demographic profiles don't address how much certain income groups spend on the lottery. "If we were ever to do a study to find out how much the poor player played, it could be turned against us, to suggest we're trying to target the poor player," Murray says. "Those who think they're going to protect the poor from the evils of gambling also suggest that we're targeting minorities. We don't target minorities or the poor."
Under pressure from the administration of Governor Bill Owens -- who, like predecessors Roy Romer and Dick Lamm, is no fan of expanded gambling -- the Colorado Lottery no longer runs advertisements showing people wallowing in luxury, what spokeswoman Murray describes as "the greed-o stuff." Instead, the ads now tout the benefits to the state and the "fun" of playing the games. But detractors such as Jerry Kopel are skeptical of the lottery's claims that the games don't pander to a gambler's instincts; they believe that Powerball would be one more potent weapon aimed at people who are already blowing their paychecks on long, long, long shots.
"I don't know why we would be different in Colorado from other states," says Kopel. "I've seen studies that indicate that 10 percent of the players are responsible for two-thirds of the revenues at a national level."
State senator Lamborn, another Referendum E opponent, views the measure as an effort to woo folks dazzled by high jackpots away from casinos. "You have a state enterprise trying to siphon money away from private enterprise," he says. "Worse than that, there is a social cost to this. We're staking the success of the program on victimizing a small number of people.
"If you had a pollution source that was fairly benign but had the potential to hurt a small number of people, the regulatory agencies would really crack down on that. Maybe 95 percent of the people can play and have fun, but if 5 percent are going to be harmed, why go ahead and do it?"
Kopel maintains that the lottery is a horribly inefficient way for the state to raise money. The agency spends 22 cents on prizes, commissions, promotion and other expenses for every 36 cents it takes in. Add to that, he says, the less quantifiable costs of bankruptcy, divorce and crime generated by compulsive-gambling problems. If a state that's currently running a surplus of nearly a billion dollars a year needs to raise more money for open space or school repairs, there are other ways to do it, such as slashing the generous commissions to retailers (around six cents on every dollar ticket sold) or a modest hike in "sin taxes" on tobacco or alcohol.
But as Kopel sees it, the hike isn't needed, anyway. "The lottery is not going down in revenue," he says. "The money for state recipients shot up last year, close to 6 percent. If it's going up without a multi-state lottery, then why the hell do you need one?"
The proposal has also been attacked -- by Lamborn, Kopel, state treasurer Mike Coffman and others -- on constitutional grounds. Unable to secure the votes for a constitutional amendment and facing a threatened veto of the bill by Governor Owens, Chlouber and other backers decided to reshape it as a statutory amendment and seek voter approval. But opponents say it's unclear in the current legislation to what extent a multi-state game will remain under the state's supervision (as required by the existing lottery law) or whether the provisions for transferring money from the general fund and exempting it from TABOR will pass muster.
"There's going to be a lawsuit about it," Kopel vows. "If necessary, I will be the plaintiff."
Chlouber dismisses such objections as a "smokescreen" for what boils down to moral opposition to the state's growing role in the gambling racket. "Powerball is not going to solve all our problems, but it's one more step in that direction," he says. "There's no good reason not to do it. If Kopel and Coffman and the governor don't want to play, then they can go sit in the dark and stay there."
A moral distaste for the whole business does seem to tinge even the most reasoned attacks on state lotteries. For years, one of the most dogged anti-lottery crusaders at a national level has been conservative columnist (and former Nixon speechwriter) William Safire, and Colorado Springs's own James C. Dobson, founder of Focus on the Family, was a key member of the National Gambling Impact Study Commission. Lamborn admits that he has a conservative's unease with recent polls that indicate almost a third of Americans now believe their best chance to get wealthy is to win the lottery rather than by saving or investing. "I don't like the message that you can get something for nothing," he says.
But Chlouber believes fears of compulsive gambling are overblown. "We're still a nation that survives and thrives on individual freedom," he says. "Why are they so worried about the government being everybody's babysitter?"
He suggests that Powerball's astronomical odds might actually discourage pathological players. "As I understand it, compulsive gambling is fed by winning -- when you hit the jackpot a few times in a row," he says. "The odds with this are so bad, that reinforcement factor is not there."
According to Peggy B., compulsive gambling is not about winning or losing. It's not about good odds or bad, high-stakes or penny-ante games, rich suckers or poor ones, young or old, white or black, a stroll to the convenience store or a junket to Vegas.
"It's not about the money; it's about the action," she says. "It affects all walks of life. But we have no state funding for treatment. Most insurance companies won't cover it. And if your employer finds out you're a compulsive gambler, you're out the door."
Peggy B. is one of the legions of faceless twelve-steppers who have come to regard out-of-control gambling as not simply bad judgment, but an addiction, comparable to alcoholism or drug abuse -- an intricate pas de deux of brain chemistry and self-destructive behavior that has received clinical recognition in the standard psychiatric manuals and spawned its own self-help groups. As legalized gambling has spread across Colorado in recent years, so has Gamblers Anonymous.
A decade ago there were only two weekly meetings of GA in the entire state. Now there are meetings every night of the week in the Denver metro area; three nights a week in Colorado Springs; one night each in Fort Collins, Longmont and Cripple Creek; a monthly women-only group that Peggy B. helped organize; and a fledgling chapter opening in Cortez, near the casinos located on the Ute and Southern Ute reservations.
Most of the growth has been attributed to the limited-stakes casinos that opened in Black Hawk, Central City and Cripple Creek nine years ago. Compulsive gamblers whose primary game is the lottery are hard to come by; researchers say that lottery compulsives tend to be more furtive, socially isolated and difficult to identify than other types of problem gamblers. Still, a few of them have found their way to Gamblers Anonymous.
For Josh, a 21-year-old waiter and GA member, the lottery offered something no casino could: easy access. Four years ago, he would have been bounced out of any slot palace in the state for being underage. Technically, he was too young for the lottery, too, but with scratch ticket vending machines conveniently located in supermarkets, the action was as close as his next shopping trip.
A large, soft-spoken young man who describes himself as "a compulsive person by nature," Josh played the scratch games off and on as a kid, usually when some older relative bought him a ticket. By his late teens, though, he was buying the tickets himself -- and dropping entire paychecks in a fruitless quest to hit a big score.
"I got kind of a rush from scratching the ticket off," he says. "I'd go in and buy ten. Go across the street and scratch them. Maybe win two dollars. Go back and get two more tickets. Scratch those off. And just go back and forth. I remember one day, I went to my bank thirteen, fourteen times to get money for scratch tickets. I was taking twenty dollars at a time, and each time, I was sure it was going to be the last time. The teller finally said, 'Why don't you just make one withdrawal?'"
Josh knew the odds were not only against him but downright impossible. He knew that a roll of 400 tickets could be expected to have, at most, one big winner -- if, that is, your notion of a "big winner" is a prize worth fifty bucks or so, which would invariably be used to buy more tickets. (The current Sizzling Sevens game, which has been promoted heavily and whose sales, Lisa Murray says, are "blowing the doors off the barn," offers 569-to-1 odds that a two-dollar ticket will yield a $77 prize. The odds of winning $777 are 8,000 to 1; in other words, if you spend $16,000 on tickets, you just might hit one of those triple-seven payoffs.) He knew it, but that didn't matter.
"That's the sick part," he says. "I knew they weren't out to give money away. But I thought somehow I could buck the odds. It really wasn't the money. I'd settle for twenty so I could get twenty more."
The magical thinking persisted for months. If someone at work boasted of having bought a $50 winner, he'd want to buy a ticket for the same game right away. If a clerk asked for ID, he'd say he forgot it, and sometimes they'd sell to him anyway. His mother told the local 7-Eleven clerks not to sell tickets to him, and he got banned from a King Soopers store after they caught him shoving money into the ticket machine, but soon he was eighteen, and nobody could stop him.
Finally, he was arrested for stealing a bottle of vodka from a liquor store, which he planned to sell to a friend to get five dollars for tickets. He wound up in Gamblers Anonymous, working on his urges. He's been clean for eighteen months. "I'm still addicted to them," he says. "I just don't buy them anymore."
All the time he's been in GA, Josh says, he's met only one other person who has a problem with scratch tickets. The overwhelming majority of the people at his meeting are slot players, and the rest are card or bingo players; it comes down to one's disaster of choice. Gamblers Anonymous takes no public position on government-sponsored gambling or particular initiatives such as Referendum E, and neither does Josh. "My thing was instant gratification, not Lotto," Josh says. "But if we do get Powerball, GA will probably get more people."
Other than GA, there are few resources for compulsive gamblers in Colorado. Because health insurance doesn't usually cover treatment and most compulsive gamblers don't have the money to pay for it, few therapists bother to undergo the specialized training required to be certified in the area. At present there are no more than six certified therapists in the state, says Renee Rupe, president of the Colorado Council on Compulsive Gambling.
"Treatment is the area where we're really lacking," Rupe says. "Even with the training, the success rate is very low. The suicide rate is high. The financial devastation is unbelievable. It blows my mind how much debt, how much trouble, how many lawsuits can result from this, at all income levels."
The CCCG is an all-volunteer effort made up of therapists, gaming-industry representatives, mental-health experts and do-gooders such as Rupe, whose background is in consumer credit counseling. The group operates a toll-free hotline (1-800-522-4700) funded by casino owners and the Colorado Lottery. The lottery prints the phone number on every Lotto and scratch ticket. But the calls are actually answered by a better-staffed council in Texas, and the list of possible local sources for referrals is a short one. Until a recent fundraiser, the council's annual budget was less than $5,000 a year.
Fewer than 10 percent of those who called the hotline in the past year identified their problem as "lottery-related"; slot machines and video poker account for nearly two-thirds of the calls. "But it's all relative," Rupe says. "A person making $10,000 a year who is spending ten or fifteen dollars a week on the lottery is overspending his budget. That money came from the food budget. Then you have people making $100,000 a year who are spending more than that at the casinos. The disease is the same."
Rupe worries what a multi-state game might bring to a state that's well behind many others in addressing its gambling problems. "The higher jackpots do attract more players," she says. "I think there needs to be some research on underage gambling and on seniors. I would have hoped that would happen before this multi-state lottery came about."
Two years ago, state senator Jim Dyer introduced a bill that would have set aside a modest portion of lottery profits for treatment of compulsive gamblers, similar to legislation enacted in other states. Therapist Nancy Lantz, a pioneer in gambling treatment in the state, pushed hard for Dyer's bill, only to see it defeated along party lines.
Lantz first became interested in gambling issues while developing court-ordered treatment programs for men convicted of domestic violence ("Men Who Beat Women and the Woman Who Treats Them," June 18, 1998). As a condition of treatment, the men would have to give up booze and drugs, but in many cases, Lantz found, they would compensate by gambling heavily. "There was no one in Colorado who knew how to treat gamblers," she recalls.
Lantz founded the Colorado Council on Compulsive Gambling shortly after the mountain casinos opened in 1991. She's now program manager for the Robert and Lillian Custer Gambling Treatment Center in Indianapolis, the first (and only) residential treatment program focusing exclusively on problem gambling disorders. Patients from around the world stay an average of 24 days, the first several of which are devoted to intensive psychological and physiological workups.
The two-year-old program builds on research that shows a strong link between brain chemistry and gambling behaviors. Lantz says many of her clients show signs of multiple addictions or disorders, known as "co-morbidities," including a high incidence of attention deficit disorder, obsessive-compulsive disorder and even Parkinson's disease. ("The dopamine and seratonin get depleted from Parkinson's, and gambling will raise that," she explains. "It's self-medication.") Most require much more than counseling, including medication, financial evaluations and extensive followup. Since gambling "relapses" can't be detected through standard screening methods, such as urinalysis, Lantz sometimes has family members pull credit reports.
The lottery players Lantz has seen tend to be "escape gamblers," she says. "They isolate a lot. Other people aren't noticing because they aren't around people. Many of them are depressed. Did the gambling create the depression, or were they depressed when they started? We don't always know."
The pathological lottery players also tend to be lower-income, she points out, such as a suicidal young artist from Colorado who checked himself in at the Custer Center a few months ago. "It's easier for them to go down to the corner than get on a bus to Central City," Lantz says. "Some of them don't even have telephones."
Through her work with other state councils as well as the Custer program, Lantz knows that multi-state games not only perk up lottery revenues, but also add to the existing casualty list. "Colorado has made leaps and bounds in awareness of the problem, but they still have done nothing about treatment," she says. "If they're going to do a multi-state lottery, they need to have the resources in place. The more availability, the more problems are going to surface."
A few years ago, novelist Lois Gould interviewed several Colorado lottery winners for the New York Times. She discovered that even players whose dreams had come true were scarcely content with their lot; in fact, their riches had resulted in so much resentment, so many ruptured friendships, so much anxiety and upheaval that some wished they had never won.
Debra Van Straete, who won $6.85 million in a scratch game in 1987, told Gould that one of her sisters didn't speak to her for a year because she didn't pick up a breakfast check. Another expected Debra to repay her student loans. Close friends hit her up for money and then disappeared, and her husband's employees abruptly demanded big pay raises.
Teresa Molander threw a big party to celebrate when she won $1.3 million in 1985. Ten years later, none of those who came to the party were still speaking to her. Shortly after $4 million winner Barbara Langfeldt appeared in a commercial for the Colorado Lottery, her parents' house was burglarized.
Many of the people Gould interviewed seemed to regard themselves as victims rather than winners. They had not anticipated the burdens of success, and they were having a hard time adjusting to the situation.
The Colorado Lottery is finding its success tough to live with, too. Locked into popular but less profitable modes of play, limited to a low-key form of advertising that has become a model of restraint for the rest of the industry, its only prospect for goosing revenues is to introduce a new product, offering much larger jackpots and much crueler odds. But Jerry Kopel says that new tide of money won't solve anything.
According to initial estimates, a multi-state game would produce a total of $18.8 million in net proceeds in its first two years of operation, including $2 million for school repairs and construction. But since the game is expected to take business away from the existing Lotto game -- who wants to play for $1.5 million, when the same buck can buy you a crack at $20 million, $100 million or $200 million? -- Kopel argues that the long-term gain to the state may be negligible. Murray says the Colorado Lottery will continue to offer the current Lotto game for at least six months but may have to adjust the jackpots downward to reflect declining sales (a move that will almost certainly further depress sales). The lottery's own newsletter offers only a cheerful, short-term prediction for a multi-state game: "Healthy sales are anticipated for at least 1-2 years."
"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.
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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