Lawmakers asking tough questions about plan to lease the lottery

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(Host) Lawmakers are asking tough questions about plans to lease the state lottery.

They say the plan is risky, and that the image of the state may suffer if it allows a private company to ramp up legalized gambling.

VPR’s John Dillon reports:

(Dillon) Under the proposal touted by investment banks, Vermont could get $56 million dollars up front at the start of the 40 year lease. The state would also get about $23 million a year in annual payments.

The Douglas administration wants to use half of the $56 million to pay for school construction, the other half to lower the statewide property tax.

(Smith) "It provided sort of the maximum return for revenue, at the least risk to the state."

(Dillon) Administration Secretary Mike Smith says he looked at other ways to get more money out of the lottery, including issuing bonds backed by new ticket sales. Smith acknowledged he didn’t ask the Lottery Commission for ideas on how to boost sales.

(Smith) "What was attractive out of all this was the $50 million up front payment. And I just don’t know how to ask the Lottery Commission for $50 million up front. I just don’t know how to do that."

(Dillon) But Morristown Representative Shap Smith questioned why the administration was counting on the money.

(Smith) "And we’ve done that without a consensus revenue forecast by our state economist, even though we haven’t tested the assumptions."

(Dillon) And Williston Democrat Mary Peterson said the lease deal was a big gamble.

(Peterson) "So isn’t the risk here is that Vermonters will be losing a lot more money because that’s how the lottery makes money? And we’ll find at the end of the day that the state really hasn’t gotten an appropriate share of that in its contract."

(Dillon) A proposal by the Lehman Brothers investment bank says a private investor could make more money from the lottery with new games and more sales. Smith said one idea could be lottery tickets sold at Starbucks.

(Smith) "Let me assure you what we want to make sure is that you don’t walk into a convenience store and all of a sudden it’s Las Vegas. That’s not what we’re after here."

(Dillon) Smith said the state would still oversee the lottery games through its lottery commission.

But the chairman of that commission, Martha O’Connor, said the state would probably get less money up front if the commission tried to limit how the games were marketed.

(O’cConnor) I would assume that if you put strong restrictions on anyone leasing this, the amount of money that’s being projected – and this is just me speaking – would be less than the $56 million that is being projected.

(Dillon) The Lottery Commission now markets the games with a strong message to "play responsibly." O’Connor said her biggest concern is that that message is maintained if the lottery is leased to a private company.

For VPR News, I’m John Dillon in Montpelier.

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