Archive for February, 2010

Raggio’s ties to gaming, his choke hold on lottery cost Silver State millions

February 23, 2010

By David Farside

Feb. 22nd, 2010

This week, some of the political rhetoric surrounding the state’s financial crises should end and the pragmatism of finding new sources of revenue should begin.

We have all listened to the outcry of educators opposed to salary cuts for teachers, reductions in class size and freezes on new hires. Yet, they haven’t supported new sources of revenue.

We have witnessed government administrators and higher education circling the wagons to protect themselves and their employees. Even college students are holding rallies, protesting increased tuition and a possible elimination of some curriculum. Yet, no one has proposed a new source of revenue.

Elected state officials haven’t missed the opportunity to use the town hall venue to generate new ideas on how to solve the state’s problems. Yet, they won’t increase the existing maximum 6.7 percent gaming tax, which is incredibly low compared to other states paying 20 percent or more.

Our governor, Jim Gibbons, doesn’t seem to care about new revenue either. He ranks 47th in the nation for allocating funds from the federal stimulus program. Our stone-brained governor has proposed an increased tax on mining by eliminating or lowering companies’ tax credits and deductions. Gibbons denies he is breaking his promise – again – of “no new taxes.” What else can it be if mining pays more taxes?

The state could have been the recipient of hundreds of millions over the last few years but no one wanted the money. For the last 10 years, I have been arguing with state officials, politicians, our local school board and casino operators for support of a lottery for education. During that time, only two school board members were interested in hearing the benefits of a lottery. Not one elected politician from the Washoe County delegation would support it, especially Sen. Bill Raggio.

True, some elected Democrats from Las Vegas tried to introduce bills favoring a lottery. However, even with a strong Democrat presence in the Legislature, most of the proposed bills never made it past committee members not wanting to bite the hand of their main contributors for re-election – the gamers.

So, how would a lottery benefit Nevada? Using the state of Oregon as a schematic, a state lottery would provide at least $400 million annually for education or the general fund in Nevada.

Oregon approved a lottery in 1988. In 2008, its 3,500 retail vendors sold more than $1 billion in lottery tickets with a sales per capita of $350.

Oregon has a population of about 3.79 million, compared to Nevada‘s about 2.6 million. However, we have a tourist population of about 35 million annually and that should be factored into projected possible lottery sales in the state.

Using $350 per capita and including only a small percentage of the tourist population, Nevada could also generate more than $1 billion in lottery sales annually and we wouldn’t have to go to California to buy a ticket.

The gaming industry has always been opposed to the lottery, effectively convincing legislators that it will hurt their business and reminding them who got them elected. But what I am proposing would increase gaming revenue, not decrease it.

Based on $1 billion in annual sales, all vendors having a gaming license or a permit to operate slot machines would receive 6 percent, or $60 million, of total sales for selling the tickets. That $60 million will be subject to gaming tax and generate $4 million for the state.

An additional 10 percent sales tax on total sales will add another $100 million to the state’s treasury.

Including 15 percent to cover the cost of running the lottery and 40 percent distributed to the players, 39 percent or $390 million would be set aside for education or the general fund. Too bad no one wants it.

Establishing a lottery in Nevada requires a constitutional amendment. It has to be approved in two legislative sessions and again by the voters in a state-wide election. If politicians, state school boards, teachers, university presidents and unions would have supported the lottery as a new source of revenue 10 years ago or if it was agreed to in the last legislative session and approved during this special session, it could have been placed on the upcoming state-wide ballot. So much for visionaries and special interest in politics.

Raggio once told me he was opposed to the lottery because the casinos will lose money, causing gaming tax revenues to decrease. Also, players won’t have enough money left to purchase a “new tie” after  they buy lottery tickets, reducing sales tax revenue as well. Right! As if anyone really wins enough money to buy a new necktie at casinos. But because of Raggio’s ties to gaming, he will always have a choke hold on the lottery, costing the state hundreds of million s of dollars annually.