Despite a recent uptick in lottery ticket sales, the Oklahoma Lottery Commission is projecting a roughly $17.2 million decline in revenues for fiscal year 2014, which will mean less money flowing to education.
“That's the bad news,” said Rollo Redburn, the new executive director of the Lottery Commission.
He estimated about $6 million less will go to education.
The driving force behind the reduction is an anticipated increase in the cost of operations.
Commissioners approved a request for proposals from a new vendor for instant and online gaming services. Currently that contract has one of the best rates in the nation, Redburn told commissioners, and he anticipates the fee for the service will increase with a new contract.
The current contract expires in August 2013.
Jay Finks, director of marketing and administration, said an increase in the cost of the agency's largest contract could have a domino effect.
The agency is required to pay 35 percent of lottery revenues to benefit higher education, career technology programs and common education, prekindergarten-through-12th-grade public schools.
Because of that cap, he said increased costs will cut into the amount of prizes the commission can award. Decreased prizes equal decreased ticket purchases, he said.
Finks said removing that 35 percent cap would equate to higher prizes being offered, more ticket sales and an overall greater amount of money going to education.
“What would you rather have: 35 percent of a $100,000 or 25 percent of $500,000?” he asked.
Redburn indicated the commission will continue to request a decrease of the 35 percent cap from lawmakers.
“Our goal is to maximize profits for education, and that's what we intend to do,” Redburn said.
Redburn also announced that the lottery now has exceeded $500 million in contributions to education since its inception.
Finks reported that 11 weeks into the new fiscal year all lottery tickets including instant games and draw games have seen a 6 percent increase in sales over the first 11 weeks of 2012.
“We've had some nice jackpot runs,” Finks said. “We're in one right now.”
The Powerball jackpot is up to $149 million.
But ticket sales still have not recovered to the rates they were at in 2008 and 2009.
Finks said some of the efforts to reverse the trend in declining ticket sales have helped. The price of Powerball tickets increased to $2 in an effort to create larger jackpots, and the state added Mega Millions in January 2010.
“We're seeing the impact of that in our sales,” Finks said.