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Oklahoma lottery rule change sought to keep from cutting prizes

Oklahoma lottery trustees approve a rule to reduce the amount of money paid to retailers to prepare for an anticipated increase in gaming vendor contracts. Without the rule, money available for prizes would be reduced. The rule change now will be reviewed by the governor and the Legislature.
BY MICHAEL MCNUTT Published: March 20, 2013

Oklahoma lottery officials voted Tuesday to reduce the amount of money paid to nearly 2,000 retailers that sell lottery tickets to increase prizes in “almost a last resort” to boost sales.

The Lottery Commission has reduced its operating costs to less than 2.5 percent of its $192 million in revenue by reducing office space and cutting the number of staff from 40 to 26, said Rollo Redburn, the agency's executive director.

Operating expenses were cut from $9.7 million in 2008 to $4.8 million this fiscal year, he said.

Money saved from the cuts went into prize money.

The proposed rule change to reduce the rate that retailers receive from 6 percent to 5.5 percent for each dollar of ticket sales now goes to Gov. Mary Fallin. The rule also eliminates paying a fee of 0.75 percent for each dollar of prizes $600 or less paid out by most retailers.

If the governor approves the rule change, the proposal then goes to the Legislature. The rule would go into effect if lawmakers don't disapprove it before they adjourn in late May.

Lottery Trustee William Paul, in making the motion to accept the proposed rule change, said it is “almost a last resort” for the lottery.

Trustees have said for years that the lottery is handicapped by a requirement that 35 percent of its profits go to education. That has resulted in lower prizes, which have hurt sales, they say.

Contracts to change

Redburn said reducing the commission to retailers is necessary to make up for an anticipated increase in gaming vendor contracts. The contract has been in place since 2005 and expires in August.

It's expected the contract will increase by $2 million a year, Redburn said. The vendor currently receives 2.84 percent of sales for running the gaming system terminals, computers, hookups, as well as providing backup, repairs and sales staff, Redburn said.

Trustees met in closed, executive session to award a new vendor contract, but the winning bid won't be released until the contract is reviewed by the state's chief information officer, Redburn said. The contract is for one year, and can be renewed annually for the next nine years.

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