Lottery Budget Scrutinized Legislation Targets Trimming California Allotment

By Angela Dawson

LOS ANGELES–Most of the California lottery advertising budget could be in jeopardy if a bill winding its way through the state legislature passes and is approved by voters.

The legislation, which already has sailed through the state Senate, calls for a 3 percent reduction in the California Lottery Board’s administrative expenses, or a cut of about $60 million annually. The state Assembly’s government organization committee is slated to take up the bill around June 9.

Bill supporters say the money saved could be reallocated to public schools. Opponents, however, argue the cuts would ultimately hurt schools, since the ad budget–one of the lottery’s largest expenditures–would have to be drastically reduced, which in turn would adversely affect lottery sales and revenue.

Executives of Grey Advertising’s Los Angeles office, which won the $30 million account this year, said they could not comment on the proposed legislation. A lottery official, who asked not to be identified, said that cutting the ad budget could result in lost sales and lower revenues and could thereby reduce education funding by $150 million.

Ad groups, including the American Advertising Federation, have been monitoring efforts to curb lottery ad budgets nationwide.

Thirty-eight states together spend an estimated $500 million annually on lottery advertising.

‘This is a clear example of the shoot-the-messenger mentality,’ said AAF vice president of state government affairs Clark Rector. ‘If (legislators) are opposed to state sponsorship of the lottery, they should deal with that directly.’ He said the bill abdicates the responsibility to voters, who would have to go to the polls to decide if the budget should be cut.

Proponents of California’s bill note that the state’s administrative costs for the lottery are the highest in the country–16 percent of its revenue, the maximum allowed under state law. Some state legislators say it is time to cut the lottery’s administrative fat. Leading the effort in California is state Sen. Leroy Greene (D-Carmichael), who introduced the bill. ‘All this business of where (the budget reduction) will come from is a tactic used by the California Lottery Board to scare people,’ said Scott Plotkin, the staff director in Greene’s office. ‘The bill doesn’t designate where the money has to come from.’

Lottery officials counter that the cuts must come from advertising and marketing as well as retailer commissions, as they comprise the lion’s share of the budget, excluding payouts.

Similar attempts to curtail lottery ad spending have been made in Louisiana, Nebraska and Indiana. In Massachusetts, the lottery’s ad budget has dropped from about $12 million since the early 1990s to $400,000. In Oregon, a bill designed to curtail lottery ad spending died in committee this spring. Last month President Clinton appointed a nine-member federal commission to study the impact of gambling in communities nationwide.

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