Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, August 3, 1994 TAG: 9408040013
SECTION: EDITORIAL PAGE: A-10 EDITION: METRO
SOURCE: By RICHARD G. WILKINSON
DATELINE: LENGTH: Medium
First, it wasn't my intention to personally attack him in my July 9 letter (``The lottery: $1.5 billion prize for Virginia taxpayers''), as he implied. My intention was simply to correct erroneous information about the lottery.
Minnix is correct that Lotto jackpot winners receive their prizes in 20 installments. However, all principle and interest go to the winners.
When we advertise a $1 million jackpot, we actually have about $500,000 cash that is invested in U.S. government bonds. Over the 20 years, the principle and interest will fund the $1 million prize. Again, all principle and interest go to the winner.
He compares the lottery to race tracks, casinos and riverboats. Those forms of gambling are not state-operated, as is the lottery. In the future, the state may regulate race tracks, casinos and riverboats. Were that to occur, the state would receive only a small percentage of the handle from those ventures. In the case of the lottery, the state operates the activity and controls the revenue's distribution.
I don't think it's accurate to say that Virginia's economy rests on the lottery. Although the lottery is the third-largest source of revenue for the state's general fund, lottery revenues represent only 5 percent of the general fund's total revenue.
Studies done by the lottery and several Virginia universities have shown that nearly all lottery players are in the middle- and upper-income range. While there are some lower-income Virginians who play, they represent less than 20 percent of the players. More importantly, we've found that more than 70 percent of ticket purchases are made by those with incomes of $25,000 and above.
Since the lottery began in 1988, players have spent $4.3 billion on lottery products. About $2.4 billion, more than half of the total, has gone to players as prizes to be spent by them in the general economy. Retailers - convenience stores, gas stations, grocery stores, restaurants, etc. - have earned $225 million, to be spent by them in the general economy. About $360 million has been spent by the lottery on salaries, rent, vehicles, equipment purchases and leases, and contractual services, such as equipment repair and advertising. These monies also circulate in the economy.
The remaining $1.5 billion has gone into the state's general fund to be spent on such things as education and public safety. While this is an important source of the commonwealth's revenue, I don't believe reasonable people see it as a ```tax.'' No one is required to play.
In summary, the majority of Virginia voters created the lottery, and lottery sales show that many people enjoy and want to participate in lottery games. Those not interested in participating can spend their money in other ways. Isn't it one of the great strengths of our nation's democratic principles that people are free to choose for themselves?
Richard G. Wilkinson is interim director of the Virginia Lottery in Richmond.
by CNB