THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, December 31, 1995 TAG: 9512310107
SECTION: LOCAL PAGE: B7 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: NEWPORT NEWS LENGTH: Medium: 62 lines
Some of the biggest winners in the Virginia Lottery never buy a ticket.
They include the retail chains that serve as lottery agents, a Newport News-based company that services lottery machines, a Maryland advertising agency that designs and places the lottery's ads, high-paid managers at the lottery itself and Wall Street securities firms.
Although a Hampton couple recently hit the biggest single-ticket jackpot in the history of the lottery's Lotto game, their pre-tax payout - more than $1.2 million annually for 20 years - is dwarfed by what some of the non-gamblers get.
A little more than half the money bet on the lottery - 54 percent - was returned to gamblers last year. Some 34.5 percent of the total amount gambled went into the state General Fund as profit. The remaining nearly 12 percent - more than $103 million - was spent on salaries, agents' commissions, operations, promotions and other expenses.
Some of the biggest recipients of lottery money are retail outlets.
Southland Corp., which owns 7-Eleven stores, picked up an estimated $10 million in commissions on Virginia Lottery tickets during the latest fiscal year, according to figures provided to the Newport News Daily Press by lottery spokeswoman Paula Otto. 7-Eleven is the state's biggest seller of lottery tickets.
Farm Fresh Inc., a Norfolk-based grocery chain, brought in more than $9 million in lottery commissions during the same year, the lottery figures show.
In addition to the commissions, the lottery gives a $5,000 sweetener each time a ticket agent sells a winning Lotto ticket. So far this year, Southland has picked up an extra $30,000.
Conway Downing Jr., once a law partner of Rep. Robert C. Scott, D-Newport News, is president and co-owner, with family members, of a company that has a $3.8 million contract to maintain and repair the state's lottery dispensing machines.
The company, Gova Inc., has never bid on the contract but instead negotiated with the lottery in 1991 for a three-year deal that has been extended to March 1997, Downing said.
Earle Palmer Brown, a Bethesda, Md., ad agency, got $1.8 million in fees from the lottery last year. At the same time, the agency spent another $17.5 million or so of lottery money around Virginia in TV, radio and billboard advertising.
Much of the money also goes to the lottery payroll, which last fiscal year totaled more than $11 million. Lottery director Penelope Kyle gets almost $97,000 a year in salary. That's about what a $2 million lottery winner gets per year.
Jim Nulph, director of sales and marketing, earns $93,000 a year. Otto is paid $63,000 as public relations spokeswoman.
The average salary for nearly 300 employees at the lottery is more than $32,000 a year.
The lottery also funnels business to Wall Street investment firms every time somebody hits a Lotto jackpot. by CNB