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House lawmakers passed a $21.1 billion budget proposal that doubles lottery advertising in hopes to fund a 5 percent teacher pay raise

Gambling on the lottery to increase teacher pay 

House lawmakers need to call the gambling hotline. That's what Sen. Tom Apodaca, a key budget negotiator, said this week after the House passed its $21.1 billion budget proposal that includes shoring up teacher pay with lottery proceeds. "They've got a gambling problem," he said.

This week state House lawmakers passed a $21.1 billion budget proposal that doubles lottery advertising in order to increase ticket sales. The hope is the sales revenues will be enough to fund a 5 percent teacher pay raise. The budget that included the lottery scheme passed the House in a 77-35 vote. Only one Republican—Rep. Debra Conrad of Forsyth County—voted against the bill. Seven Democrats voted for it.

Democrat opponents of the bill call the scheme foolish, while their Republican counterparts call it financially risky. Support of a lottery is a marked departure for Republicans, many of whom opposed its creation in 2005.

Many Republicans reiterated their moral opposition to gambling, but indicated that they are warming to the idea of the lottery being a significant revenue source for the state.

Many states, including neighboring Virginia, South Carolina and Tennessee, rely on lottery revenues to supplement their education budgets. In North Carolina, the lottery paid out $220.6 million last year in salaries for nearly 4,000 teachers in grades K–3. Other money went to school construction, Pre–K, college financial aid and scholarships.

House lawmakers say a 2013 performance audit of the N.C. education lottery shows that lottery ticket sales will generate funds as predicted.

It needs to, because the House budget doesn't account for the possibility of lottery sales not materializing. And as The News & Observer reported this weekend, even the lottery commission isn't sure the proposal will generate the additional $106 million in projected revenues.

A few House and Senate Republicans have been some of the lottery provision's harsh critics.

Rep. Paul Stam, R-Wake, said he wasn't happy with the idea; nonetheless, he voted for it.

Rep. Conrad, who voted against the bill, called the budget piece "disturbing."

"I do feel uncomfortable rolling the dice and betting on money that may not materialize," Conrad said last week in the House Education Appropriations Committee.

Yet during two days of debate on the House floor last week, no one submitted an amendment to change how teacher raises would be funded.

In fact, the proposal is currently the only real alternative to the austere Senate budget—which strips teachers of their tenure and fires teaching assistants, slashes the Department of Public Instruction by 30 percent and kicks 15,000 people off Medicaid.

North Carolina's education lottery has always been controversial. Opposed by some Republicans and progressive Democrats for functioning as a tax on the poor, the lottery barely passed the General Assembly in 2005 after a tie-breaking vote from then-lieutenant governor Bev Perdue.

Ex-Gov. Mike Easley, a proponent, signed the lottery into law in and tickets went on sale the following March. North Carolina now has five big games and many scratch-off games (see sidebar). Powerball and Mega Millions pay out the largest lump sums and have the smallest odds of winning.

Three number-choosing games, Carolina Pick 3, Carolina Pick 4 and Carolina Cash 5 give better odds of winning smaller sums.

In 2009, lotteries in 11 states raised more money per person than corporate income tax, according to the Tax Foundation, a policy research group.

In North Carolina, the lottery generated $1.69 billion in operating revenues in the last fiscal year. Of that, $17.5 million went to salaries, wages and benefits; $1 billion to lottery prizes, $118 million to retailer commissions and $15 million to advertising (Read the entire 2013 annual report)

The House's chief budget writer, Rep. Nelson Dollar, R-Wake, said he is "very confident" that lottery ticket sales will bring in the funds as predicted. He called the budget sound and balanced.

"There are a lot of positive things in the budget," said Rep. Ken Goodman, a Rockingham Democrat. "There's more good than bad and this was a budget worth voting for. I was sent to Raleigh to work together to get things done and the public is disillusioned with all of us, so that had a lot to do with my decision to vote for it."

House Speaker Thom Tillis, R-Mecklenburg, said if lottery sales projections do fall short, teacher pay raises would be covered by moving money around, setting funds aside or using "other sources."

"The House created a responsible budget to reach a broad scope of North Carolinians and as a result has bipartisan support," the Speaker said in a statement after the House vote on Friday.

Tillis conceded that House Republicans weren't necessarily happy with the proposal, but the amount of extra money the lottery could potentially generate—22 percent more than the total lottery revenues, which were used for education in the last fiscal year—is hard to ignore.

"My guess is, if Republicans had been in the majority at the time the lottery was put before the people, it would never have made it to the floor," Tillis said. "But it is here, and you can't necessarily un-ring that bell when you're talking about hundreds of millions of dollars going to education."

Rep. Grier Martin, D-Wake, voted against the lottery in 2005. He chastised House lawmakers for the budget move.

"I didn't expect the folks that would get addicted to gambling would be in the General Assembly," Martin said. "We liked the first hit so much we decided to double down on it ... and then use that to pay for teachers' salaries."

Donald Ylvisaker, a statistician and professor at the University of California Los Angeles, has worked for the Colorado and California lotteries for nearly 30 years.

Though he plainly states the odds of winning are astronomically small, he sees the plan as a solid strategy to raise funds.

"They are going to try and optimize the advertising they do and put the money in the right areas of the state," Ylvisaker says.

"Generally speaking, poor people enjoy playing the lottery, because of that old saying, it's easier to win a million than earn a million," Ylvisaker says. "It's not so likely, but it still remains true. Even rich people can be drawn in if there is a big pot of gold waiting at the end. If the jackpot is high, then all kinds of people jump in."

According to the lottery's 2013 report, there were 5,754 callers to the N.C. Problem Gambling helpline. Of those, just 12 percent—721 people—received services. Three-quarters of the callers said they had a gambling problem; the remainder were family members or friends of a problem gambler. More than a third of callers identified the lottery as the primarily gambling activity, while 44 percent listed video sweepstakes as their habit.

New advertising restrictions could decrease lottery sales. In a concession to appease religious conservatives like Stam, the bill contained restrictions banning lottery advertising at college sports events and required billboards to make the slim odds of winning explicitly obvious.

Then there is the possibility that the lottery proposal could die sometime in the next two weeks in negotiations with the Senate.

"We're not just gambling, but we're gambling on gambling," said Rep. Yvonne Holley, D-Wake.


Your odds

Instant scratch-offs: 1 in 3 to 1 in 5: Odds of winning something or breaking even

Odds of being poor in the U.S.: 1 in 6

Odds of a woman having identical twins (naturally conceived): 1 in 250

Carolina Pick 3
1 in 1,000: odds of winning a $250 jackpot
1 in 1,000: odds of winning a $500 jackpot

Carolina Pick 4
1 in 416.7 to 1 in 10,000: odds of winning a $2,500 jackpot
1 in 416.7 to 1 in 10,000: odds of winning a $5,000 jackpot

Dying from drowning, lifetime Odds: 1 in 1,134

Turning a successful triple play in a baseball game: 1 in 1,400

Odds of a woman having identical triplets (naturally conceived): 1 in 8,000

Odds of being struck by lightning (lifetime): 1 in 10,000

Odds of a man bowling a perfect game (amateur): 1 in 11,500

Odds of hitting a hole in one (amateur): 1 in 12,500

Odds of contracting West Nile: 1 in 66,592

Carolina Cash 5
1 in 84,000: Odds of winning $500 in Carolina Cash 5 EZ Match
1 in 575,757: Odds of winning 54.71 percent of the prize pool.

Getting hit by a meteorite (lifetime): 1 in 700,000

Dying while running or jogging: 1 in 1 million

Dying from a lightning strike (lifetime): 1 in 3 million

North Carolina Powerball: 1 in 175 million: Odds of winning the jackpot.

North Carolina Mega Millions: 1 in 259 million: Odds of winning the jackpot.

Sources: N.C. Education Lottery, National Safety Council, Center for Disease Control and Prevention, The New York Times, NBC, ABC, TIME

This article appeared in print with the headline "Fat chance."

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