No change for Oregon video lottery retailer payouts

By BRAD CAIN
Associated Press
Saturday, October 31, 2009 9:02 PM PDT

SALEM — The Oregon Lottery Commission voted unanimously Friday to maintain compensation rates for video lottery retailers despite claims by education advocates that the bars and taverns are being overpaid for hosting the games.

The commissioners followed a recommendation by Lottery Director Dale Penn, who said reducing payouts to retailers — as school advocates had urged — would eventually have the unintended consequence of reducing revenues.

That in turn could cut the amount of lottery money available for the schools, Penn said.

Appearing before the commission, Penn said cutting retailer compensation was a ‘‘risky strategy’’ that could hurt the overall health of the Lottery and possibly put some retailers out of business.

‘‘They are under heavy stress,’’ Penn said of the 2,300 bars and taverns that host the video gambling machines. ‘‘Many of them are hanging on by their fingertips.’’

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The lottery commission vote Friday leaves new five-year contracts for retailers unchanged. Bars and taverns now get an average of about 24 cents for every dollar lost by gamblers at video lottery machines.

Retailers used to get 35 percent, but the lottery has steadily cut the rate.

School advocates said the bars and taverns are being generously compensated at the expense of schools and other state programs that receive lottery dollars.

The retailer rate could be gradually reduced to 16 percent and still allow lottery outlets a reasonable profit, said Holly Pruett, head of the group Stand for Children.

Pruett said she was disappointed by the commission’s move to endorse Penn’s proposal. She indicated that the political fight over retailer compensation would continue.

‘‘I think a lot of people are still wondering why bars and tavern owners are enjoying this kind of subsidy’’ from the Lottery, Pruett said.

Penn said video lottery retailers have been hit by the twin blows of a new state smoking ban that took effect Jan. 1 and the state’s deep recession that has resulted in a drop in lottery play.

As a result, he said, average annual commissions kept by video lottery retailers fell to $71,220 in the fiscal year that ended in June, down from $82,676 the previous year.