Dunleavy's suggestion for a lottery shows he's not serious about a fiscal plan

A state lottery could raise $8 million to $15 million a year, according to a 2015 report compiled during the Walker administration.

A lottery is not the solution to the state’s financial situation. But since Gov. Mike Dunleavy chose to highlight that as the only revenue source in his State of the State speech, it’s another sign that he is not serious about a fiscal plan.

What he’s serious about is holding off the recall by stalling for as long as possible.

If the state pays the dividend Dunleavy wants, the state has a deficit of close to $2 billion. Something has to give. And Dunleavy is refusing to do his job and help put the pieces together.

The reasonable thing to do is to preserve a dividend close to $1,000—give or take a few hundred—institute new taxes to spread the burden and hold down spending. The compromise would be unpopular in some quarters, but this is the work of government. Dunleavy isn’t doing it.

The message of the State of the State speech is that he has gone AWOL, acting as if he has no more control over state finances than the former temporary budget director has from Florida. He is neglecting his duty, which will only build support for the recall.

He is sticking with the idea that it is not his job to provide leadership on spending cuts, taxes or get an agreement on how the Permanent Fund Dividend fits into the overall situation. A legislative stalemate is likely with Gov. Disengaged acting like a hapless bystander.

Anyway, about the lottery idea he floated, here is an excerpt about lotteries from a Walker administration report:

Generally, a state-sponsored entity oversees the lottery (in 2004, 65% of lotteries were administered by a lottery commission or board, 15% were administered by a lottery corporation, and 20% were administered directly by a state agency), but lottery sales are made at private retail locations such as grocery stores, convenience stores and newsstands.

Major expenses for the lottery agency include prize payouts, retailer commissions, marketing, and other administrative and operational expenses. Even with these expenses, every lottery in the U.S. was profitable in the 2013 fiscal year. Lottery income in FY 2013 varied from $8.3 million in North Dakota to $3.1 billion in New York. On a per capita basis, income ranged from $11.5 per capita in Montana to $360.4 per person in Rhode Island.

Given the geographical distribution of Alaska’s population, and the relatively small population base, it could be argued that income would come in on the low end of the range in other states.

However, this may be offset by the lack of access to other gaming opportunities, such as casinos and card rooms. The most recent proposal for a state lottery in Alaska came in 2003, when Senator Robin Taylor, a Wrangell Republican, introduced SB178.

Sen. Taylor proposed to create a corporation within the Department of Revenue that would oversee a state lottery, with a board of directors that set policies and regulations.

Revenue would have been directed to a special account to support education in the state. This legislation could provide a starting point for future lottery proposals.

An Alaska lottery would probably offer games that fit into one or more of three categories:

• Instant ticket lotteries: Players would purchase preprinted scratch-off or pull-tab tickets, similar to those currently used in Alaska’s charitable gaming activities. Raffle-type drawing would also be classified under this category.

• Numbers lotteries: This is the type of game most commonly associated with state lotteries. Players pick from a set of numbers, and win if they match enough numbers to those picked in a subsequent official drawing. “Pick 3”, “Lotto”, “MegaMillions” and “PowerBall” are all examples. Often, these are pooled among multiple states, creating potentially much larger jackpots.

• Video lotteries: This type of lottery uses a “video lottery terminal” (VLT), similar to a slot machine, to play electronic games with instant payout. To estimate how much revenue an Alaska lottery could bring in, the Department of Revenue looked at statistics from the 10 lowest population states. We looked closely at Wyoming, the most recent entrant into the lottery market which expects to earn $13 to $17 million in its first year of operation. It opened August 2014 with Powerball and Mega Millions and is adding two Wyoming-specific games this year. Wyoming’s model may be a good model to emulate. Alaska could start off with Powerball and Mega Millions and then create its own unique Alaska lottery game.

Although the per capita income of the 10 least populated states ranged from $11.45 to over $360, using the lowest per capita income of North Dakota of $11.45 (which is only able to offer multistate draw games), Alaska could generate annual proceeds of around $8 million.

The addition of video lottery terminals could have a significant impact on the amount of income that could be generated for the State. On the other hand, an expansion of gaming through any sort of lottery, while beneficial to state revenue, would almost certainly have some negative impact on current gaming activities such as pull tabs and raffles. These current activities support numerous nonprofits in the state; any changes would likely be opposed by the entities that benefit from the current system.

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