State lottery's new pitch: Buy a ticket, send a kid to college

Would you be more likely to spend a buck on a lottery ticket if you knew some of the money would go to college scholarships?

State lottery directors are betting you will. Over the summer, 21 cents of every lottery dollar began going into a new state fund for student aid for college. Starting Monday, a new TV ad campaign will draw a clear connection between playing the lottery and providing college scholarships.

At a time when education dollars are shrinking, state leaders hope lottery players will be so moved by the social good they can do when they buy a ticket that they'll spend generously — raising extra money for academic and need-based scholarships.

Washington is hoping to emulate the success of the popular Georgia state lottery, where "they market the lottery for an altruistic purpose: They help somebody go to college," said state Sen. Jim Kastama, D-Puyallup, who sponsored the bill that ties the lottery to financial aid.

Still, not everyone thinks that funding higher education with gambling is a winner.

"Do you really think people will play the lottery because they want to help higher education?" asked state Sen. Margarita Prentice, who has served as a nonvoting member of the state Gambling Commission for 16 years.

Prentice, D-Renton, thinks the state is being unrealistic about how much money it can earn from lottery sales. During the economic downturn, revenue from gaming has been on the decline; everything from cardrooms to casinos has seen a drop-off, and lottery sales dropped 6 percent from 2008 to 2009, although sales are still up slightly from 2006.

"You cannot gamble your way out of a recession," she said.

In tying financial aid to lottery tickets, state officials are simply swapping one source of funding for another, a switch that bill opponent Rep. Gary Alexander, R-Olympia, likens to a shell game.

Before this year, lottery revenues were used to help make up the K-12 construction fund for school buildings; now, that money will come out of the general fund.

Most financial-aid money used to come out of the general fund. Now a portion of it — about 30 percent — will come from the lottery. Most of the rest of the financial-aid money will come from the general fund.

Under the new plan, if there's an uptick in lottery tickets, it could mean more money for financial aid — but there's no guarantee that will happen.

Alexander said he voted against the bill because he thinks the Legislature is breaking the promise it made to voters that the lottery would fund K-12 education.

Feel-good TV campaign

Starting Monday, TV viewers will begin seeing a series of feel-good lottery ads. In one ad, the camera cuts from one happy scene to another as students react joyfully to an admission letter they've just received in the mail

A voice-over says: "Starting now, every ticket you buy helps fund scholarship programs in Washington."

Lottery officials hope the television ads will "strike an emotional chord that inspires people to play the lottery with that extra dollar in their pocket and pay it forward," according to a presentation lottery officials made to the state Higher Education Coordinating Board in mid-September.

Kastama acknowledges that encouraging people to gamble in the name of higher education causes him some moral angst: "That is a concern — that is always a concern."

But, he said, "I don't think our current marketing campaign is all that healthy either." The current message suggests that you "buy a lottery ticket so you don't have to do anything for the rest of your life" if you win, he said.

Kastama thinks the new campaign will rake in more money because, compared to other state lotteries, Washington's 28-year-old game is not that popular — so there might be room for growth.

According to The Tax Foundation, a nonpartisan tax-research group based in Washington, D.C., this state ranks 37th, out of 42 states that have a lottery, in terms of per-capita lottery sales.

Residents here spent about $80 per capita on lottery tickets in 2008. And according to state research, only about 8 percent of Washington residents bought a lottery ticket last year.

"People in the state of Washington are independent-minded," said state lottery director Bill Hanson. There's other gaming in Washington, such as tribal casinos. "It's a different situation."

In Georgia, where the lottery is marketed as a way to support higher ed, residents spent about $366 per capita in 2008. The state's rank in per-capita sales is eighth. (The lottery is the only legal form of gambling in Georgia, aside from bingo games.)

How the finances work

For years, proceeds from Washington's lottery went primarily to the state's K-12 building fund, although a small portion went, and will continue to go, to paying off sports stadiums.

Even if all lottery proceeds went to K-12 education, that would amount to only about 2 percent of the money the state currently spends on K-12 funding, according to "A Citizen's Guide to K-12 Finance," published last year by the state Senate.

Under the new plan, K-12 building funds will now come out of the state's general fund.

Most of the lottery's proceeds — about $73 million this year — will go to the Washington Opportunity Pathways Account, which funds state grants and work-study awards for low-income students, as well as academic and vocational scholarships. The lottery will fund about 30 percent of these programs in 2010. Another $40 million will go to support early-childhood education.

Devoting lottery revenues to a program that's relatively small is "in some sense, a little more honest," said Charles Clotfelter, a professor of economics at Duke University who has studied and written about state lotteries. Tying the money to a limited program makes a clearer connection to what the money is intended for, he said.

Typically, lottery proceeds go into a state's general fund, where it's hard to track the benefit, Clotfelter said.

There's another advantage to switching the beneficiary: Many education leaders feared that if lottery funds were explicitly marketed as tied to K-12 construction funds, voters might turn down bond issues for new-school construction, thinking schools were already getting enough through lottery funding, Kastama said.

So the lottery was never marketed as having a societal benefit.

Many economic studies have shown that a disproportionate number of people who play the lottery have lower education and income levels.

"Some people are worse off" because states offer a lottery, Clotfelter said. "The state has to come to grips with that."

Still, across the country, "we've all kind of gotten complacent with the government being involved in the gambling business," he said. "Nobody's saying, 'Let's repeal the lottery.' "

Kastama believes the state is failing to adequately fund higher education. Although tying the lottery to financial aid to improve sales is a gamble, it's worth the chance.

"Somebody's got to be thinking out of the box here," he said.

Seattle Times researcher David Turim contributed to this story.

Katherine Long: 206-464-2219 or klong@seattletimes.com