Yes, the headline is stating the obvious about the Ohio Lottery, but recent developments in Columbus have spotlighted just how big it has become.
Indeed, a glance at a state report on the Ohio Lottery Commission’s activities provides this insight:
“Traditional lottery ticket sales have experienced solid growth in the last 15 years. The rise in receipts was due to the introduction of new games, including multi-state games, and additional drawings for additional games. Sales reached a record $3.06 billion in FY [Fiscal Year] 2016, primarily from record jackpots for Mega Millions and Powerball games.
“Ticket sales for ‘mature’ lotteries such as the Ohio Lottery are usually flat or decline, unless new games are introduced, changes to existing games are made, or increases in the number of drawings boost sales. Although incomes continue to grow, attitudes toward gaming remain generally favorable, and total gaming expenditures increase, the increased competition in the gaming market limits the upside potential of Lottery ticket sales.”
The state’s fiscal year is from July 1 to June 30.
According to the state report, from July through December of last year, traditional ticket sales of $1.47 billion were $5.1 million (0.3 percent) above sales over the same period in 2015.
For the entire FY 2017, the Lottery Commission believes traditional ticket sales may again exceed $3 billion.
Why is this information pertinent today? Because the Ohio Lottery Commission wants to extend its contract with Intralot, the Greek company that operates the state’s gaming systems.
Intralot began operating in Ohio in 2009, and since that time has earned $259 million for providing the lottery terminals and electronic slot machines at racinos (horse-racing tracks with slot-machine casinos).
Last week, the lottery commission, made up of nine members appointed by the governor and confirmed by the Ohio Senate, went before the state Controlling Board with a request to continue the contract with Intralot for two years. The commission also sought approval to exercise renewal options for the contract through mid-2027.
And here’s the kicker: The Ohio Lottery Commission had not solicited competitive bids in seeking to extend the contract with the Greek company. The new two-year agreement would have meant another $71 million for Intralot over the next two years.
That information went over like a lead balloon during Monday’s meeting in Columbus of the state Controlling Board.
According to the Columbus Dispatch, which first reported on the no-bid contract, board members had concerns about the request.
The Dispatch quoted Sen. Jay Hottinger, R-Newark, as saying, “There has been a long time since there’s been a competitive bid.”
A request for proposals was last issued in 2007.
The newspaper noted that Lottery Commission officials said Intralot would provide nearly $70 million in savings, equipment and upgrades in exchange for the six-year contract extension.
However, a majority of the Controlling Board members were not swayed.
“But, candidly, I’m not certain we know how good the deal is,” said Sen. Hottinger. “It’s a large contract. It’s incumbent upon us to get out there every once in a while to see what the competition has.”
Yes, it is a large contract, and it is the responsibility of government to ensure that the taxpayers are getting the most value for their dollars.
And it needs to be said: In today’s “Buy American, Hire American” government climate espoused by President Donald J. Trump, the state of Ohio has a duty to find out if there are U.S.-based companies that can match or better the deal offered by Intralot.
The state will approve an extension for a limited time with the current provider of gambling services so the lottery commission can solicit bids.
The Dispatch made note of Sen. Bill Coley’s comment that the extension with Intralot does not necessarily mean a long-term arrangement.
Coley, R-West Chester, said if a competitor finds a better, more efficient way to run Ohio’s lottery operations, “the taxpayers of the state would receive the benefit.”
In addition, seeking an extension of the contract with the Greek company without a competitive bid, the Ohio Lottery Commission had also requested Controlling Board approval to enter into another no-bid agreement. This one would have resulted in Intralot being paid $12 million to purchase and operate up to 750 “Quick Keno” self-service lottery terminals at retailers.
Keno is one of the fastest growing online and instant ticket games operated by the Ohio Lottery. The other games are Pick 3, Pick 4, Pick 5, Rolling Cash 5, Classic Lotto, Raffle, Kicker, EZ Play, EZ Play Tap, EZ Play QuicKeno, Lucky for Life, Powerball and Mega Millions.
According to the state report, the games generated $1.5 billion in fiscal year 2016, 49 percent of total sales revenue. The Lottery also sells a variety of Instant games through thousand of retailers, including special games that coincide with major holidays.
Instant-game receipts were approximately $1.56 billion (51 percent) of total sales revenue in fiscal 2016.
In fiscal 2012, the Ohio Lottery began regulating VLTs (video lottery terminals) at Ohio racinos. The program generated $291.1 million in revenue in fiscal 2016.
With so much at stake, the Controlling Board did the only thing a responsible government entity could do: require competitive bidding for the new contract for gambling services.
The larger the profit from the state lottery, the higher the amount funneled to primary, secondary, vocational and special education. Some of the profits also go to the Ohio Department of Mental Health and Addiction Services for the administration of problem gambling treatment programs.
Here’s a final stat to show the importance of the Ohio Lottery in the state’s overall economy: $2.1 billion is expected to be directed to the Lottery Profits Education Fund in the next biennium.