Lawmakers studying whether it’s time for the state to cash out on the Texas Lottery reported Monday that they oppose ending the game because that would devastate funding for public education and could spark higher taxes for nearly all Texans.
At the same time, a legislative committee studying the issue said lottery officials should study where the tickets are being sold as well as how advertising dollars are being used — and that the state should stop promoting the games in print media.
“The committee recommends the Legislature continue the Texas Lottery and the Texas Lottery Commission,” according to a report released Monday night. “It is the committee’s opinion that the loss of state funding for education and other valuable programs, as well as the loss to Texas businesses, would be highly detrimental to the state.”
This comes as lottery sales ended the year at a record-breaking pace in Texas, generating $4.38 billion in sales — $1.2 billion of which went to public education and veterans programs.
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House Speaker Joe Straus and Lt. Gov. David Dewhurst appointed a legislative committee earlier this year to study the impact of eliminating the lottery and reviewing charitable bingo and the distribution of money generated by bingo.
State Sen. Kelly Hancock, R-North Richland Hills, was among those serving on the committee.
Two members of the committee — state Reps. Giovanni Capriglione, R-Southlake, and Rick Miller, R-Sugar Land — submitted a separate letter recommending that the Legislature explore options for a “10-year licensing agreement with a private company that would allow continued state regulation.”
And because they “do not believe the committee’s report provided an adequately detailed process for phasing out of the Texas Lottery,” they encouraged continued study of the issue.
The lottery, which began in Texas in 1992, has generated $22 billion for the state and paid out $44 billion in prizes to players, state records show.
Overall, it has contributed more than $17 billion to the school fund, including more than $1 billion a year for the past decade, commission records say.
Before 1997, lottery proceeds went to the state’s general fund. Since then, they have gone to the Foundation School Fund, which is administered by the Texas Education Agency, according to the Lottery Commission.
Critics say the game financially hurts some of the most vulnerable Texans and doesn’t do enough to help the state. Supporters disagree, and they wonder where the state would find $1 billion a year to replace the lost revenue.
But if the state eliminates the lottery, officials, according to the report, would have to accept:
“A reduction in public education funding of approximately $1 billion annually and significant reductions in the funding of other critical programs;
“A reduction in spending in other areas of the budget to offset the loss of lottery funds;
“The need for higher taxes to replace the more than $1 billion in annual public education funding and other funding that would be lost; and/or
“The need for approval by two-thirds of the Legislature to use funds from the Economic Stabilization Fund (the ‘Rainy Day Fund’) to replace the public education funds and other funds that would be lost from elimination of the lottery.”
Regarding bingo, the legislative committee recommends studying whether some bingo payouts are “excessive,” whether the state should benefit from a “bingo prize fee” and whether bingo operations should be under the Texas Lottery Commission, in case there is a conflict of interest with that commission overseeing the charitable game.
The report also suggests the Legislature encourage local law enforcers to crack down more on illegal eight-liner “gambling operations” that could strip business away from charitable bingo in Texas.