Lottery Reform

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2018 Legislative Update

For the fourth year in a row, legislation was introduced to repeal the law requiring the lottery to deliver at least 30% of revenues to the lottery scholarship fund. 

Think New Mexico won passage of the 30% guarantee in 2007, and the reform has resulted in an additional $9 million a year going to students. However, since most of those dollars came from reductions in the lottery’s contracts with outside vendors (multinational gaming corporations Intralot, Scientific Games, and International Gaming Technologies), those special interests have hired a team of paid lobbyists to push to roll back this reform.

House Bill 147 was introduced to repeal the 30% guarantee and replace it with a requirement that the lottery deliver just $38 million a year to students. As the Associated Students of UNM pointed out in this news interview, the 30% law has resulted in scholarships receiving an average of $42 million a year over the past five years.

Think New Mexico joined the students in opposing the bill as it was originally introduced.

However, anticipating that the bill would make it to a vote of the full House, Think New Mexico drafted three amendments to protect the interests of students. Thanks to leadership from legislators across the political spectrum, all three amendments were successfully added to the bill. The Santa Fe New Mexican’s Steve Terrell wrote an excellent overview of what happened.

First, Representative Jason Harper (R-Rio Rancho) passed an amendment that caps the lottery’s annual operating costs at 15%. This is the average amount the lottery has spent on operating costs, including its contracts with multinational gaming corporations, for the past decade. However, before the lottery was required to deliver at least 30% to scholarships, it spent upwards of 20% on its operating costs. This amendment made sure that wouldn’t happen again.

Then, Representative Matt McQueen (D-Santa Fe) passed an amendment to increase the annual guarantee for students from $38 million to $40 million a year. The scholarship fund has received at least $40 million a year in nine of the last ten years.

Finally, Representative Alonzo Baldonado (R-Los Lunas) passed an amendment requiring that any unclaimed prizes must go to the scholarship fund in addition to the $40 million floor. Unclaimed prizes average $1-3 million a year.

Thanks to these amendments, the revised House bill 147 would have made sure that students received at least $40 million a year, plus $1-3 million in unclaimed prizes, and if the lottery ever failed to deliver that amount, the 30% guarantee would automatically return. In addition, lottery operating costs would have been capped at the current level so that any growth in the lottery would go to students, not gaming companies.

We encouraged the Senate to pass the bill in its amended form, but unfortunately the lottery and the gaming corporations opposed the amendments that would have kept them fiscally accountable, and as a result the bill died quietly without ever receiving a hearing in the Senate Finance Committee.

The final outcome is that the status quo remains in place: students are still guaranteed to receive at least 30% of lottery revenues, as they have for the past decade. The scholarship fund has received more money every year since the 30% guarantee was enacted than it did in any year before.

Our bottom line has consistently been that any changes to the lottery must put the interests of students first. Think New Mexico will continue working to ensure that the lottery fulfills its statutory purpose of maximizing dollars for scholarships.

2015-2017 Developments

Lottery ReformBefore Think New Mexico’s 2007 law established the guarantee that the lottery must deliver at least 30% of revenues to scholarships, only about 23% of lottery revenues were reaching students (with the rest going to prizes and overhead costs like contracts with outside vendors). In the years since our reform law was enacted, the 30% guarantee has resulted in lottery scholarship students receiving an additional $9 million a year over and above what they would have received without the law.

In July 2014, the CEO of the New Mexico Lottery announced that he would bring legislation to repeal the 30% guarantee. That legislation was introduced as Senate Bill 355 in 2015, and Think New Mexico worked hard to defeat it. We succeeded thanks to the support of the student governments at the University of New Mexico, New Mexico Tech, Highlands University, Santa Fe Community College, and San Juan College, among others. Read more about this issue in our opinion editorial from March 2015.

Unfortunately, in 2016 Senate Bill 180 was introduced to repeal the 30% guarantee. SB 180 proposed replacing the 30% guarantee with a requirement that the lottery deliver at least $41 million to the scholarship fund. Thankfully, Think New Mexico again collaborated with other stakeholders to defeat Senate Bill 180 – and thanks to the 30% requirement, students received $46 million in 2016, $5 million more than they would have if that bill had passed.

In 2017, Senate Bill 192 was introduced to repeal the 30% guarantee and replace it with a requirement that the lottery deliver at least $38 million a year to students. Throughout the 2017 session, Think New Mexico opposed Senate Bill 192 and also worked to pass House Bill 250, which would have increased the accountability of the state lottery and sent more lottery dollars to scholarships.

House Bill 250, sponsored by Representative Jason Harper (R-Rio Rancho) and Representative Javier Martínez (D-Albuquerque), would have sent unclaimed prize dollars (which average $2-3 million a year) to the scholarship fund rather than putting them back in the prize pool. It would also have aligned the interests of the lottery’s managers with the interests of students by requiring that any bonuses paid to the lottery CEO and outside vendors be calculated based on increases in dollars to scholarships (instead of the unrelated factors currently used to calculate bonuses). Finally, the bill would have prohibited the lottery from expanding into video lottery gaming, “play at the pump” ticket sales at gas pumps, or ticket sales at ATMs.

House Bill 250 passed two House committees unanimously, passed the House with only a single dissenting vote, and passed the Senate Judiciary Committee unanimously. Unfortunately, it was never brought up for a hearing in the Senate Finance Committee.

Meanwhile, Think New Mexico fought Senate Bill 192 at every step of its journey through the legislative process, and the final showdown came late on the last night of the session when the bill was brought up for a vote of the full House. Legislators from both parties spoke out against jeopardizing the lottery scholarship fund, and Representative Harper successfully amended all the provisions of House Bill 250 into Senate Bill 192, which meant that the bill had to go back to the Senate for senators to approve the amended bill. The Senate did not bring Senate Bill 192 up for consideration before the session concluded, so the bill was defeated and the scholarship fund will continue to receive the full 30% of lottery revenues.

Issue Summary

lotterybillsign

Governor Richardson signs the lottery reform bill into law.

The New Mexico Lottery was created to “provide the maximum amount of revenues” for full-tuition scholarships at public colleges and universities in New Mexico, according to state law. These “Lottery Success Scholarships” have sent over 38,000 of New Mexico’s best students to college.

Unfortunately, in 2006 the Higher Education Department projected that the scholarship fund faced an $18 million deficit in 2011, when the cost of the scholarships would exceed lottery revenues and current cash reserves would be depleted.

Under that scenario, the eligibility requirements for the scholarship would have to be raised so that many deserving students would no longer qualify for Success Scholarships, or the value of the scholarship would have to be cut for all students, increasing the financial burden on already stretched New Mexico families.

In September 2006, Think New Mexico proposed a different strategy for making Lottery Success Scholarships sustainable: cut the disproportionately high operating and administrative costs at the New Mexico Lottery and re-allocate those savings to scholarships. The New Mexico lottery’s operating and administrative costs were the fifth highest in the nation in 2005, and were very high even when compared to other states that have relatively low populations, rural populations, and low ticket sales.

Think New Mexico released a policy report describing its “30% solution” for making the scholarships sustainable: require that the lottery deliver 30% of every dollar to the scholarship fund, just as state law already required 50% be returned to players as prizes. At the time, only 24 cents of every dollar bet on the lottery went to scholarships, while nearly 20 cents were used for operating and administrative costs.

The proportion of revenues going to scholarships could be increased by such strategies as re-negotiating the state’s overly expensive, sole source online gaming contract with multinational corporation GTech.

Eleven other states had already successfully implemented this strategy, and several other small lotteries delivered over 30% to their beneficiaries in 2005, including North Dakota (33.5%), Washington D.C. (30.4%), New Hampshire (30.2%), and West Virginia (30%).

In 2007, Think New Mexico’s lottery reform legislation was passed by the legislature and signed into law by Governor Richardson.

News Coverage

newspapericon-smallRead Santa Fe New Mexican article about the winners and losers of the 2018 legislative session • February 16, 2018

newspapericon-smallRead an opinion editorial by Associate Director Kristina G. Fisher about the 2018 lottery legislation • February 15, 2018

newspapericon-smallRead Santa Fe New Mexican article about transformation of House Bill 147 from a bill that benefited special interests into one that put students first • February 11, 2018

newspapericon-smallRead Santa Fe New Mexican article about the lottery’s struggle to pass its 2018 bill repealing guarantee of 30% of lottery revenues to the scholarship fund • February 8, 2018

newspapericon-smallRead Santa Fe New Mexican columnist Milan Simonich’s article about the lottery’s deceptive 2018 bill to repeal the law guaranteeing 30% of lottery revenues to the scholarship fund • February 5, 2018

newspapericon-smallRead Albuquerque Journal article about the lottery’s deceptive 2018 bill to repeal the law guaranteeing 30% of lottery revenues to the scholarship fund • February 1, 2018

tvicon-smallWatch KRQE News 13 story about the Associated Students of UNM opposing HB 147, which would repeal the requirement that 30% of lottery revenues be dedicated to scholarships • January 22, 2018 (2:17)

tvicon-smallWatch KOB News 4 story about the Associated Students of UNM opposing a bill that would repeal the requirement that 30% of lottery revenues be dedicated to scholarships • January 22, 2018 (2:09)

tvicon-smallWatch KOAT News 7 story about the Associated Students of UNM opposing legislation that would repeal the requirement that 30% of lottery revenues be dedicated to scholarships • January 22, 2018 (1:45)

newspapericon-smallRead Albuquerque Journal editorial about the need for more fiscal accountability by the New Mexico Lottery • May 26, 2017

newspapericon-smallRead Santa Fe New Mexican columnist Milan Simonich’s article about the special interests pushing legislation to repeal the law requiring the lottery to deliver at least 30% of revenues to students • February 27, 2017

newspapericon-smallRead Albuquerque Journal editorial endorsing Think New Mexico’s 2017 proposal to increase the accountability of the lottery and send more dollars to scholarships to reduce the percentage of lottery dollars dedicated to scholarships • February 12, 2017

newspapericon-smallRead Think New Mexico’s opinion editorial opposing the Lottery’s proposal to cut the requirement that 30% of revenues go to scholarships, which has been published in the Albuquerque Journal, the Alamogordo Daily News, the Carlsbad Current-Argus, the Edgewood Indpendent, the Farmington Daily Times, the Grant County Beat, the Hidalgo County Herald, the Hobbs News-Sun, the Las Cruces Sun-News, the Las Vegas Optic, the Los Alamos Daily Post, the Rio Grande Sun, the Rio Rancho Observer, the Roswell Daily Record, the Ruidoso News, the Santa Fe New Mexican, the Silver City Daily Press, the Silver City Sun-News, the Taos News, the Truth or Consequences Herald, and the Union County LeaderJanuary-March 2015

radioicon-smallListen to an interview with Fred Nathan on Richard Eeds Show on KVSF Santa Fe about Think New Mexico’s work to protect lottery scholarships • February 11, 2016 (mp3, 24:38)

tvicon-smallWatch KRQE News 13 story about the New Mexico Lottery’s attempt to repeal the requirement that 30% of revenues be dedicated to scholarships • February 4, 2015 (2:20)

newspapericon-smallRead Daily Lobo articles about student opposition to the lottery’s proposal to reduce the percentage of lottery revenue dedicated to scholarships • November 24, 2014, February 26, 2015, and March 6, 2015

newspapericon-smallRead Las Vegas Optic editorial opposing the effort to reduce the percentage of lottery dollars dedicated to scholarships • July 14, 2014

newspapericon-smallRead Rio Grande Sun editorial opposing the proposal to reduce the percentage of lottery dollars dedicated to scholarships • July 16, 2014

newspapericon-smallRead Albuquerque Journal article about the lottery delivering a record high percentage of revenues to the scholarship fund in 2010 • August 14, 2010

newspapericon-smallRead Associated Press article on the initial results of the lottery reform Legislation • June 13, 2008

newspapericon-smallRead Santa Fe New Mexican article on how the New Mexico Lottery saved $35 million by rebidding its sole-source contract with Gtech • July 27, 2007

newspapericon-smallRead front page Albuquerque Journal article on passage of the lottery reform bill • March 12, 2007

newspapericon-smallRead Think New Mexico’s opinion editorial on lottery reform • March 2007

newspapericon-smallRead Santa Fe New Mexican editorial in support of lottery reform legislation • January 25, 2007

radioicon-smallListen to KSFR Santa Fe Public Radio report on lottery reform • January 16, 2007 (mp3, 5:30)

newspapericon-smallRead New Mexico Business Weekly article on Think New Mexico’s lottery reform initiative • November 3, 2006

newspapericon-smallRead syndicated columnist Jay Miller’s columns on Think New Mexico’s lottery initiative • November 23, 2006October 8, 2006
and his follow-up column on the impressive initial results of the reform September 28, 2007

newspapericon-smallRead Albuquerque Journal editorials endorsing lottery reform • October 30, 2006September 5, 2006

newspapericon-smallRead Las Vegas Daily Optic editorial endorsing lottery reform • September 26, 2006

newspapericon-smallRead Deming Headlight editorial in support of lottery reform • September 13, 2006

newspapericon-smallRead Santa Fe New Mexican editorial endorsing lottery reform • September 10, 2006

newspapericon-smallRead Hobbs News-Sun editorial in support of lottery reform • September 9, 2006

newspapericon-smallRead Las Cruces Sun-News editorial in support of lottery reform • September 7, 2006

Saga of the Lottery Lobbyist

Just before the 2007 legislative session, the Albuquerque Journal learned that the New Mexico Lottery had hired a lobbyist for $32,000, most likely to fight reform efforts. The paper published a front-page story and editorial on the subject, and Governor Richardson ordered the lottery to cancel the lobbyist’s contract.

 

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