Operating costs could be challenge for Oklahoma's lottery

OKLAHOMA CITY (AP) -- The way Oklahoma's lottery laws are structured will make it a challenge to fund operating expenses while still devoting enough money to be paid out in prizes, the president and

Monday, April 4th 2005, 9:25 am

By: News On 6

OKLAHOMA CITY (AP) -- The way Oklahoma's lottery laws are structured will make it a challenge to fund operating expenses while still devoting enough money to be paid out in prizes, the president and chief executive officer of Tennessee's lottery says.

"It's not insurmountable," Rebecca Graham Paul said. "You need to look at innovative ways to cut costs."

Oklahoma's lottery law states at least 30 percent of lottery proceeds are to go to education the first two years, increasing to 35 percent after that. At least 45 percent is to be paid out in prizes.

That leaves 25 percent the first two years and 20 percent after that for operating costs, which is reasonable, Paul said.

The problem is the 45 percent payout allocation for prizes is too low, she said.

Most states, she said, are allocating between 50 and 60 percent of gross lottery revenues for prize money.

If Oklahoma increased its share of prize money to 55 percent, that would reduce the amount after 2007 for operating costs to 10 percent, or about half the amount spent by other states.

James Orbison of Tulsa, chairman of the Oklahoma Lottery Commission, said raising the payout "will put a huge pressure on costs."

Orbison said it's likely Oklahoma will have to allocate as much as 60 percent of its gross revenues to prizes.

"Just looking around at other lotteries, you just almost have to have that kind of percentage across the board," Orbison said. "The public is amazingly savvy about which products have the best odds, and if they think they can go across the border to Texas and get a better deal, they will, I'm sure."

Since their appointment in February, commission members have been reading operating procedures, putting together a job description and advertising for an executive director.