Lottery, not taxes, offered as county fix

By Jane Stebbins, Pilot staff writer July 02, 2013 09:27 pm

JR Wilson is betting an online lottery could bring Curry County out of its economic doldrums.

But County Commissioner David Brock Smith bets it will never fly, primarily because such gambling ventures are prohibited by the state constitution.

The Harbor man has copyrighted the Curry County Lottery, which hopes to entice people to buy lottery tickets to make money for the county as an alternative to taxes.

Wilson’s lottery proposal is in response to Curry County commissioner’s proposal asking voters this fall to approve a 3-percent sales tax. That ballot question, which has been temporarily nixed, was offered up after voters May 21 rejected a property tax increase to pay for public safety in the county.

The lottery idea has been more than a year in the making, and the signs are already freckling the landscape in southern Curry County: “Lottery – Not new taxes!”

Wilson and other supporters hope to soon start gathering signatures to put it on a the ballot, possibly as early as November.

Online lotteries

The Curry County Lottery Facebook page has a long list of why the group selected a lottery: It would keep taxes at their current rates, could keep rents at reasonable prices, enhance the economy as winners spend their money, create more jobs and attract new businesses — and would “protect cities and other tax bases from a raid by Salem.”

“I get to see all that happen,” Wilson said. “That would be special to me.”

The “raid by Salem” comment is based on the growing reality of the passage of House Bill 3453, which would allow the governor to restructure government in counties with failing budgets.

The bill would also pay for those services by taking tax dollars collected from the county on behalf of special districts.

A multi-drawing lottery was selected, Wilson said, because “more winners breed more players,” the revenue would spread the wealth around, there is more economic stimulus with multiple winners and the better odds would attract more players.

The rationale for conducting it online is that it is less of an investment to start, people outside the county can play, and it would bring money into the county that wouldn’t be realized otherwise.

But legal?

Smith, however, said that, despite all the groups’ efforts, Wilson’s attempt to start a lottery of any kind is against the law.

“The Constitution reads: Any lottery or sale of lottery tickets for any purpose whatever are prohibited and the Legislative Assembly shall prevent the same by penal law,” Smith said.

Another portion of the law reads, “Only one state lottery shall be permitted in the state.”

“The state does not allow counties to form their own lotteries,” Smith said. “It’s not possible. It’s against the law.”

“The Lottery is the only one empowered to run a lottery in the state of Oregon,” said Larry Trott, public affairs specialist with the Oregon Lottery Commission. “Counties are not states, but counties are state subdivisions.”

The state lottery commission addresses Lottery games in Oregon, and the Department of Justice administers charitable activities such as bingo and raffles, he said. Social gaming is administered by counties and cities based on local ordinances. Even then, there are numerous criteria that must be met before any gaming activity can be established. Indian tribes also must abide by strict regulations to operate casinos.

Trott said that based on his understanding of what Wilson’s trying to do, it can’t be done.

“Only the Lottery can do a lottery,” he said. “Article 15, section 4, subsection 11 says only one state lottery shall be permitted. That a group of private citizens can slap together a lottery doesn’t really make sense.”

“It doesn’t say anything about a (this kind of) lottery,” said Jackson Mark Gerald DeHaven of Harbor, who is working with Wilson on the proposal. “We’re not a county or a municipality. Why can’t we run one to take care of the county?”

Interpretation of the state constitution is up to attorneys. But DeHaven said he thinks county commissioners are set on implementing a tax of some sort, and notes that after the group presented the information to the board of commissioners in November, they haven’t had any response – and ergo, in his thinking, implementing a lottery is a go.

“You’d think by now they would have crammed it down our throats: You can’t do this,” DeHaven said. “Why have they not done it so far? I think it’s smoke and mirrors. They’d had six months to reply and they haven’t.”

Wilson echoed those sentiments.

“We have gone clear to the governor with our request and no one wants to put it in writing,” Wilson said. “Nothing forbids us. If it’s that illegal, they would have forced it down my throat. Show us something or shut up.

“We have written to the governor, state representatives; no one will go on record as to where (in the law it says) we can’t,” he added. “If you’re not going to show us, and we’re looking at the same stuff and can’t find anything, we’re going to push forward. Show me gentlemen, and I’ll shut up.”

How to play

Wilson’s idea involves a lottery format in which bettors go online and purchase sets of numbers for $2 or $3 apiece. Ten sets of numbers would be drawn, with each winning combination worth $5,000. Half of the sets drawn will have winners, so $25,000 would go to five players and $25,000 would be carried to the next jackpot.

The odds are better than most lotteries, too, with a 50:50 chance on the sets of numbers drawn.

Under Wilson’s proposal, 50 percent of proceeds would go into the jackpot, 15 percent apiece to the county and community enhancement, 10 percent to operating costs and 8 percent to a rainy day fund. He would receive 2 percent for his work.

The lottery, Wilson proposes, would be overseen by a board of at least five members, including three volunteer citizens – one from each geographic area of the county – a citizen appointed by the copyright holder and possibly a county commissioner.

The five-member board would oversee a minimum of three committees, each made up of at least three people for each of the geographic areas. They would evaluate requests for funding and send those lists to the lottery board for review.

“There will be no restrictions on requests for funding,” Wilson wrote. “From Little League to Scouts, police and fire departments, to school groups and senior organizations – all requests for funds will be considered and evaluated according to need and available funds.”

Wilson projects, for example, that if the first week brought in $100,000 in ticket sales, half would go to the county and the rest to the jackpot.

At the end of seven weeks, Wilson projects, the county would receive $412,500 and winners would get $310,000.

“Even if it took some time to reach these figures, it would still be profitable,” Wilson wrote. “Based on these projections, in one year, $3 million would go to the county and $2 million to $3 million to winners, based on ticket sales.”

The county’s percentage of the funds would be capped – the proposal doesn’t indicate a percentage – that can be raised to account for inflation. When that cap is reached, excess funds would be diverted into a Community Enhancement Fund.

That fund would be comprised of three pots of money, one for each geographic area of the county, with revenue to each based on the amount of money generated in each part of the county.

Revenue would be awarded to charitable, educational, benevolent or community-centered groups for activities and needs – regardless if they are recognized by the federal government as being non-profit organizations.

The Rainy Day Fund would be used in the event of a disaster, although the overview doesn’t indicate what that might include.

“And startup costs would be nowhere near the $500,000, like a sales tax,” DeHaven said. “Tops 75, 100 grand.”

Smith is curious about the thinking – and all the work so far – behind the proposal.

“It could be possibly a diversion to the whole (tax) issue,” he said. “I’m at a loss. If I was able to change the law, I would change the Endangered Species Act so we can go back in the forests and put people back to work in the woods. But this (lottery) is just something we cannot do.”

“This is for the betterment of the people,” DeHaven said. “It’s just a good idea – altruism at its finest.”

He said people he’s talked to have been overwhelmingly supportive of the idea.

“People are digging it,” he said. “Even if you don’t play, a better economy affects everybody. It betters the community.