Why Nevada doesn't offer lottery

Why Nevada offers just about every type of gambling possible — except a lottery
By David McGrath Schwartz
Tuesday, April 3, 2012
Mega Millions lottery fever

Watching Nevadans form long lines across the California border last week, hoping to strike it rich gambling, would seem akin to Idahoans emigrating for potatoes or Wisconsinites taking a road trip for cheese. Gambling is, more than anything else, supposed to be Nevada’s franchise.

But California offers something Nevada doesn’t: lottery tickets.

Record lottery ticket sales of $1.5 billion last week for a jackpot of $640 million once again raises the question of why Nevada doesn’t participate in a lottery.

“Nevada is sending people out of state to gamble,” said Assemblyman Paul Aizley, D-Las Vegas, who authored a resolution in 2009 to change the state’s constitution. “That, to me, is crazy.”

Casinos see it differently. A lottery in Nevada would be, in their mind, competition.

The Nevada Constitution has prohibited lotteries since it was ratified in 1864. Over the past 30 years, efforts to change that have been squashed by the gaming industry at the Legislature. (Voters did change the constitution in 1990 to allow charitable groups and not-for-profits to hold small lotteries — think church raffles.)

Since 1975, the Legislature has considered a lottery resolution almost every session to start the ball rolling on a five-year process to amend the constitution. It has yet to pass.

A lottery in Nevada would bring in between $30 million and $50 million a year, according to one Legislative analysis done in 2005. Another study, by the Governor Kenny Guinn’s Task Force on Tax Policy, estimated in 2002 that it would net the state $40 million to $70 million a year.

Considering that the state has cut its budget four times since 2008, that money would by no means solve the state’s budget problems.

And gaming lobbyists said that it would cut into their business.

During a 2009 hearing, when Aizley’s proposal was in front of the Assembly, lobbyists articulated their opposition.

“It would directly compete with our business,” said Michael Alonso, a lobbyist representing Terrible Herbst, according to minutes of the hearing. “We do not think the state should be directly competing with its largest industry.”

Lesley Pittman, a lobbyist representing Station Casinos, also pointed to the government competition. “Now is not the time for the state Legislature to make a conscious choice to make it more difficult for our gaming industry to regain its financial health,” she told the committee.

Lawmakers asked if there wasn’t a way that the local operators could figure out how to make money from lottery sales.

But that math would be difficult.

Retailers in California get 6 percent of lottery ticket sales. Education gets about 50 percent to 55 percent, according to a spokesman for California Lottery.

In Nevada, the gaming tax on its largest casinos’ gambling wins is 6.75 percent.

Gov. Brian Sandoval opposes a state lottery.

“It’s not appropriate for the state to compete with our No. 1 industry,” his spokeswoman said.

MGM Resorts International Chairman and CEO Jim Murren told KSNV Channel 3 last week that he also opposes a lottery. His company creates jobs, he said.

“How many jobs does a lottery create?” he asked.

Lottery business on the other side of the border, meanwhile, is doing just fine.

Forty-three states participate in lotteries, generating $17 billion in revenue for those states.

The convenience store just across the California border at Primm is consistently the top seller of lottery tickets in California.

“And it wasn’t close,” said Alex Traverso, spokesman for California Lottery.

Aizley said he doesn’t like to see Nevada money going to buy California lottery tickets and helping fund their schools. But he has given up.

“It just doesn’t pass,” he said. “It’s not a winner for me.”