We have known for years that the day of reckoning for the HOPE scholarship was approaching and difficult choices would be required. Gov. Nathan Deal and the General Assembly are providing true leadership and good judgment in dealing with the challenge existing today while remaining true to the program’s original vision as conceived by Gov. Zell Miller.
I am somewhat concerned, however, that there seems to be a prevailing belief by many that the lottery’s ability to fund HOPE and pre-k has peaked.
I believe the Georgia Lottery’s best days are yet to come and there is ample reason for Georgia’s current and future 4-year-old children, college-age students and their parents to be optimistic. Notwithstanding, the proposed “Enduring HOPE” legislation, demand for HOPE and pre-k will likely continue to outpace its current funding capacity, as Georgia continues to be one of the fastest growing states in the nation over the next 20 years. The long-term solution lies in the lottery continuing to bring new products to market to generate new revenues, just as it has never stopped innovating in its near 20-year history.
The Georgia Lottery’s performance has been the gold standard by which other lotteries are judged. This did not just happen; it’s the result of concerted effort by talented and creative people who have never been satisfied to rest on their laurels. Teamed with a dedicated network of retailers who sell lottery products, the Georgia Lottery continually leads the nation in finding new ways to entertain and engage its players. As with any business, technology can transform an industry — and the same is true with lotteries. I foresee a bright future for HOPE and pre-k predicated on the lottery’s established ability to find new revenues to fully fund these critical programs.
I also would like to address the suggestion that the lottery can increase its revenues simply by lowering its percentage of prizes paid out.
The Georgia Lottery is one of the largest and most successful lotteries in the world when measured by revenues generated for the state and product sales per capita. In reviewing national lottery data, I have always recognized the strong correlation between prize payout ratios and lottery revenues — typically, the higher the prize payout, the more people are attracted to the lottery games resulting in greater sales per capita and higher net revenues for the state. For example, in 2009, the lottery generated sales of $3.4 billion ($345 per person), paid out 63 percent or $2.1 billion in prizes, generating $872 million in funding to the state.
In the same year, our neighbor North Carolina, with similar population and state GDP, generated about $1.3 billion in lottery sales, paid out 58 percent or $732 million in prizes, but generated only $415 million for the state. The average national payout percentage in 2009 was 60 percent, while the average sales per person was $185; less than half of that generated by our lottery.
Our people know what it takes to maximize funding for HOPE and pre-k — they have sustained growth even in the face of the worst economic recession in modern history. It would be unwise to tinker with the success of the lottery’s management team and second- guess their judgment on payout rates for games. The governor’s plan recognizes this fact.
The lottery has been extremely successful maximizing revenues from its existing products such as scratch-off tickets and weekly/daily drawings. We may indeed be approaching market saturation for some of these games, though the lottery staff continues to keep every game fresh for the players. In light of all that is happening, it is incumbent on the lottery to investigate and consider all new products and technologies currently being utilized by lotteries both within the U.S. and around the world that might be able to further enhance funding for the programs. This review should include looking at electronic lottery games played on video lottery terminals.
A sensible course is to let the lottery’s professionals do their jobs. With their proven abilities, they can create the additional opportunities to generate the money necessary to sustain HOPE and pre-k over the long term. When you think about it, isn’t that why Georgians approved the lottery in the first place?
David C. Garrett III worked with Gov. Zell Miller to pass the 1992 Lottery for Education Act. He was the first chairman of the Lottery Board, from 1992 to 1994, and chairman of the Lottery Finance Committee from 2003 to 2007.
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