O n Friday, the Oregon Lottery Commission will meet to consider whether to add line games to the state's menu of lottery video games. But with insufficient budgets forcing the state to face the elimination of vital programs, now is the time for the commission to do more. It should scrutinize its overly generous compensation formula for video lottery retailers.

Last year when it reviewed retailer compensation, the Lottery Commission failed its constitutional mandate to maximize profits by voting to continue to overcompensate lottery retailers at a time when our schools are struggling financially.

There is no legitimate dispute that lottery retailers, largely tavern owners, are overpaid to operate state-owned video poker machines. Last year, the lottery hired an economist from the respected ECONorthwest firm to evaluate what a fair commission rate should be. His conclusion: Commissions of $10,000 a year would cover a retailer's total costs. But the Lottery Commission approved a contract with retailers that gave them an average annual payment of about $68,000.

Both an audit by the secretary of state's office and a separate study by a legislative economist found that retailers would make healthy profits if they received 15 percent to 18 percent of total revenues -- about half their current average commission of 29 percent. Each percentage point by which the lottery reduces the commissions would be worth more than $5 million a year to schools and public interests.

The Oregon Lottery was founded under the premise that "[a]ll proceeds from the State Lottery shall be used for any of the following purposes: creating jobs, furthering economic development, financing public education in Oregon or restoring and protecting Oregon's parks, beaches, watersheds and critical fish and wildlife habitats."
As lottery retailers, tavern owners are partners with the state. But the current relationship has clearly become lopsided, siphoning the public's money for the benefit of a few. It is time to end that subsidy. It is time for the Lottery Commission to do what Oregon's constitution requires of them.

The business interests that fought for retaining the high payouts for retailers claim that many of them will abandon the games if commissions are greatly reduced. But that is clearly false. In the end, tavern owners will not turn their backs on this jackpot, especially with slot games in the offing, which are easier to play and will generate more money.

Last year, there were about 2,000 video lottery retailers; there are about 831,000 students ages 4 to 20 in Oregon. If we are serious about improving public schools, about our children's futures, about values, we will look at tilting the formula in favor of a broader public good. And if bar and tavern owners think they deserve a special welfare program, they should ask the Oregon Legislature to fund one directly rather than through excessive lottery compensation rates.

If we continue state funding as usual, we will contribute to the neglect of a generation of students, further erode economic development and expose a weakness in ourselves for not speaking out for what we know is right.

Randall Edwards is state treasurer of Oregon. Richard B. Solomon is a former member of the Lottery Commission.

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