HAMILTON: How Transparent is the NYS Lottery?

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By: Ken Hamilton

WBEN News Radio 930‘s Tom Puckett reported on Monday that Governor Andrew Cuomo vetoed a bill that would have allowed lottery winners of more than $5,000 to keep their names anonymous. The governor stated that he thought that the names of the winners should be public so that people would know that there were indeed actual winners, instead of thinking that the state might be pulling something devious.  He cited the need for transparency.

Mike Loumas of Buffalo’s Financial Guys, a staunch critic of the governor, was outraged. State legislators had passed the bill last June, prior to October’s most recent and likely the most famous, or notorious case – depending upon if a relative or friend of yours might have won the nearly $1.6-billion Mega Millions jackpot.  That jackpot was won on a ticket purchased in South Carolina, where the winner could remain anonymous.  Loumas indicated in the interview that the concern should be less on who won the jackpot and more on what the state do with their share of the winnings.

Good question!

One of my favorite stories is about when the governor’s father was governor.  I tell the story of how Governor Mario Cuomo would network all of the public television and radio stations in the state together for his Friday night program Ask the Governor, where the silver-tongued executive allowed folks from around the state to take a chance to call an 800-number and actually do just that – ask the governor.

I tell of the night that I actually got in, and the conversation went as follows:

Ken: Governor Cuomo, I thought that the money from the lottery was supposed to go to education?

Cuomo: Don’t you believe that it goes to education?

Ken: No!

Cuomo: Have you ever purchased a lottery ticket?

Ken: Yes I have.

Cuomo: Did you win?

Ken: No.

Cuomo: Well, didn’t you LEARN anything?

 

 

Now to tell the truth, the call never happened – it was something that I made up years ago when Mario Cuomo was doing his show.  But it does raise the same question that Loumas has: What does the state do with the money?  I only have two good years of Niagara University accounting education, and that was up to intermediate accounting, and that is good enough to teach you to read and understand most business accounting forms and transactions.  But business accounting and accounting for non-profits and governmental accounting is as the character Homey often said in the old television program In Living Color – “It’s a whole nudder-thang!”

The state’s website to examine the records is found at: https://gaming.ny.gov/pdf/Annual%20Report/2017-18%20CAFR.pdf.  Good luck, though.  It is labeled as the Comprehensive Annual Fiscal Report 2018 for the Fiscal Years Ended March 31, 2018 and 2017.  From the title, it is hard to tell if it is a two-year report or for the period between the Marches of 2017 & 2018; but no matter, the data therein is what’s most telling.

The verbiage says that the law limits administrative expenditures on Lottery operations to 15% of traditional lottery game sales, and that administrators had a surplus of $426.45-million for the period ending March 31, 2018.  That’s a good thing, as that money is turned over to education. But the financial highlight said that New York Lottery revenues totaled $9.974 billion, while net proceeds earned for Lottery Aid to Education reached only $3.372 billion for fiscal year 2018.

Here’s how that happened. According to the graph on the page, if the direct operating expense was $6,478B, I would have to assume that it was prizes paid out.  There was $127-million in indirect operating expenses, which I assume was advertising and such, but I am not sure.  Through some other mumbo jumbo, after school distribution, the state made $351M.

Niagara County took in $47,923,785.40 in 2017-18, and $1,048,654,369.48 since 1977. Likewise Barker took in 1,160,304.52/ 15,778,268.59 respectively; Lewiston-Porter 2,637,533.12/63,204,189.64; Lockport 8,175,829.56/174,800,288.72; Newfane 2,647,493.27/64,966,042.56; Niagara Falls 14,262,475.05/293,306,677.67; Niagara-Wheatfield 5,266,395.99/113,840,685.64; North Tonawanda 5,971,083.91 /146,283,180.24; Royalton-Hartland 2,108,581.46/53,439,748.61; Star Point 3,728,562.66 /75,519,732.36; and Wilson $1,965,525.86/$47,515,555.45.

Odds are that more than 50% of the money came out of the pockets of those in NYC-area, where seemingly the most winners are. But argument could also be made that despite the amount coming back, if the money that was spent on lottery was instead circulating through the local economy it might have better served upstaters.

Regardless, of what the state made, and who knows where that went, we have to go back to the governor’s argument of transparency. The official lottery page lists where the school money went in Niagara County and other areas, but there is still the issue of transparency.  There are scores of pictures of winners on the web page, but there are still no names. I prefer that the governor had signed the legislation and opened up transparency in other areas of government, like the $351M.

Well, did we learn anything?

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