Lottery Beneficiaries (Editorial)

What’s this? Convenience store operators, at least the majority represented by the Arkansas Oil Marketers Association, are officially and unequivocally in favor of a state-run lottery.

At least they don’t fool around with high-minded rationalizations about how many more Arkansas students will get a college education if only the state government would take on the job of promoting long-odds gambling. For the gas station owners, a lottery is barely a public policy question at all. To them, a lottery is just a gift that keeps on giving to their bottom lines:

“Our members are losing thousands of Arkansas customers and millions in sales to lottery retailers in the border states. We’re losing business and the state is losing tax revenue,” Ann Hines, the AOMA’s executive director, said in a statement announcing the association’s endorsement of the lottery proposal that will be on the Nov. 4 ballot.

The National Association of Convenience Stores reports that lottery ticket buyers spend about 30 percent more at convenience stores than customers who don’t buy lottery tickets. That’s gift No. 1.

Then they can also expect to earn a commission – in other states, it’s typically 5 to 8 percent – on each lottery ticket sold. That means at least $10 million and as much as $25 million flowing straight to the convenience store operators every year, depending on whose estimate of total ticket sales you accept.

Of course, as Arkansas Advocates for Children & Families so succinctly pointed out in its well-reasoned report opposing the lottery, “money spent on purchasing Arkansas lottery tickets would have to come from somewhere else. …” And the same is true of the extra 30 percent that lottery customers spend in convenience stores: Their gain will be some other business’ loss.

Granted, some of that loss will be borne by competing convenience stores in border states. But a 2005 report published in the Journal of Public Economies and cited by AACF found that “the introduction of a state lottery is associated with an average decline of $46 per month, or 2.4 percent, in household non-gambling expenditures.” Low-income families “experience statistically significant declines in expenditures on food and on rent, mortgage, and other bills.”

That’s a good thing to keep in mind if you are in a business that won’t be getting a commission by selling lottery tickets.

We felt some sympathy for gasoline retailers earlier this year. They operate in a highly competitive business, and their profit margin is squeezed when fuel prices rise, even though they often get the blame. In recent weeks, however, they have been making up for lost time. Pump prices invariably decline more slowly than wholesale prices, so retailers get their best margins when gasoline prices are headed down.

We can’t blame the AOMA for supporting a proposal that will directly benefit its members. We just don’t agree. The lottery is still a bad idea for Arkansas.