Oregon’s Gamble

By Sophie Chen

Often, the winners are in disbelief. They check again and again, call the Lottery headquarters, and tell their friends. It might be a rollercoaster of emotions; in the morning they’re thrilled, and by the time it’s on the news, they lock all the doors, fearing that someone will try and kidnap their kids. 

Oregon’s top lottery winners in 2018 won between $10,000 and a whopping $150 million; 2019 is proving to be no different with jackpots across the state. Imagine you’ve just realized that you bought a winning Powerball ticket for a few hundred million dollars. Unless you’re a Fortune 500 CEO or heir to an oil empire, that’s probably more money than you’ve ever thought about having. Luckily, more than half will go to tax, so you’ll receive a slightly more manageable sum. You might be in Portland (you drove your Subaru to get to this local 7/11), or maybe you reside in a more rural area (you drive a pickup truck). You might have played the Lottery on a whim, seeing the numbers going up on the Powerball billboards, or maybe it’s just your routine to buy a ticket once a day. However it happened, you are one of the lucky ones.

This is a reality for multiple Oregonians per year. Often, the winners are in disbelief. They check again and again, call the Lottery headquarters, and tell their friends. It might be a rollercoaster of emotions; in the morning they’re thrilled, and by the time it’s on the news, they lock all the doors, fearing that someone will try and kidnap their kids (Baumann and Shelby).

After the initial shock, the money could be a relief—the winner’s family has medical needs, or there’s a tough debt building up interest (OregonLive). Anyone over the age of 18 has the same opportunity try their luck and change their lives. But just who are the people that play (and sometimes win) the lottery, and how does it impact their lives?

“Well, we get a whole lot of riffraff for the video lottery,” Chelsea says amid the dim chatter of the bar’s customers, “trying to play the machines with the change they got sitting on the street yesterday. Then they’re freaking out, crying like crazy in the corner when they don’t win.” We’re at the Broadway Grill and Brewery, just inside the door angled towards the corner of busy Broadway and the side street of the 17th. Portland’s typical grey-white sky glares through the windows, lighting up the pub’s wooden-paneled walls surrounding the tables and bar. In the back of the room, a scruffy-looking man ambles out of the doorway labeled “Pool / Lounge / Lottery”, turning towards the empty bar, where a member of the all-female staff stacks cups.

This urban area of Northeast Portland is packed with people diverse in every way; the customers of the Broadway Grill video lottery are simply a fact of life for the smiley Chelsea, who looks and sounds like she’s from the Midwest. “The crazy homeless, yeah, but we also got a pediatrician who comes in regular. All kinds of people [play]. I’ve seen people come and play a whole paycheck [at the Lottery], and then realize they don’t have rent,” she says with a slight lilting accent and concerning cheer. “Some mornings, you pull a stack of hundreds out of the machine … I’m not a gambler, but I guess people love it.”

Chelsea’s nonchalant explanation betrays a saddening fact: people who are already struggling financially can worsen it by playing the Lottery. It’s both confusing and disheartening (to me at least) to think that some of Portland’s many people that are homeless or living outdoors end up losing what little they have playing a game where the odds are so heavily against them.

Some claim that government-endorsed gambling creates a regressive or even exploitative tax, asserting that poorer or more financially insecure citizens (like the “riffraff” at Broadway Grill) are more likely to place bets based on the sheer magnitude of a jackpot or any potential of winning. This logic assumes that with education comes a fuller understanding of gambling, and that the people who do play are generally less educated, have a lower income, and in short are less aware of their slim chances of winning big (usually one in millions) (Huffington Post). The lottery then essentially draws its funds from the poor, leaving the wealthiest folks unaffected by the inevitable losses of gambling.

Looking at the statistics provided by the Oregon Lottery itself, the theory of a “tax on people who are bad at math” seems slightly true; less plausible is the trend towards a poorer player base. 55% of lottery players in a 2016 sample identified as having an income under $50,000 per year, nearly mirroring Oregon’s income distribution (with the median income being about $53,000). So, lottery players are on average only slightly less wealthy than the Oregon average. As for education, 68% of lottery players have not obtained a college degree, making them on average, less educated than the 60% of Oregonians overall with degrees (Oregon Lottery).

In short, the lottery is decidedly not dominated by the wealthy or highly-educated, but it isn’t overwhelmingly skewed towards the poor. That there is some sort of unhealthy imbalance in the player base “is really a common misconception,” Oregon Lottery Employee Chuck Baumann says with casual conviction over the phone. “It’s actually pretty much the average Oregonian playing the lottery.” Matthew Shelby, who’s on the same Public Affairs team as Chuck in Salem, adds: “If we were to see some really big swings, or a real concentration [in demographics], it would spark conversations here” about the effects of operating a lottery on disadvantaged communities or groups of people.

Even though their job is to inform people about the Lottery in a positive light, I found Chuck and Matt to be appropriately candid while talking to a high schooler. I pictured the two of them next to each other in their office chairs, with my voice on speakerphone. “The Lottery,” Matt explained, “is different from other state agencies in that we’re selling something–more like a business,” so the purpose and function of the Lottery are also a little different. Matt states it as “maximum profit commensurate with the public good,” meaning that the more the Lottery makes, the more money goes to the state to fund its various beneficiaries.

“We sometimes get callers asking ‘can I get Lottery dollars [to fund a personal] project?” Chuck says, “and Matt or I have to tell them we can’t make that happen; it’s not at our discretion.” Hand in hand with that example is the conception that the Lottery raises money to donate to charities or nonprofits. Though lottery revenues ($1.3 billion in 2018) not spent on marketing, development and operating costs do go to “good causes” such as education and communities, it’s first funneled into the state budget and allocated from there to education (58%), job creation (26%), state parks and even watershed enhancement (both 7.5%). All of this sounds pretty good to me, and we’re even reassured about action being taken to inform and treat addictionprograms to focus on problem gambling get 1% of revenues, so about 8 million dollars per year (Oregon Lottery).

Surprising to me was the magnitude of the Lottery’s contribution to state coffers; only the cumulation of yearly income tax beats the lottery’s nearly billion dollars ($725 million in 2018 and increasing by a tens of millions each year). With such a substantial amount of funding coming from the Lottery, it’s apparent that the state of Oregon depends on the Lottery to function. It’s like having another tax, only this one is voluntary, and will take as much as you give.

If you thought the profits were high, the amount of money Oregonians spend on the Lottery is astounding; the state’s cut is 5.6% of revenue, and 91% goes back out as prizes. That being said, your chance of winning in one shot is not 91%. The odds of winning multi-million dollar jackpots range from one in a few million to one in hundreds of millions, and the chances of winning smaller prizes improve from there (1 in 5 Lucky Lines tickets make back their price). The Lottery “doesn’t guarantee wins,” Chuck says cheerily, “similar to a Las Vegas casino … the house always wins. Here, the house is the state.” However, there is incentive for the Lottery to keep people winning back most of what they put in. “Decreasing payout [percentage] decreases players,” and players are the key to the Lottery’s success (Baumann and Shelby).

As a result, a small but significant amount of lottery revenue goes to marketing and outreach. From what I’ve seen, the intended main selling points of the Lottery are entertainment and the benefits of Lottery funding. I’ve seen those inspiring billboards showing happy beneficiaries, and the colorful fonts and designs of Mega Millions and Powerball jackpot counters. The most effective marketing draw, however, which I have yet to experience, seems to be the vibrant design and gameplay style of video lottery interfaces, which are unique to Oregon in the Pacific Northwest.

“We have six machines here,” says Chelsea as she steps out from behind the hostess desk at the local Broadway Grill and Brewery. “It brings in a lot of our lunch crowd because we’re the only ones open during the day. All the other bars with Lottery are closed.” The attractive quality of the the video lottery far outweighs that of Scratch-its, (other types of games): $934 million, or 72% of lottery revenue, came from the 11,659 video lottery terminals in bars and restaurants across the state.

Retailers are “partnered with the Lottery,” Chuck says, and 99% of the lottery is sold through them, and selling pays. About 250 million dollars of revenue went to retailers in commissions in 2018 (Oregon Lottery). There are two categories of lottery retailers: your ‘traditional’, which sell Scratch-its and Draw game tickets, and Video Lottery spots like the Broadway Grill. Both get a cut: up to 10% for traditional retailers and hundreds of thousands of dollars for video retailers. To have video lottery machines, the retailer must have a liquor license, which also prevents those under 21 from playing the video lottery. For places without liquor licenses, the age minimum is 18.

With hundreds of locations and only traditional style lottery games, 7/11s and Plaid Pantries are probably your run-of-the-mill lottery retailers. After experiencing the complex dynamics of the Broadway Grill, I wanted to get a sense of how the Lottery worked in a more subtle role. I walk into my nearest Plaid Pantry. It’s empty, with only a cashier doodling on a pad of paper at the register. The bright lights of the refrigerator cases wane a little as a scruffy looking guy in a red vest comes toward the register. His name tag says “Carl Manager”.

“We don’t get much revenue from the Lottery,” he says when I ask him about its effect on business. According to Lottery statistics, traditional lottery retailers make a meager average of $9000 per year. “Mostly, it just brings people into the store to buy other stuff,” Carl continues. “Um, did you want to get anything?” the cashier asks, giving me a sheepish smile. I did not buy anything, though I probably should have after bombarding the poor guys with questions.

Two minutes after my extremely brief trip to Plaid Pantry, I’m expecting more of the same at the 7/11 five blocks east. There’s no one around, so I look at the hand-painted designs on the windows, which proclaim colorfully that the 7/11 is family owned and local. A short, older lady with a thin brown braid and glasses comes up to the register, looking at me skeptically. After my awkward and overly enthusiastic introduction, she tells me her name is Angelina. “The lottery? Uhh… let’s see. I sell a lot of tickets, especially to the regulars that come in here a few times a week, and I know ‘em all.”

She starts to smile and loosen up. “Problem gamblers… I guess there are some. There’s an old guy who comes to buy the Scratch-its and Powerball, probably spends a few hundred a week. Seems like he’s retired and has enough money, that’s just his thing.” It seems like buying lottery tickets is an occasional thing, unlike video lottery play, which is more continuous. Angelina also says she doesn’t have any training to deal with problem gambling; that makes sense since the lottery scene at these stores is clearly much more low-key. Where there are only traditional lottery games (Keno at diners, ticket dispensing machines at grocery stores), the Lottery seems to take a supplementary role, in terms of finance and the general atmosphere of the establishment–most customers aren’t oriented towards simply playing the Lottery, and the stores don’t depend on taking their cut of what’s sold.

Video lottery has a vastly different effect on businesses. “Honestly, it’s a huge part of what made this place profitable,” Chelsea says, looking across the expansive Broadway Grill with a sobering look. “The Lottery floats restaurants and bars for the first year ‘cause [restaurants] aren’t making a profit; without it I don’t know where we’d be now.” The place looks nice, and the wood of the bar and tables shines brightly. By now, the restaurant is empty; Chelsea, the idle bartender, and one server are the only staff working during the 2 PM lull, save for the occasional trickle of people in and out of the game lounge. It’s clear that the Lottery brings a necessary source of income to the business, but the Broadway Grill is a restaurant first and foremost.

There’s one more type of Lottery retailer to mention. If by chance you’ve ever been in a Dotty’s, you’ll know what it means to be a cash-cow “deli” (OregonLive). When you think of a deli, you might think of cold cuts, cheese and sandwiches. This type of deli ends up being something else altogether. With “Wall to wall video gambling … cigarettes and bare bones food options such as microwave burritos,” these shops operating as “delis” are essentially small casinos set up for the promotion of Lottery playing. The “cash-cow” part of the name alludes to the hundreds of dollars one store can make off of the Lottery alone—even more so when chains are created.

Casinos are currently only legal on Native American reservations. Accordingly, other casinos are prohibited in Oregon, and the Lottery requires that 50% or more of an establishment’s profits be non-Lottery related. Despite this rule, deli/restaurant/bars skirt the regulations and evaluation metrics of the Lottery. Revenue sources are doctored to count in the cost of cigarettes and food given for free to Lottery players, or simply are falsified to meet the requirement of 50% (Theriault). They barely pass a “reasonableness test” of whether the place is a restaurant or simply a grimy Lottery hotspot. Despite the uninviting sound of these establishments, half of the top ten earning Lottery retailers in Oregon fall into this category of Limited Menu Retailers (Oregon Lottery).

Before looking into the Lottery, I’d never heard of the Dotty’s chain or a lottery-centered deli. While these places pull in huge sums of money for the Lottery and for themselves, I’m skeptical of their impact. First, the aforementioned legality is questionable. But, with the Oregon Lottery looking to maximize profits and contributions to the state, regulating these de facto casinos works to a financial disadvantage (OregonLive). When smoking in restaurants was banned in 2008, the Lottery took a hit in profits; clearly, more rules will discourage players (Baumann and Shelby). Secondly, and more importantly, the enormous profits seem to come largely at the expense of the niche group of problem gamblers, whose compulsions are compounded by the environment of winners and losers, and superstitions about which machine is “due to pay”.

It’s difficult to gauge who is playing the video lottery, how often people play, or how much they spend. According to data from throughout the mid-2010s, the average yearly loss is $2,564 across all video lottery players going in at least once a year. Yet, this five percent of Oregon’s population accounts for almost 86% of Lottery Revenue or $737 million (Mental Health Association of Portland, Oregon Lottery). The statistics appear bleak: there is a small population of Oregonians who are funding a disproportionately large chunk of our state budget, and I don’t think it that those contributions comes from the pure goodness of their hearts.

This is not a new revelation. Carolyn Tomei, a former Oregon Representative (D-Milwaukie) has had a lot to say publicly about the topic in her years of being a legislator, frustrated that her peers seem to overlook the drawbacks of the Lottery in favor of the massive funding boost. In 2013, she stated her position on problem gamblers rather aggressively: “You wouldn’t think about prostituting your daughter to balance the budget. Let’s be clear about that. Let’s not pretend that these are people having a good time and they’re paying into the lottery’s coffers to help the people of Oregon.” While the Lottery does not intend to exploit players, most likely these heavy gamblers have fallen into the trap of addiction.

Gambling disorder, gambling addiction and problem gambling are all terms for the mental illness associated with compulsive and repeated gambling. “I would frequently say to myself; I can stop, I can stop. And I couldn’t stop,” an older woman named Kitty shares in a testimonial interview via the Lottery site. She has short brown hair and glasses, and looks like she could be my aunt. “You probably never thought you would grow up and deal with these kinds of challenges… with gambling,” she says, “it’s kind of a weird thing” (Oregon Lottery).  It’s true that gambling addictions can be completely overlooked in the face of more health-related issues like drugs and alcohol. But over time, like with most addictions, gambling can have dire personal and especially financial ramifications.

There seem to be two primary processes that drive problematic gambling. The first is based in pure entertainment: the rush that comes with taking a big risk, and the even bigger rush when it pays off and you win something. Psychologists equate the effect of gambling to that of using addictive drugs. From a neuroscience standpoint, it makes a lot of sense. Every time your brain experiences something pleasurable, dopamine floods the neural pathways associated with that activity. Over time, these connections strengthen, but as dopamine receptors multiply to account for the excessive stimulation, playing more creates a tolerance: the pleasurable feeling is dampened, leading to a craving for even more stimulation. The deeply rooted functions of the human brain make us highly susceptible to all addictions, and gambling is no different.

Playing the lottery has an addictive effect on a basic neurological level, but there are also conscious thought processes that exacerbate addictive behavior. One of these is the harmful mental phenomenon of “chasing your losses”, wherein a gambler spends more than desired, and tries to make up their loss by winning the next game. A retired British army officer named Justyn Larcombe describes it well in his TED Talk: after getting a 9-to-5 job and searching for excitement, the stress of having an epileptic child prompted him to bet on a sports match. He won his first bet, but as his next few losses built up, he felt forced to spend more and more, losing hundreds of thousands of dollars. He began frantically taking out loans and betting more to recoup, all to avoid having to explain their empty bank account to his wife.

As in Justyn’s case, much of the failure to seek out treatment or help is caused by a deep sense of shame. Some hide their habits, but even someone with an apparent gambling problem is likely subject to the judgment and stigma that accompanies all mental health issues. It’s also possible that underlying issues such as depression, anxiety, or OCD have a role in promoting a gambling disorders.  Regardless of their source, however, we can all agree that gambling addictions should be prevented and reduced as best as possible, particularly in the case of a statewide lottery spanning millions of people.

Problem gambling is not only a problem for the players, but it’s a problem for the Oregon Lottery, and lotteries in general. “We want lots of people to play a little, and have programs to promote that” says Matt, and this seems like a value that reconciles gambling with a government’s charge of supporting public welfare. Given its intent of making a profit, the Lottery’s finances might benefit most from ‘a lot of people playing a lot’, and constructing their business to serve that goal. However, individuals and the general public might be hurt by a rise in gambling without the services and outreach that the Lottery supports.

Since 1999, the Oregon lottery has spent over $99 million dollars “funding problem gambling treatment and prevention” (Oregon Lottery). Between the OPGR (Oregon Problem Gambling Resource), treatment referral ad campaigns, and retail staff with Responsible Gaming training, it would seem that there is no shortage of opportunities for concerned players to find help (Oregon Lottery). Even though I don’t play the lottery, it makes me feel at least superficially better to know that there is awareness about problem gambling and efforts to prevent it. My only question is this: how do you truly stop someone from gambling, or wanting to gamble?

“Just forgive yourself. Own what you need to do going forward,” former gambler Kitty says. She doesn’t describe a complete conquering of her addiction so much as the ways that treatment has helped her grapple with it. There’s no single right way to treat addiction, but it starts with acknowledging a problem and seeking help. She said, “I was in an inpatient facility. Having counselors that emphatically care … structured 24 hours … space from gambling to make new patterns … gives you guidance” (Oregon Lottery). Counseling and support groups help educate on ways to rebuild, and bring together people who share a common experience.

“You’re too young for that, babe,” Chelsea says with a freckled smile when I ask to look at the video lottery machines. After all my conversations, I still don’t truly understand what it’s like to play the lottery, and how it can have such a grip on people’s lives. I’ve never even seen a video lottery machine in real life. Yet, I can see how the lottery system is critically beneficial in ways and exploitative in others.

We need gambling services and resources largely because of the lottery; from a pessimistic standpoint, the people who fall into gambling addiction are essentially sacrifices made so that the state of Oregon has a billion-dollar weight lifted off its shoulders. The Mental Health Association of Portland writes that 75 to 90% of people seeking help for problem gambling play Oregon Lottery slot machines and video poker. The evidence points to a concerning concentration, not in demographics or income levels, but in the amount of time and money spent on video lottery by a disproportionately small group of Oregonians. Why has there been no change?

The answer is simple. There is no way to replace the hundreds of millions of dollars going into schools, parks, development and infrastructure, without which the state might collapse. The 1% of revenue allocated to deal with problem gambling is a large enough sum to cover the obligatory anti-addiction services, and is effectively used to justify the overlooking of the Lottery’s concerning statistics: that 155,000 Oregonians are funding the state with hundreds of millions of dollars. Like many things in the world, this dilemma disheartens me. Sadly, I have no true solution.

In our complicated and convoluted society, the road to the greater good is often unclear. A middle ground for the Oregon Lottery surely exists: we’ve already placed limits on age, preventing vulnerable minors from gambling addictions. To continue running the Lottery while truly prioritizing the reduction of problem gambling would require not only age restrictions but the tracking of Lottery games and time, and reaching out to individuals who appear to be in need. Short of eradicating the Lottery altogether, any change will inevitably leave some people still suffering in our state. All you can hope is that it’s not you who gets hooked.

 

References

Baumann, Chuck, and Matthew Shelby. Interview. 28 Feb. 2019.

“The fall and rise of a gambling addict | Justyn Rees Larcombe | TEDxRoyalTunbridgeWells.” YouTube, uploaded by TedX Talks, 17 July 2017, http://www.youtube.com/watch?v=7AN3VLLlkdI.  Accessed 22 Apr. 2019.

Galka, Max. “The lottery Is a Tax — An Inefficient, Regressive and Exploitative Tax. Huffington Post, 6 Dec. 2017, http://www.huffpost.com/entry/the-lottery-is-a-tax-an-i_b_8081192. Accessed 22 Apr. 2019.

Greif, Andrew. “Will sports gambling return in Oregon? Lottery ‘very interested’ following Supreme Court ruling.” OregonLive, 14 May 2018, http://www.oregonlive.com/sports/2018/05/will_sports_gambling_return_in.html. Accessed 22 Apr. 2019.

Marum, Anna. “The Oregon Lottery could be in trouble.” OregonLive, 15 Feb. 2017, http://www.oregonlive.com/politics/2017/02/oregon_lottery_in_trouble.html. Accessed 22 Apr. 2019.

Mental Health PDX. “Oregon Lottery gathers most of its money from problem gamblers.” Mental Health Association of Portland, 25 Nov. 2013, www.mentalhealthportland.org/

oregon-lottery-takes-most-of-its-money-from-problem-gamblers/. Accessed 22 Apr.2019.

Oregon Lottery. “Comprehensive Annual Financial Report (FY 2018).” Oregon Lottery, oregonlottery.org/docs/default-source/financial-reports/2018cafr.pdf?sfvrsn=42880ea7_3. Accessed 22 Apr. 2019.

Oregon Lottery. “Responsible Gaming Report.” Oregon Lottery, oregonlottery.org/microsites/rg-annual-report/. Accessed 22 Apr. 2019.

Statistical Atlas. “Educational Attainment in Oregon.” Statistical Atlas, statisticalatlas.com/state/

   Oregon/Educational-Attainment. Accessed 22 Apr. 2019.

Theriault, Denis C. “‘Little casinos’? Cash-cow ‘delis’ flout Oregon Lottery rules, audit finds.”

   OregonLive, http://www.oregonlive.com/politics/2015/08/little_casinos_oregon_lottery.html.

   Accessed 22 Apr. 2019.

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