Georgia Senate leaders have followed through on their pledge to squeeze extra dollars out of Georgia’s lottery program.
In early January, they said increasing revenue for the HOPE scholarship and the pre-K program while reducing overhead for the Georgia Lottery was among their top priorities, and on Monday Sen. Bill Cowsert, R-Athens, and other ranking Republicans, introduced Senate Bill 5.
By striking four words in existing law -- “as nearly as practical” -- it would delete financial wiggle room for the lottery. Those words apply to the current goal of producing profits of at least 35 percent of proceeds.
The legislation also reduces the goal to 26 percent in fiscal year 2018, rising to 30 percent two years after, unless ticket sales drop by at least 5 percent. Currently, the lotter returns about 25 percent of sales.
Cowsert has long been critical of the lottery’s administrative costs, saying cuts could raise more money. An audit requested by the Senate Appropriations Committee, however, found that administration accounted for about 14 percent of overall operating expenses. The major cost driver was expenses related to prizes — such as advertising and, especially, payouts to winners.
Last year, the lottery returned a record $1 billion for education in Georgia. Lottery officials have noted that the audit said Georgia ranks among the lowest of 44 lotteries across the nation in administrative expenses as a percentage of net sales, and that Georgia’s prize payout rate was in line with other states — ranking 12th out of 44.
Cowsert said the Senate wants to find a “sweet spot” that maximizes returns, using a “simple empirical formula” and quick tweaks to fix any threats to sustainability.
The senators noted that a 1-percent increase in returns can add as much as $40 million annually to pre-K and HOPE programs.
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