Cutting commissions for retailers who sell
state lottery tickets is likely to result in a net loss for the state in
the long run.
As part of his proposed budget, Gov. Mark Sanford has called for
cutting retailers' commissions from 7 percent of the take to 6 percent.
Sanford projects that the cut would save the state $8.4 million in year
that could be applied to educational programs, including college
scholarships.
But Sanford has offered this proposal just as North Carolina is
gearing up to launch its own state lottery. That will mean new
competition for South Carolina retailers, especially those located near
the state line.
Eight of the top 10 stores with the highest lottery ticket sales in
South Carolina are located in York County. They have succeeded in
drawing customers from North Carolina who, until now, couldn't buy
tickets in their own state.
South Carolina stores won't lose all those customers to the new North
Carolina lottery. Many will continue to buy tickets wherever the jackpot
is the biggest.
But sales are certain to slump at least somewhat, and retailers'
share of the take will drop accordingly. If the state reduces
commissions, that also could affect sales.
Ernie Passailaigue, the executive director of South Carolina's
lottery, thinks sales will decrease if incentives to retailers are
reduced. Either stores will make less of an effort to sell lottery
tickets or they will stop selling completely. If the retail base
shrinks, lottery revenues will fall accordingly.
Store owners make the point that selling lottery tickets can be a lot
of work, especially when jackpots are high and customers are standing in
line to buy tickets. Personnel behind the counter have to deal with
customer demands and handle large amounts of cash. Some, no doubt, will
ask themselves whether it is worth the trouble for a 6 percent
commission.
Red Rocket, the No. 6 store in the state for lottery sales, pulled in
$231,000 in commissions last year. If the commission had been 6 percent,
that amount would have been $33,000 less. And if the store loses sales
to the North Carolina lottery, profits could be considerably smaller.
The point is, why jeopardize the sales potential for the lottery? It
is a classic example of being penny-wise and pound-foolish.
This paper opposed the state lottery when lawmakers first proposed
it. But now that it is in place, the state should do what it can to
maximize profits, which, in turn, can be used to fund college
scholarships.
The General Assembly at least should wait to gauge the impact of the
North Carolina lottery before making any drastic changes in the
operation of this state's lottery.
