06/08/2003

By BRAD CAIN, Associated Press Writer

With the state's tax collections continuing to slump, Gov. Ted Kulongoski and lawmakers are seriously thinking about expanding state-sponsored gambling to help fill holes in the state budget.

They may give the Oregon Lottery the go-ahead to add slot machine-style games to its video poker terminals, which could bring in an additional $90 million over the next two years.

Oregon Lottery may get the go-ahead to add slot machine-style games to its video poker terminals. (File photo)

"It's something that's clearly been swirling around the building," said Peter Bragdon, Kulongoski's chief of staff. "It could be part of a financial solution for the state."

That prospect dismays Lloyd Marbet, a long-time Lottery critic and political activist from Portland.

Marbet said while there's no doubt state government is in a financial pinch, it should find other ways to raise revenue without ramping up state-sponsored gambling.

"It will only lead to more problem gambling and addiction," he said. "We shouldn't prey on our weakest citizens as a way to support state programs."

Rep. Randy Miller, co-chairman of the Legislature's budget committee, said the vast majority of Oregonians who play Lottery games don't have a problem.

"If citizens want to put some money into a slot machine and make money for the state, why should the state say `no?' " the West Linn Republican said.

For years, the Lottery Commission has made no secret of its desire for video slots -- also known as line games. The change would require only a reprogramming of the existing 9,000 video poker terminals in 1,900 bars and taverns around the state.

But the idea remained on hold because of former Gov. John Kitzhaber's resistance to any move that could create more problem gamblers.

During last year's governor's race, Kulongoski took a stand against expanding Lottery offerings and said he wished the state could become less dependent on the Lottery.

However, Kulongoski has indicated his willingness to rethink that opposition because of the state's deepening budget problems.

"The history in this state is that as the state's budget needs grow, you get more games, faster games and games in more places," Bragdon said.

The Lottery has become a major source of revenue for state programs over the years.

It went from a simple scratch-off ticket operation in 1985 to a business that now makes about $350 million a year for the state, most of it from video poker.

It's also been a lucrative proposition for businesses that have the Lottery's video poker terminals.

The Lottery paid $153 million in commissions averaging about $75,000 each to the 1,900 bars and taverns with video poker in the fiscal year that ended last June.

Retailers argue that since the state's eight Indian casinos have slot machines, it's only fair to let Lottery retailers offer them as well.

"I have a lot of customers asking for them," said Salem restaurant owner Mike Lewelling. "Right now, they have to drive to the Spirit Mountain or Chinook Winds casinos to play them."

The possible expansion of the Lottery could get tied up with another issue pending in the Legislature -- a proposal to slash commissions paid to retailers with video poker machines.

The bill, which would cut poker commissions by more than 50 percent, has had only one hearing in a Senate committee and doesn't appear to be advancing.

Supporters of the idea, including state School Superintendent Susan Castillo, think the retailers are overpaid and that some of that money should be directed to schools and other programs.

"Educating kids vs. subsidizing taverns seems like a pretty easy choice to me," Castillo said.

Miller, the West Linn lawmaker, notes that the retailers' contract with the Lottery runs through July 2004. If lawmakers gave the Lottery the nod to go ahead with slot machines, that could be a factor in negotiations for a new contract, he said.

"That's for the Lottery Commission and the retailers to decide. It shouldn't be argued in this building with legislators who are overzealous about wanting more money, he said.