01:35 PM PST on Saturday, February 12, 2005

BY NIKI SULLIVAN, Associated Press Writer

Oregon State Treasurer Randall Edwards was among those calling Friday for a substantial cut to video poker commissions paid to bars and taverns, so that the state has more lottery money for schools.

kgw.com Graphic

Lottery Director Dale Penn is expected to recommend next week cuts in the share of gaming revenue that retailers get on grounds they will make more money from increased play when new games are added.

Gov. Ted Kulongoski has directed the Lottery Commission to add slot-machine type games to the poker terminals, to raise an estimated $60 million a year to fund state police.

Educators and parents held a news conference on Friday, calling on Penn to hold commissions at 20 percent of the net revenue earned by a businesses' video gaming machines.

Commissions now average 28.8 percent, and Penn has made a preliminary proposal to drop the rate to 25.6 percent. Net revenue is money played minus the prizes paid out.

Penn is due to announce his final recommendation Tuesday, with hearings and possible commission action by late March.

Edwards said schools have been cut so deeply in recent years that "we need to look under every rock possible" for more money and that schools should be involved in commission rate negotiations.

A recent analysis of lottery profits show that retailers still would make a profit at a commissions of 20 percent or less, he said.

The Oregon Restaurant Association has said it's willing to negotiate a lower rate. But association President Mike McCallum said commissions of 15 to 20 would be too low.

Cutting commissions too much would dissuade Oregon retailers from promoting the lottery, which would in turn decrease state profits, he said at a news conference Friday.

Plans are for the new games to be available by July 1, when the 2005-07 state budget period starts. The lottery now yields almost $400 million a year for the state for education, economic development and other programs.