Artificial Sales Barriers Continue to Stymie the New Mexico Lottery

ALBUQUERQUE – The New Mexico Lottery announced April 2017 revenue transfers of $2.95 million to the Legislative Lottery Scholarship Fund. Transfers through April are lagging $7.6 million behind transfers during the same period in Fiscal Year 2016. The Lottery continues to project a fiscal year return of approximately $37.5 million to the Legislative Lottery Scholarship Fund, which is approximately $9 million less than the return in Fiscal Year 2016.

Lottery Chairman, Dan Salzwedel said, “It is unfortunate that artificial sales barriers continue to stymie the Lottery from maximizing sales and providing more dollars for scholarship recipients in this time of critical need since all profits go to the Lottery Scholarship Fund.” As Colorado, Texas, Arizona and recently Oklahoma have found, a repeal of the 30 percent requirement would allow the lottery to provide higher prize payouts for scratcher games resulting in more dollars for beneficiaries (students). A recent Georgia lottery report revealed that “virtually every lottery” that has repealed a return mandate and implemented higher prizes in scratcher games has increased the actual dollars returned to beneficiaries.

Lottery CEO, David Barden said, “You only need to look at the Oklahoma lottery to see change and that mandates don’t work.” Oklahoma just repealed its 35 percent return requirement and is anticipating an additional $85 million to be generated for its good causes. The Oklahoma bill was modeled after successful changes in other states eliminating return mandates. Barden stated, “This is a proven method other states have used to get more dollars for scholarship funding (or other good causes) and it is unfortunate that students and families continue to be hurt because we are lagging so far behind successful business models used by other lottery states.” Barden estimates that the scholarship tuition fund will lose approximately $27 million additional dollars over the next five years without a legislative reprieve from the 30 percent mandate. The bottom line is that a continuation of the requirement in the current law that mandates a 30 percent return to the Scholarship Fund means less money for lottery scholarship recipients.

Chairman Salzwedel stated, “the dynamics are simple – without legislative relief from the mandate, my worst fear is that next year we will be reporting another decline in lottery transfers.” The Chairman also cautioned about the negative impact of losing the Lottery’s Gross Receipts Tax Exemption at some point. “This would just be devastating to higher education, the scholarship tuition fund, and our students. I urge policymakers not to do this should it come up in Special Session next week. If it is passed, Lottery transfer projections for next year will be grim.”

Fiscal Year 2017 transfers to date total $31.65 million through April 2017, compared to $39.26 million in FY 2016: