Gov. Nathan Deal is navigating tricky terrain as he balances the need for new lottery revenue with his party’s traditional opposition to gambling initiatives.
The governor has etched out a policy opposing the expansion of gambling, a stance he’s used to silence pushes for casinolike developments in Georgia. Yet in recent months, he’s supported two other efforts that appear to clash with his long-stated opposition.
The first allowed Internet sales of some lottery tickets. The second involves pending legislation that could clear the way for more coin-operated gambling machines across Georgia.
Both could mean millions of dollars in new revenue to the Georgia Lottery and the education programs it supports. But both have also elicited howls of criticism from opponents who fear they will spur more crime and other social ills.
Deal says neither are an expansion of gambling, and he has reconciled his support for the two by stressing the need for new revenue streams for the lottery-funded HOPE scholarship and pre-kindergarten programs. Those strained programs have weathered cuts as lottery revenue struggles to keep up with growing enrollment and costs. And the latter proposal, he said, asserts state control over an industry that’s long proliferated under the radar.
“This is a positive step in the right direction, being able to put the so-called gray machines in a registered status and under the jurisdiction of the state lottery,” he said. “That way we will know who owns those machines and we will know something about the payouts.”
Critics, though, say they amount to tacit state approval of more gambling. Jerry Luquire of the Georgia Christian Coalition called the moves an “insidious” step toward an eventual embrace of full-fledged casinos.
“If that’s not an expansion of gambling, I don’t know what is,” he said. “Everything has a small beginning. A baby begins with a kiss. And in my estimation, this is the small beginning of casinos in Georgia. It’s just a matter of time.”
In November, Georgia became one of the first states to embrace online lottery ticket sales. Deal, who appoints the lottery board, said Internet sales were an innovative way to reach a more competitive, tech-savvy market.
It’s eventually expected to funnel millions of dollars into the lottery, but online sales are off to a slow start. Only three games are available for purchase online now, and Internet sales account for less than 1 percent of total revenue for those games - about $300,000, said Tandi Reddick, a lottery spokeswoman. Eventually, they are expected to amount to about 2 percent of annual sales of the games.
The second effort is more complicated. House Bill 487 aims to regulate coin-operated machines and other gambling devices that have clustered in the back rooms of gas stations and other businesses across the state. It establishes their operation as a “privilege and not a right” that would face state oversight.
State law since 2001 has outlawed video poker in Georgia and banned machines from spitting out cash prizes, yet many machines continue to be used openly despite the occasional crackdown. One report estimated as many as 10,000 illegal slot machines now operate in Georgia, many doling out cash payouts.
Under the proposal, those machines would be linked to a central database tracking how much they are used. They would still be banned from dispensing cash but would be allowed to reward players with store merchandise and, for the first time, lottery tickets. Operators would buy licenses ranging from $500 to $5,000, and violators could face fines up to $50,000.
The machines would eventually channel 10 percent of their revenue to the state lottery. No one is quite sure how much money they will generate because they’ve never been tracked, but supporters see it as a way to capture more revenue from machines that have flouted the 2001 ban.
“The prohibition really has done nothing to curb cash payments, but it has hurt lottery sales,” said state Sen. Butch Miller, R-Gainesville. “This bill makes nothing legal that isn’t already legal today.”
But it’s sparked concerns among others who note that the legislation doesn’t include additional funding to police the machines. And state Sen. Tommie Williams, for one, says the social erosion from gambling will outweigh any benefits it could offer HOPE.
“We’d be better off if these things were gone. Somehow, over time, our moral compass has shifted away from what this does to the people who can’t afford to be playing these things … to how much this means to the HOPE scholarship,” said Williams, R-Lyons. “I hope we don’t justify wrong by saying, ‘Yeah, but it’s for the HOPE scholarship.’ ”
Arch Adams, who helped lead the movement that outlawed video poker 12 years ago, fears that the legislation will pave the way for its return.
“There’s no doubt this bill clears the way for legalized video poker in Georgia. And the Legislature is well aware of that,” he said on Friday. “It’s a great setback for Georgia families and for the HOPE scholarship. Video poker is a vicious competitor to the lottery.”
House and Senate lawmakers have both overwhelmingly passed versions of the measure, but they must hash out minor differences before it reaches Deal’s desk. It has also earned support from some law enforcement officials and lottery executives, who would regulate the so-called gray machines.
“If the legislation passes, we are well prepared to take on this responsibility and believe it will positively impact our mission, which is to optimize revenues to HOPE and pre-k,” said Debbie D. Alford, the lottery’s president.
The recent shift comes amid mixed signals for gambling initiatives. In the first statewide gambling vote since 1992, Republican voters narrowly approved a nonbinding resolution in July supporting “casino gambling with funds going to education.”
But more concrete plans to do so have languished. A push for a referendum to legalize horse racing has failed to generate momentum this session. And Atlanta developer Dan O’Leary’s pitch for a $1 billion gambling complex featuring video lottery terminals in Gwinnett County has gone nowhere; the land is now being envisioned as the site of a business school.
O’Leary, for one, hopes the legislation’s passage could open the door to his proposal and others.
“Bringing these machines under the control of the Georgia Lottery is directionally right,” O’Leary said. “I hope that the successful regulation of amusement machines will provide the data needed for additional new lottery games and revenue.”