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Changes needed in way Oregon Lottery operates

State lawmakers must look for ways to eliminate some of the dens of addiction that the Oregon Lottery currently supports.

If necessary, lawmakers should consider adding to state statute further limitations on the number of lottery terminals allowed in certain retail locations.

At the very least, the Oregon Legislature and lottery officials must put an end to the debate over the definition of a casino and what is a legitimate restaurant or tavern. Along the way, so-called “lottery cafes” ought to disappear. That outcome would allow the lottery to adhere more closely to its original purpose, which is to foster a revenue stream for the state while destroying fewer lives than it currently does.

A secretary of state audit released last week concluded that the Oregon Lottery might be allowing lottery cafés to operate as casinos, even though the Oregon Constitution bans casinos on nontribal lands.

The lottery has consistently evaded its own rules about casinos. One measure of whether a business qualifies as a casino is the amount of money it generates from lottery terminals. According to rules adopted eight years ago, if more than half the establishment’s gross revenue comes from gambling, that makes the place a casino.

Yet, the state audit contains evidence that most lottery cafes or delis — bare-bones establishments that usually have the maximum six lottery terminals and very little else to offer — are deriving more than half their revenue from gambling. Under the state constitution, they are illegal. Instead of closing them down, however, lottery officials try to keep them in business.

Rather than enforcing the 50 percent rule, they’re now judging whether a business is a casino largely by the way it looks. Does it really have food on hand and the ability to prepare it? Is there a menu available? How about tables for dining?

Such minimal criteria — if allowed to remain in place — would only empower the lottery to ignore these mini-casinos and concentrate on maximizing lottery revenues without regard to the social costs.

Those costs are well known to Hayden Island residents, who have tolerated in their midst what may be the largest collection of lottery delis in the state. As the Portland Tribune has reported over the past several years, Hayden Island’s “Lottery Row” has been a haven for crime and vice. Statewide, lottery cafés generate about one-fifth of lottery revenues, but they contribute disproportionately to gambling addiction and other societal ills.

Hayden Island’s Lottery Row mini-casinos serve as an example of another dirty little lottery secret — one that also was pointed out by the recent audit. In order to meet the requirement that half their revenue come from something other than gambling, lottery cafés peddle a second addiction: cheap cigarettes. Of the lottery-oriented cafés audited by the state, cigarettes made up anywhere from 32 percent to 97 percent of the nongambling revenue.

In essence, the state is encouraging its citizens to indulge in two destructive habits — one that drains their bank accounts and another that damages their bodies.

The secretary of state’s audit recommends that the Oregon Legislature come up with a firmer definition of the word “casino.” However, it also suggests that if retailers can’t comply with the constitutional ban on casinos, they should put fewer lottery terminals in their bars and restaurants.

This second notion is the better way to go — but it should be more than a suggestion. The Legislature, working with lottery officials, should provide a specific set of regulations for those lottery cafés that offer little more than gambling devices. The secretary of state’s audit calls these businesses “limited menu retailers.” It is, in fact, quite easy to distinguish them from genuine restaurants and bars.

The maximum number of terminals in each of these locations should be reduced from six to perhaps two or three. That would dry up the lottery delis and encourage establishments to base their business model on something more than twin addictions.


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