It's too bad P.T. Barnum didn't live long enough to pay a visit to the Convenient Food Mart on East 71st Street in the heart of Slavic Village, because he would have loved the place. People stand in lines eight deep just to throw their money away on a sucker bet that they have virtually no chance of winning.
Debby Jedd has been working at the store for nine years and is a firsthand witness to the fri-volity of the State of Ohio's 27-year foray into organizing, operating, and promoting the numbers racket. She's heard the arguments -- that people play for entertainment, that the profits go to education, that there's nothing wrong with a little harmless wagering -- and thinks they amount to a load of crap.
"We have people come in here who play $200 a day," says Jedd, a wispy woman with short dark hair and glasses. "If they had the money, that would be one thing. But they don't have the money."
Jedd usually operates the special line at the store where customers can choose from 39 different instant games (the state offers more than 40) and six drawings, ranging in price from 50 cents to $10. She can punch in customers' special combinations of numbers in the Pick 3 and Pick 4 games with amazing speed, and the clicks and beeps form a peculiar soundtrack that rarely stops.
Like a bartender who knows her regulars, Jedd knows most of the customers by name and the games they play. And it is games -- plural -- because nobody at this store bets on just one. Most lose their money on Pick 3, Pick 4, Super Lotto, and a variety of the scratch-off instants.
A woman in her 70s who works at one of the neighborhood Polish fraternal organizations gingerly walks in, her gait impaired by the frailty that comes with age. She plays daily and gives Jedd her numbers and the instants she wants with the precision of an experienced player. The elderly woman's face is marked by wrinkles and age spots, but she doesn't bat an eyelash when Jedd rings her up. The total, for her various lottery plays and two packs of cigarettes: $87.78.
Next comes Dawn, a woman in her mid-30s wearing an Indians jacket. Dawn buys a six-pack of Miller High Life 16-ouncers, two small bags of Doritos, and eight instant lottery tickets.
"If you want to throw your money away, why don't you give it to me? Don't give it to the lottery," Jedd teases Dawn, who says she comes in several times a day to play. As Dawn walks out the front door, Jedd turns and whispers: "Give her three minutes, and she'll be back in here."
Two minutes later, Dawn reappears to redeem a winning instant that earns her another ticket. She gets the free ticket and buys seven more. As Jedd hands her the change, she remarks that Dawn should just buy the full $20 worth of instants. "You know you're gonna spend it anyway."
And so it goes. A retiree buys $42 worth of Pick 3's and Pick 4's. Another middle-aged man drops $72 on Pick 3's, Pick 4's, and instants. ("That's not bad," Jedd says. "He usually spends $90, and he's in twice a day.") Another man buys $20 worth of Buckeye 5's and Super Lottos. The place is a veritable Noah's Ark of lottery plays, with two of every kind. Black and white, old and young, man and woman alike -- they all come to gamble.
Jedd scoffs at the suggestion that lottery sales have been lagging the past few years. "We sell more," she says. "We're always selling more, especially now that we have the drawings twice a day."
Jedd is referring to the Ohio Lottery's doubling last year of Pick 3 and Pick 4 drawings. That was just the first in a series of changes made since Bob Taft was elected governor in November 1998. After a relatively quiet period under his predecessor, anti-gambling Governor George Voinovich, the lottery is now in the midst of a major overhaul. Existing games are being expanded, the state is preparing to join PowerBall or a similar multistate game, and it's all being more heavily advertised and marketed.
In short, the lottery is being pumped up on every front by the Taft administration.
Taft, who refused to be interviewed for this story, has tried to characterize the expansion as simply "stabilizing" the lottery, a means to stay competitive with neighboring states, keeping money from flowing out of state.
But like the constant justification cited by lottery supporters -- that the money goes to education -- these rationales amount to smoke and mirrors hiding the real issue: The lottery has become a financial crutch for the state budget.
Though lottery revenues constitute only a small percentage of the total budget, Taft's own staff characterizes them as critical and admits that not having them would mean facing some difficult choices -- to wit, raising taxes or making budget cuts, even in these flush times. In effect, the lottery amounts to a political dodge, keeping the governor from making some hard decisions.
Anecdotally, this hidden tax comes from people least able to pay it, like the aforementioned folks at the Convenient. Lottery proponents have always stressed that people have the choice whether or not to play. That may be true. But like cigarettes and alcohol, the lottery is heavily advertised and marketed, particularly in the inner city and now, critics say, to kids. In short, to the people most vulnerable to the false hope of getting rich quick.
While spokespeople insist it's a voluntary form of harmless entertainment, in reality the lottery has become another state bureaucracy -- and like every government bureaucracy, self-perpetuating. As the bureaucracy grows, so do revenues -- $2.1 billion last year -- as do the number of games, feeding the larger "culture of gambling" in this country, the growth of which few have stopped to consider or quantify, because it's feeding government coffers.
In fact, the only bigger junkie than some of the troubled players is the state, which has become addicted to gambling profits. And like any drug, the fix needs to keep getting bigger, for both users and the dealer. Ohio Lottery officials say relatively few people are interested in jackpots of less than $20 million anymore, just as the Taft administration says a $671 million profit is no longer enough.
The whole business adds up to a moral and economic quagmire that few will discuss candidly, much less call for what it is. While voters here have generally supported the lottery, they have rejected other forms of gambling, like riverboat casinos. Maybe Ohioans do want a bigger, bolder lottery. But the professed anti-gambling Taft and the state legislature aren't asking. They're trying to sell the changes as just another bureaucratic or economic decision, not a major expansion of gambling in Ohio.
"Governor Taft is going to have to decide what side he's going to come down on," says Reverend John Edgar, a Methodist minister who is spearheading a coalition of activists trying to rein in the lottery. "He cannot say, "I'm opposed to gambling, and yet I'm going to expand the state lottery.'"
Right now, that's exactly what Taft is saying.
The Shell Game
When Ohio voters approved a constitutional amendment creating a state lottery in 1973, the chief proponent of the game was State Representative Ron Mottl, a Democrat from Parma. As a reward, the Ohio Lottery Commission was headquartered in Cleveland rather than Columbus. It remains one of the only state agencies headquartered here.
The first games went on sale in August 1974, and sales for fiscal year 1975 were nearly $92 million, with profits reaching nearly $37 million. The games grew in popularity throughout the 1980s, and in 1987 voters approved another amendment to the state constitution. That amendment required the Lottery Commission to maintain at least a 30 percent profit margin. It also stipulated that all profits be turned over to the Ohio general fund and used to finance primary, secondary, and vocational education.
Selling the lottery as a panacea for state schools was a way to gain popular support for expanding it. That year, the Super Lotto went to two drawings per week, Pick 4 went to six drawings, and the Cash Explosion game show was started. For fiscal year 1988, sales jumped nearly 29 percent, and profits were up nearly 35 percent.
The amendment also provided lottery supporters with a convenient rallying cry, as any vote against the lottery ever since has been equated with a vote against school funding and the children of Ohio.
"It's not about the lottery; it's about education," says Scott Milburn, Taft's spokesman. "And the governor puts education above every other policy issue in terms of priority. Obviously, the lottery is a major source of education dollars. If the lottery declines or goes away, it's not a question of "Gee, do we miss the lottery?' It's a question of "Hey, how do we plug this hole, and which part of state government takes the hit to plug the hole?'
"That's not a question the governor really wants to face," Milburn admits. "So, you stabilize the lottery."
Never mind that part of the governor's job is to make difficult decisions about what is best for the state and its residents.
Milburn and others say Taft is not really expanding the lottery, but trying to return it to previous levels. They note that, while sales last year exceeded $2.1 billion, the fourth-best year ever, with profits of $671 million, those figures are actually in decline. Sales peaked at $2.3 billion in fiscal year 1996 and have been slipping ever since. Profits peaked in fiscal year 1997 at $748.5 million, and they, too, have been sliding.
But when lottery supporters talk about the profits going to education, they often leave out a crucial fact: Lottery proceeds do not increase state funding for education. Rather, they are part of a creative accounting maneuver that allows the state legislature to divert dollars that would be earmarked for education to other projects.
Take last year, for example. When the state legislature appropriated $13 billion for education in Ohio, the lottery contributed $671 million, nearly 6 percent of the total. But it was not a proverbial cherry on top. Rather, lawmakers factored the $671 million into the final tally, then were free to spend that amount on other projects.
"Regardless of what place that money takes in the equation, it's still money that's needed, it's money that's used, and it's money that's missed. And if you take that money out of the equation, you've got to fill that gap," Milburn says. "You have to fill that gap with money from other programs. That's money from parks, transportation, and other needed programs."
Cleveland City Councilman Joe Cimperman, whose ward has one of the highest rates of lottery sales in the state, calls the use of lottery proceeds for schools a "shell game."
"It's a complete sham that we couch in education funding," Cimperman says. "We're so shameless about it."
Taft barely mentioned the lottery while crisscrossing Ohio in search of votes, but he began pumping it up soon after he was elected. Even before he was sworn in, Taft told The Cincinnati Enquirer: "I believe that if we're going to have a lottery, it needs to be viable, and it needs to provide a reliable source of revenue for the schools."
Taft told the paper he was "not a big advocate of gambling," but added: "Sales are volatile right now, and they could be in decline tomorrow if we don't address the issue. That means keeping up with the market in terms of lotteries around the country."
So just seven months into office, Taft expanded the lottery for the first time in seven years. He added an afternoon daily drawing, in addition to the nightly drawings, of the Pick 3 and Pick 4 games, which everyone agrees are inner-city games played primarily by the poor: direct descendants of the numbers rackets formerly run by the likes of mobster Shondor Birns and boxing promoter Don King. Taft tried unsuccessfully to get Ohio into the multistate New Year's Eve "Millennium" drawing. The Lottery Commission's marketing budget has been increased 40 percent since Taft's election, and the governor has endorsed a plan for Ohio to join PowerBall, or a similar multistate lottery, in which the only thing higher than the payouts are the odds against winning them.
What's more, a special commission set up by the state legislature has talked of expanding the lottery to include games that can be purchased via the Internet and installing slot machines -- "video lottery terminals" in politicalese -- in racetracks across the state. The commission also recommended eliminating or relaxing the law requiring a 30 percent profit margin, though Taft has not yet decided if he will support that proposal.
Those changes have drawn the attention of people like Edgar, the Columbus-area Methodist minister who, in 1996, worked with the Ohio Council of Churches to defeat a proposed change to the state constitution to allow gambling on riverboat casinos. Now he has turned his attention to the lottery.
Earlier this month in Columbus, Edgar met with activists from across the state and country to strategize about ways to derail the Ohio Lottery's expansion. He says the state has no business operating and promoting a game that he views as a regressive tax on the poor.
"It is a form of very poor taxation that takes income from poor and working-class folks who can least afford it, and it does it in a very deceptive way," Edgar says. "It implies to folks that they're going to get rich, and that they've got a real chance of winning, when that is not at all true. I think it's reprehensible for the State of Ohio to be taking advantage of its own citizens in this fashion."
Stacking the Deck
Indeed, the lottery offers bets that are the longest of long shots. The odds are better playing the slots or blackjack in Las Vegas, or even getting together with friends for a weekly poker game. The lottery's payouts are much larger, but odds of winning are staggering.
A $1 player's chances of picking all six numbers in the Super Lotto is 1 in 10.7 million and will increase to 1 in 14 million when changes to the game are implemented in July. The odds of hitting the Kicker's six numbers, for a $100,000 payout, are 1 in 1.1 million. The odds of picking all the right numbers for Buckeye 5, which also offers a $100,000 top prize, are 1 in 435,000. Even the chances of picking three of the five numbers in Buckeye 5, which will earn a player 10 bucks, are 1 in 88.
State Representative Donald Mottley, a Republican from the Dayton area, is at the other end of the spectrum from Edgar. An attorney who was trained as an economist, Mottley looks at numbers -- both profit projections for the Ohio Lottery Commission and Ohio's general fund -- with cool precision. He's come to the conclusion that, if the state is going to operate a lottery, it might as well squeeze as much money out of it as possible.
Mottley chaired the Ohio Lottery Profits Review Commission, the nine-person board set up last year to figure out ways to increase lottery revenues. The LPRC liked the online gambling idea, because it "may increase sales to higher income individuals and help counter accusations that the lottery targets those with lower levels of income." Additionally, the commission was told video gambling machines at racetracks could generate an additional $233 million in profits.
The LPRC also explored other options, including increasing advertising; earmarking lottery profits for specific projects, rather than dumping the money into the general fund; increasing efforts to prevent problem gambling; and specifically stating that low-income groups are not targeted by the lottery.
Faced with the political realities of living in a state that has overwhelmingly rejected gambling initiatives twice in the last decade, the LPRC trimmed its list to six recommendations. This month, Mottley introduced a bill that would authorize Ohio to join a multistate lottery, repeal the 30 percent profit margin requirement, and increase services for treating problem gambling.
His logic for boosting the lottery seems not far removed from the old adage that everybody else is doing it.
"There's $14 billion being bet by Ohioans, and most of it is out of state. Only $4 billion of that $14 billion is being bet in Ohio, with the lottery being $2 billion of it," says Mottley, who is confident his bill will be approved by the legislature. "If you get rid of legal betting in Ohio, I think a good bit of it would go to illegal betting or out-of-state betting. I don't think it greatly affects gambling behavior by Ohioans to have a lottery. What it does affect is how much of the profits from gambling stays in Ohio, rather than going across our borders or into some other illegal enterprise."
He notes that Ohio Lottery profits began to dip when neighboring states embraced gambling. PowerBall is available in Indiana, Kentucky, and West Virginia, while Michigan offers The Big Game, another multi-state lottery. Riverboat casinos are parked along the Ohio River in Indiana, while West Virginia has 30,000 video gambling terminals. And there are regular casinos in Detroit and Windsor, Ontario.
"We need a tool to get back some of the money we used to get from Ohioans," Mottley says. A failure to reverse the decline in lottery revenues, he warns, will mean increases in the state sales tax (from 5 percent to 5.6 percent) or the state income tax (bumping the top rate from 7.5 percent to 8.2 percent). He's confident there are enough votes in the legislature to override the unique coalition of conservative Republicans, who claim that expanding the lottery undermines family values, and urban Democrats, who say the lottery is really just a fancy tax on the poor.
No such warnings were ever sounded during the administration of anti-gambling Governor George Voinovich. In fact, from 1990 through 1998, the lottery was a taboo subject.
"Under Voinovich, they were functioning, but they didn't go out of their way to let you know they were there," Cimperman says. "Taft has injected new life into it."
Indeed, William Howell, who served as Lottery commissioner from 1995-'98, increased the lottery's marketing budget by 40 percent, to $21.3 million, soon after Taft defeated Lee Fisher. Despite Howell's move -- seen as an effort to show he was willing to lead a more aggressive lottery -- Taft replaced him with Mitchell J. Brown.
Marcus Advertising, which had handled lottery ads since the game's inception in 1973, was replaced with Beachwood-based Stern Advertising. Some of that agency's decisions have come under fire. Anti-gambling groups criticized lottery advertising at Geauga Lake amusement park, claiming the ads target children. This month, the Ohio Lottery is sponsoring a series of performances by high school bands at the Rock and Roll Hall of Fame. Ads running in this publication and others start: "Attention! High school rock bands" in lettering roughly the same size as the ubiquitous Ohio Lottery logo.
Critics also point to instant games like Monopoly, Battleship, and Monster Cash -- decorated with a cartoonish vampire -- as proof that the lottery has, if not specifically targeted minors, not exactly dissuaded them from gambling, either.
"We're Joe Camel now," charges Cimperman.
"[Voinovich] wanted absolutely no expansion of the Lottery, period," says Howell. "When I took the job, [Voinovich] told me he wanted it run efficiently and ethically, but he did not want to do anything to expand it. He was not in favor of [the lottery], but since it was there and it was a revenue source, fine. But that was the extent of it."
Cynics regarded Voinovich's stance as a protective maneuver, benefiting the Bingo games run by Catholic churches, whose parishioners make up the core of Voinovich's support. Either way, no new games were added after 1992, and the advertising budget was cut during the Voinovich administration.
Voinovich wasn't completely puritanical about the Lottery Commission, according to one former employee. "Voinovich used the Lottery as a political-patronage dumping ground. So while Voinovich decried the use of lotteries and how wrong they were and all this stuff, he wasn't shy about dumping tons of political operatives in there."
Indeed, during the Voinovich administration, the number of full-time employees at the Ohio Lottery Commission went from 300 in 1990, when he took office, to 386 in 1994. Last year the commission had 346 employees.
"It's such a patronage mill, such a place to stick people who worked on your campaign," Cimperman says. "It's a bald, shameless political machination."
Double or Nothing
Political machine or not, the Lottery Commission is working with renewed zeal after eight years of a disinterested Voinovich. This month it voted to overhaul its flagship game, Super Lotto, by July, adding two more balls to the drawing plus a "bonus" seventh ball. The changes mean players face longer odds of winning the jackpot, but have better odds of winning smaller prizes.
The changes to Super Lotto -- whose sales have slipped nearly 50 percent in the past decade -- are expected to clear the way for the state to join PowerBall or The Big Game.
"Its profitability has gone down the tubes," says Sandy Lesko-Mounts, the Lottery Commission's spokeswoman. "We lose money on it all the way until it hits $20 million."
According to Lesko-Mounts, the profitability slide is due in part to declining ticket sales, which are attributed to increased competition and something called "jackpot fatigue." In the day and age of PowerBall's $80 million jackpots and "Who Wants to Be a Millionaire?" a $4 million payout doesn't sound that big.
What's more, declining interest rates have forced the state to contribute more money to cover the prizes. Last year the Lottery Commission had to invest nearly $400,000 more per Super Lotto game than it did earlier in the decade to keep up with payouts.
But before tweaking Super Lotto, which has more of a suburban appeal than the Lottery's other games, the Taft administration doubled the number of daily Pick 3 and Pick 4 drawings. Last July, the Lottery added a lunchtime drawing to the existing evening game. And this month, the commission reintroduced a game it experimented with last year, the Red Ball game, in which the Pick 3 jackpot is increased by 20 percent if a red ball is drawn out of a hopper with seven white balls.
Taft was criticized for doubling the two games most closely associated with poor people gambling in the ghetto. Cleveland City Council, among others, passed a resolution condemning the decision.
"For people who play twice a day, their chances of winning will be doubled," Lesko-Mounts says. "But it was really an accessibility option. We've found people are splitting their bets. I don't think it's exploded into an enormous problem."
Actually, the effects of all lottery games are a bit of a mystery, since the state has not done a comprehensive study on the subject in more than a decade. In the mid-'80s, an outside research firm decreed the average Ohio Lottery player to be a white male with a high school diploma. Currently, the Lottery Commission conducts polls via winner-response forms and does some focus-group sampling for marketing its instant games, Lesko-Mounts says. But there has been no comprehensive look at who plays the lottery or why they play it.
As one might expect, both sides can cite data that support their positions. David Gale, of the North American Association of State and Provincial Lotteries, testified in Columbus that the typical lottery player has some college education and an above-average income. "That makes sense, because people who play tend to play with disposable income," Mottley says.
On the other side, Tom Grey, the executive director of the National Coalition Against Legalized Gambling, was among the contingent meeting with Edgar this month. He cites a study conducted last year by Primerica and the Consumer Federation of America that found 27 percent of Americans believe their best chance to build wealth for their retirement is by playing the lottery -- a figure that jumped to 40 percent for those earning less than $35,000.
"I suppose there are no impartial witnesses in this argument," Mottley acknowledges.
The most comprehensive national gambling study to date was released last June. It was conducted on behalf of the National Gambling Impact Study Commission, which Congress created in 1996 to review federal, state, local, and tribal gambling policies. What that commission found is that nobody knows much of anything.
"What is clear is there is still a dearth of impartial, objective research that the public and policymakers need to shape public policies on the impacts of legal gambling," the NGISC report read.
The report also gave some support to those who claim lotteries have much more to do with taxation than entertainment. "In an anti-tax era, many state governments have become dependent on "painless' lottery revenues, and pressures are always there to increase them. The evolution of state lotteries is a classic case of public policy being made piecemeal and incrementally, with little or no general overview," the report said, noting that the public welfare is "taken into consideration only intermittently."
The NGISC's final report came with recommendations for continued research on who gambles and why, as well as the creation of citizens' overview committees in every state with gambling. Most damning, though, is the NGISC's final recommendation on how best to regulate gambling.
"Heavy governmental promotion of lotteries, largely located in neighborhoods, may contribute disproportionately to the culture of casual gambling in the United States. The commission, therefore, recommends that states curtail the growth of new lottery games, reduce lottery advertising, and limit locations for new lottery machines."
In short, do exactly the opposite of what Ohio and the Taft administration has embarked upon.
You Bet Your Life
Mottley bristles at the suggestion that the lottery is a way to get money from poor people -- who have little taxable income or property -- and criticizes politicians and activists who characterize it as such.
"It isn't a tax; it's voluntary payment," he says incredulously. "So they want to bring back illegal numbers? Is that their idea? The fact is that these were people who were betting anyway, perhaps putting their lives at risk by betting with organized crime, who are now betting in a legal fashion with the lottery. But it's a choice to bet, and that's what [critics] are missing."
Cimperman says the rhetoric coming out of the statehouse conflicts with what he sees in his ward. "It's hurting the very people the government is supposed to protect. Yes, people have a choice. But when we know people are struggling to make it, they don't need another opportunity to make the wrong decision."
Observers on both sides of the argument see a new battleground emerging soon. Since voters overwhelmingly rejected initiatives to allow riverboat casino gambling in Ohio in 1990 and 1996, that option appears to be, at least temporarily, dead on arrival. But there has been no vote on putting video lottery terminals in racetracks.
"That's the progression," says Grey, of the National Coalition Against Legalized Gambling. "[The Lottery Commission] will look to that, because sales are going down, and they'll say, "We have to compete with the casinos around us.'"
Howell, Voinovich's lottery commissioner for four years, agrees there will be another push for increased legalized gambling.
"And the video terminal is the door that opens it," Howell says. "The video poker machines and putting the video slot machines in the racetrack, that's where the expansion will come."
Which would be just fine with the folks back at the Convenient Food Mart on East 71st Street, where customers line up on this April Fool's Day with everything from $50 bills to handfuls of pennies to buy their lottery tickets. Across from the Polish Village bar, where a neon sign advertises Genny Beer, many of the lottery players say they would welcome the introduction of the video lottery terminals and PowerBall, whose odds of winning are roughly 1 in 80 million.
John Pruitt is a retiree who bets a staggering $200 a day, split between four different stores in the neighborhood. He says playing at different stores increases his chances of winning. He's mostly a Pick 3 and Pick 4 man, but says he wouldn't mind laying a wager or two on PowerBall.
"I play every cotton-picking game, and I'm gonna quit soon," he says good-naturedly, while handing over $48 for his Pick 3, Pick 4, and Super Lotto tickets. "I can't rest if I don't play. I guess I've just got the heart for it."
Pruitt says that, last year, he bet $50,000 on the lottery and won back $20,000. He says the lottery is the one vice he allows himself and would like to see the games expanded to include PowerBall. Just don't tell him that people play for the thrill of betting and don't really expect to win.
"That's rich people talking," Pruitt says. Then he stuffs his lottery tickets into his pockets and walks out the front door into the sunlight. There are only three hours until the next drawing, and Pruitt still needs to buy lottery tickets at three more stores.
Mike Tobin can be reached at mike.tobin @clevescene.com.
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