Casinos for kids? That’s what they HOPE you think

AJC Photo / Curtis Compton

AJC Photo / Curtis Compton

It turns out, the HOPE scholarship has financial problems in part because Georgians have gotten smarter. How much smarter? We may soon find out.

The smarts I’m talking about aren’t in the classroom, where an increasing number of Georgia students have earned (or sweet-talked their way into) B averages to qualify for the state’s merit-based college money. I’m talking about the way Georgians quickly wised up to the relative odds of playing one kind of lottery game vs. another.

First, a bit of background. Legislators have long bemoaned the Georgia Lottery Corp.’s failure to hit the 35 percent profit margin strongly suggested by state law. Lately, only about a quarter of lottery revenues have gone to HOPE and pre-K programs. For a nearly $4 billion-a-year enterprise, the difference is almost $400 million. That would be more than enough to ensure HOPE fully covered tuition, instead of today’s average of about 87 percent of tuition.

Why 25 percent instead of 35 percent? Lottery president Debbie Alford told legislators Monday it’s because players favor scratch-off tickets, which pay out 71 cents on each dollar gambled, rather than tickets for marquee drawings such as Powerball, which return 52 cents on the dollar and thus are less than half as profitable for the state.

Twenty years ago, people in Georgia spent about $2 on those more-profitable draw tickets for every $1 spent on the better-odds scratchers. By last year they’d wised up, and it was the other way around.  (Of course, lottery players also spent almost three times as much on tickets as back then, even though the average ticket is still a money loser, so let’s not get carried away calling ourselves brainiacs.)

Still, because folks are buying a lot more of those scratchers — and it’s better to have a quarter of a $4 billion business than a third of a $1.4 billion one — the lottery works well from that standpoint. But it’s also better to get a full scholarship than a partial one, so legislators are feeling pressure to find more revenue.

That brings us to the new IQ test for Georgia’s voters.

Alford spoke Monday to help set up the main draw for two days of hearings: the possibility of legalizing casino gambling.

HOPE’s shortfall is the stated reason for the new casino push. But if you believe this really is all about the kids, you’re the mark in this game of Three-card Monte.

There have been whispers about expanding gambling here for years. MGM Resorts would want to build a $1 billion casino in Atlanta even if HOPE didn’t exist, because it would make a lot of money.

They could make even more money with Georgia’s proposed tax rate of 12 percent. The need for a low tax rate was underscored by the first two casino-industry witnesses, who warned higher-tax states are losing gambling revenues to others.

That’s a sound economic principle. But the entire point of legalizing casinos, or so we’re told, is to fuel a cash grab to shore up HOPE.

In the meantime, the denominator in this equation, the soaring cost of tuition, has been scarcely scrutinized. Tuition at Georgia Tech and UGA has been growing almost twice as fast as lottery profits, which have barely kept pace with most other state colleges. The proposed casino plan is projected to bring in $280 million for HOPE and pre-K combined, compared to $1 billion now. Given current trends, sooner than later, we’ll be right back where we are now. And then what?

Then, presumably, we’d talk about either cutting costs or finding yet another source of taxes. Why not have that tough conversation now? Here’s betting it’s because some folks want casinos here anyway.

We can have a debate about casinos. But smart Georgians won’t be fooled into thinking we’re really talking about HOPE.

Reader Comments 0

46 comments
Long Memories
Long Memories

Supply and demand says that if you get more money for tuition then tuition will skyrocket even more.  Hold tuition (AND FEES) to the consumer price index.  The lottery can't keep up with these exorbitant increases and overstaffing in these facilities as well as the lack of utilization of space. 4 casinos closed in Atlantic City, 2 in Mississippi.    Casinos suck the life out of economies when they come in. More casinos are competing for a shrinking market and they will continue to close.

Wascatlady
Wascatlady

When HOPE came along, Georgia discontinued its participation in SSIG, a state/federal partnership that provided money for POOR STUDENTS based on income.  HOPE goes disproportionately to upper middle class and upper class students. Coincidence? Nah.

LilBarryBailout
LilBarryBailout

@Wascatlady

HOPE goes to students that achieve a certain level of success in high school.

And no, it's no coincidence that people who do middle- and upper-class behaviors get middle- upper-class results.

clintontoast2016
clintontoast2016

dems only angle is taking in more money to spend. If Georgia tax payers didn't have to foot the bill for these new federal programs we wouldn't have to resort to almost any means necessary to gain more funds. 

stogiefogey
stogiefogey

I try to but a GA Lottery ticket whenever I'm in the grocery store to help repay the $ they shelled out to finance my kids' college educations.

Unfortunately about the half the time I walk out empty handed because the lone clerk behind the customer service desk is involved in doing money transfers to Mexico or ? for non-traditional tourists. I have closed mortgages in less time than some of those money transfer transactions take!

MANGLER
MANGLER

The State would just remove every $1 raised via the gambling vice taxes from the general education fund, just like they do with current lottery vice taxes.  Education doesn't see a net increase in funds, but the State does.

Starik
Starik

Teach gambling courses in the high schools. Improve math skills and job prospects.

Wascatlady
Wascatlady

I agree with you, Kyle.  It isn't about helping students. They might benefit some, but that is not the prime driver in bringing casinos.

M H Smith
M H Smith

@Wascatlady 


Hope shouldn't get another penny not while we cannot afford healthcare to 600,000 people.

Expanding gambling isn't the problem, expanding HOPE beyond it's dedicated source of revenue, the lottery, IS!  

Wascatlady
Wascatlady

@M H Smith @Wascatlady We SHOULD be getting the full 35% to HOPE/PreK!  Our legislators have failed in their jobs again!  Since the Lottery Corp has been "unable" (unwilling) to follow the guidelines they agreed on, bring in another corp that WILL do what was agreed.  The program CAN be awarded to another group, since the Lottery Corp has not lived up to the agreement.

Kyle_Wingfield
Kyle_Wingfield moderator

@Wascatlady The lottery will never hit the 35% target as long as people are buying more scratch tickets. They only return about 17% profit. But lottery players have chosen overwhelmingly to buy those kinds of tickets.

So here's your choice: Would you rather take half the scratch tickets off the shelves? That would drive the profit margin up to 35% -- and the actual profits down by hundreds of millions of dollars. And you'll quickly learn you can't spend profit margin.

TicTacs
TicTacs

Republicans just don't know what to do unless someone else tells them.

JackClemens
JackClemens

"or finding yet another source of taxes" Weed and moonshine.

RafeHollister
RafeHollister

Raising money for Hope is akin to the fight against illegal immigration.  If you don't find a way to clap down on Universities and colleges just raising tuition to absorb the ever growing Hope money, you are just wasting your time, just like worrying about what to do with the illegals already here, while more are  pouring in everyday.  So, we should attach tuition to the Fed rate, ha, it would be zero until at least the Obama economic disaster is over.  If they don't like the Fed rate, attach it to the COLA on Soc Sec or something similar.  You have to figure out a way to bring the Universities to a more frugal budget reality.


We should legalize any form of volunteer taxation that people want to participate in.  If we have reached the point where we can cut up late term fetuses for body parts or legalize staying stoned on welfare dollars, why should we concern ourselves with blackjack, slot machines, and horse racing.

M H Smith
M H Smith

@RafeHollister 

You see how quickly a LIMITED SCHOLARSHIP became an UNLIMITED ENTITLEMENT.

HOPE and its' executive management have enough money.


Why isn't the Mayor pushing for gambling revenues to fund  GARDY HOSPITAL?

LilBarryBailout
LilBarryBailout

I hope if they build a casino, the city will be smart enough to install one of those systems that can detect and pinpoint the location of gunfire in an urban environment.  They'll need it.

LilBarryBailout
LilBarryBailout

@Eye wonder @LilBarryBailout

Yeah, that will work about as well as getting rid of drugs.

But do get your politicians to start working on repealing the Second Amendment.  I'd love to see how that works out for you.

Lil_Barry_Bailout
Lil_Barry_Bailout

@Eye wonder @LilBarryBailout

That's about as likely as getting rid of gnats.  And it would, of course, violate Our Second Amendment Rights.  You should urge your elected representatives to try to repeal it.  They're already working on repealing Our First Amendment--they could just add it to their liberal fascist to-do list.

Claver
Claver

Growing tuition and fees does seem to be a large part of the problem.  I'd love to see a detailed financial analysis of why UGA and Ga Tech tuition and fees keep going up so quickly.  Preferably a balanced one that is not pushing a particular ideological agenda.

Tom Pritchett
Tom Pritchett

@Kyle_Wingfield @DS  When the Florida lottery went into place in the 1970s, the promise was that lottery profits would go into education.  Pretty quickly the legislature there figured out they didn't have to put as many state dollars into education--freeing up more money for their other projects without raising taxes.  I believe Florida's experience was what prompted Governor Miller to specify that Georgia lottery profits would go specifics like to tuition rather than just into education as a broad category.  


I think if you'll go all the way back to just before the HOPE lottery was put in place you'll see the percentage of the cost of the university system (USG) funded by tuition was much lower than it is now.  It took our legislature longer to figure out a way to do what the Florida legislature did, but they succeeded.  By not continuing to support the university system at pre-HOPE levels, they forced the regents to turn to tuition increases to try to maintain the quality of the USG.  It would be interesting to see if HOPE would have problems funding full scholarships for all recipients if  state tax money were now funding the USG at pre-HOPE levels.

ByteMe
ByteMe

I'm fine with casinos.  I just think that we should be discussing them in places like Cairo or Brunswick... places that need the money.  Atlanta doesn't need the extra burden these places put on the infrastructure for the limited additional money they bring in.

bu2
bu2

@ByteMe

I'm fine with casinos too-in Alabama and North Carolina.


We don't need to go out of our way to encourage poor and middle income people to get addicted to gambling.  And casinos kill other local business, especially restaurants.  The idea of a casino is to never let people out the door. 

Dusty2
Dusty2

Kyle,


Please keep hammering away on this subject.  Gambling is just another way to steal money out of the pockets of those who need it most.  Rich people are not gambling at casinos.  But poor people want to take a wild wild chance of getting millions, or even thousands, by LUCK. Taking money from poor people, even if by choice, is not the way to finance education.


Casinos are for hopeless people wasting the little bit they have.  Their money goes to those who have it already and wish for more and it isn't schools or students.  

Hedley_Lammar
Hedley_Lammar

@Dusty2 All of that is true of course but let me ask you this


If Casinos or the lottery were removed. Do you think people who are poor at handling money would find something else to blow it on?


I do. At least this way some good comes from it. 

LilBarryBailout
LilBarryBailout

@Hedley_Lammar @Dusty2

Yes, and it's one of the few ways for those who consume so much entitlement spending to "give back" to those paying the bills around here.

Dusty2
Dusty2

@Hedley_Lammar @Dusty2 


There are plenty of ways to waste money.  I just don't want to add another one to tempt people to lose money with an impossible dream.


Casinos have nothing to do with education.  It is for the profit of businessmen and nothing else.  

bu2
bu2

@Hedley_Lammar @Dusty2


Casinos and the lottery make it real easy.  They are get rich quick schemes.  At least with horse racing, it moves slower.   You have to try harder to lose as much money.

Lukasatl
Lukasatl

we can do without casinos in the great state of georgia.

JFMcNamara
JFMcNamara

We probably shouldn't address rising tuition. That's a function of supply and demand.  That's a free market function and shouldn't be address unless we are adding more state funded colleges to increase supply.


Also, I thought one of the conservative principles was small government, but it seems like you want the government to intervene to block casinos.  Its also a free market concept.  Republicans should want Casinos to open either way, because you are interfering in the market if you block them.  The market should decide if it stays open, not the government.


I know what Jesus said, but Jesus will run casinos out of business because the people won't go if that is what he wants.

JFMcNamara
JFMcNamara

@Kyle_Wingfield @JFMcNamara  , I'm not saying you can't debate it.  I'm just saying that if you are actually against government intervention, you would be on the side that says the government shouldn't care about Casinos.


"The colleges with the highest demand would charge the highest demand and its students would get little to no subsidy."


Harvard, Yale, UPenn, Notre Dame, Stanford, Emory...I could go on, but I think you get my point.


The subsidies are doing more harm than good.  That is my point, and I think you agree with me. In a sense, its what your entire series on private education is about, isn't it?  The government's involvement in K-12 education is making it worse and driving up the cost (according to Kyle Wingfield).  Why is what I'm saying really that different? I'm saying stay out of it which is what I thought you were saying about K-12.

Kyle_Wingfield
Kyle_Wingfield moderator

@JFMcNamara "I'm just saying that if you are actually against government intervention"

You're responding to a caricature. I have met a lot of free-market people, including some really, really anti-government-intervention people. I don't know that I've met anyone who's in favor of zero regulation whatsoever. So the question is, what kind of regulation do we need? And regulation of industries that come with well-documented social ills is one type favored by even a lot of -- though certainly not all -- people who otherwise think of themselves as being pro-market.

"Harvard, Yale, UPenn, Notre Dame, Stanford, Emory...I could go on, but I think you get my point."

Are you saying their tuition isn't subsidized, in many cases by a great deal? In any event, we were talking about Georgia's public colleges. You see tuition rise as the schools become more selective, but they all received public subsidies in the way of annual budget appropriations.

"The subsidies are doing more harm than good.  That is my point, and I think you agree with me. In a sense, its what your entire series on private education is about, isn't it?"

You're conflating two things here. First, I tend to agree that overly generous college subsidies do distort the market and drive up prices, which is worst for those who don't get the subsidies. (There are tens of thousands of dollars of difference between a 2.9 GPA and a 3.0 in this state, which is one reason grade inflation is believed to be so rampant.) But the question, again, is how and how much to subsidize. With k-12 education, the dynamic is vastly different because of the near-monopoly local public schools have on public education funding. There, my argument is that families should have more choices in how to spend those education dollars -- and, in the case of that specific series, that it is possible to afford another option on the amount of money the state spends per pupil.

Kyle_Wingfield
Kyle_Wingfield moderator

@JFMcNamara I think the questions of whether to legalize casinos is a perfectly fine public policy question to debate. What I'm saying here is we shouldn't skew that debate by pretending it will shore up HOPE's shortfall for more than -- educated speculation here -- about a decade.

As for not addressing tuition because it's a function of supply and demand ... what we're talking about is how much to subsidize tuition, which mostly serves to distort that free market function you're talking about. If anything, in a free-market system (which, to be clear, isn't at all what we have) the colleges with the highest demand would charge the highest demand and its students would get little to no subsidy. In reality, we have a highly regulated, mostly subsidized higher-ed system and the question before us is how, and how much, to subsidize it.

Seen in that light, your free market snark doesn't really apply.

bu2
bu2

@Kyle_Wingfield @JFMcNamara


Money is fungible.  The casinos don't raise money for tuition.  They raise money.  How the government spends it should not be tied.  Particularly since casinos suck money out of other areas of the economy.

straker
straker

Kyle, one of the LAST things we need in Atalanta and elsewhere in Georgia is casinos.


Let's hope our legislators don't, for a change, be seduced by money and vote NO on this.

LogicalDude
LogicalDude

", the soaring cost of tuition, has been scarcely scrutinized. "


Exactly. 

Any mention of HOPE needs to have this piece examined. Why can't HOPE do what it's supposed to do with the funds available? 


Bruno2
Bruno2

As a dedicated, lifelong gambler, I sincerely hope that GA never allows casinos here--too much temptation.  Five hours to Biloxi is just far enough to limit my trips there to once or twice per year.  Some may argue that it's not the state's responsibility to help people control their impulses, but flipping it around, is it ethical for the state to profit from people's weaknesses??  At this point, it's not conjecture to know that many people can't control their gambling bug.  Growing up in NJ, I saw many people lose long-established family businesses due to gambling losses.


Per the scratch-off tickets, I rarely played until this year.  Those $30 scratchers are very tempting, however.  My biggest win was $150.  I'm guessing I'm a few hundred dollars n the hole thus far.....

Hedley_Lammar
Hedley_Lammar

@Bruno2 Me and you need to talk


I have some investments I think you wold be interested in

TicTacs
TicTacs

Freedom scares folks.