A bill currently being debated in the Florida Legislature risks wiping out up to $235 million in education funding, by making changes to the state’s lottery program, with no plan to replace the funds.
According to the Florida Department of Lottery’s most recent financial report, ticket sales were $6.7 billion during the 2017-2018 fiscal year, an increase of about $540 million from the previous fiscal year. From that amount, approximately 65.58 percent went to prize payouts for winners.
Of the remaining funds, approximately $1.76 billion went to the Educational Enhancement Trust Fund (EETF), which provides funding for Florida’s K-12 public school system, the State University System, scholarships like the popular Bright Futures program, and other student financial aid programs. Other amounts are allocated for expenses like advertising, salaries, administrative costs, and retailer commissions. Any unclaimed prize funds are also transferred to the EETF.
The bill in question, HB 629 and its Senate companion SB 1264, proposes to prohibit the “use of personal electronic devices to play, store, redeem, sell, or purchase lottery tickets or games” (i.e., smartphones and other mobile devices) and to require a new warning label to be printed on lottery tickets and advertisements.
The Florida Legislature’s Revenue Estimating Conference, responsible for estimating the fiscal impact of bills, reviewed HB 629 and issued a report.
The prohibition on mobile lottery ticket sales isn’t expected to have a major financial impact, since mobile and online sales aren’t currently happening. This bill merely preserves the status quo on this issue, restricting sales to the more than 13,000 authorized retailers around the state. Predicting what might happen if online sales were to allowed would be “impossible to calculate,” according to the report.
It’s the warning label that poses the problem.
Warning labels for Florida lottery tickets have been proposed in the past, but in a less obtrusive manner than this bill. Former Gov. Rick Scott (R-FL) vetoed a 2017 bill that would have printed a rotating series of six different warnings on tickets, including short phrases like, “WARNING: GAMBLING CAN BE ADDICTIVE.” Current Florida law does not require any warning on tickets or ads, but the Florida Department of the Lottery has been in the practice of including “a message which promotes responsible play on its tickets, play slips, and most promotional/advertising products and encourages anyone struggling with a gambling problem to contact the 1-888-ADMIT-IT phone line.”
HB 629 would require a much longer warning than ever proposed before in Florida or required by any other state’s lottery. If passed, the bill would mandate that the warning take up at least ten percent of the space on the front of the ticket or a printed or electronic advertisement, and be read aloud at the end of a radio ad. The proposed language:
“WARNING: PLAYING A LOTTERY GAME CONSTITUTES GAMBLING AND MAY LEAD TO ADDICTION AND/OR COMPULSIVE BEHAVIOR. THE CHANCES OF WINNING A BIG PRIZE ARE VERY LOW.”
Because no other state has a warning label this long and prominent on their lottery tickets, the Revenue Estimating Conference reviewed the effects of other mandated warning labels, such as for cigarettes or sugary drinks, in reducing sales of those products.
Based on these studies, and their past review conducted for the 2017 legislation, the Revenue Estimating Conference estimated that the impact of this warning label would result in a reduction in sales during the first year of being enacted of $248.9 million on the low end, up to a reduction in sales of $924.6 million on the high end.
Specifically regarding the impact to the EETF, HB 629 is estimated to cost between $63.2 million on the low end and $234.9 million on the high end.
The estimated costs are expected to continue to rise in future years, costing the EETF up to $252.3 million during the 2023-2024 fiscal year. From the Revenue Estimating Committee’s report (page 133):
Concerns about negative consequences from gambling are a worthy subject to debate — especially here where the lottery is essentially a government-sponsored gambling enterprise promoted to the taxpayers of Florida — and preventing fraud is a noble endeavor as well, as noted by the bill’s sponsor, Rep. Will Robinson (R-Brandenton). Robinson told Florida Daily that the prohibition on expanding to online sales was to prevent “fraudulent websites” from scamming Floridians with fake ticket sales.
However, wiping out hundreds of millions of dollars from an already tight education budget — with no plan to replace it — is irresponsible.
The expected impact from these warning labels stands to take almost a quarter of a billion dollars from education annually for the near future. As Florida Politics noted, this bill risks destroying up to an eighth of the total funds the Lottery expects to send to EETF this year. Even the lowest estimated figure represents lost funding for Bright Futures scholarships for 5,000 Florida college students.
Personally, I benefitted from the Bright Futures scholarship when I attended the University of Florida, and it is part of the reason I was able to graduate without student loan debt. The economic impact that financial freedom has had on my life is incalculable, and there are thousands of other Florida university graduates with stories similar to mine.
Gov. Ron DeSantis (R-FL) has proposed several ambitious education programs to kick off his first year in office, including a $10 million fund to pay college tuition for teachers who agree to teach in Florida for at least five years, and to nearly double the allocation for the “Best and Brightest” bonus program for highly effective teachers and principals, up to nearly $423 million.
Getting the governor’s proposals past the budget hawks in the Legislature is expected to be an uphill climb. If they are already a quarter of a billion dollars in the hole from lost lottery funds, it will only be tougher. The bill is currently progressing through committee in the House; DeSantis may wish to consider sending a message that he intends to veto the bill if it keeps the warning label language intact.
Let’s have a open and honest debate about the Florida Lottery, and about education funding — especially whether relying on promoting the sale of lottery tickets is a proper and sustainable financial strategy. But let’s not rashly take a step that would significantly undermine the foundational support the Lottery provides to our state’s education system.
Foliow Sarah Rumpf on Twitter: @rumpfshaker.
Photo by Florida Lottery via Facebook.