Officials Laud D.C. Lottery as Success

By Yolanda Woodlee
Washington Post Staff Writer
Sunday, August 26, 2007

Christopher Snipes didn't really believe he would win the D.C. Lottery when a store owner persuaded him to plop down $1 to buy a scratch ticket on the first day of the game in August 1982.

But seconds later, as the Metrobus driver finished scratching off the third $10,000 spot, he asked: "Don't three of a kind win?"

As the game's first $10,000 winner in the District, he was an instant celebrity and an immediate convert.

"It was great," Snipes, 66, recalled last week. "You would have thought I won a million dollars."

Like Snipes, Nadine P. Winter, then a member of the D.C. Council, needed convincing. She feared low-income District residents would squander their rent and grocery money on the chance to win fast cash.

But looking at the city's cash-strapped budget, Winter figured the lottery was a chance worth taking.

"I had been very vocal until it got down to the vote," said Winter, who later served on the lottery board. "I began to look at the budget. There were so many general needs at that time."

As the D.C. Lottery celebrates its 25th anniversary, city officials still marvel at its fiscal impact. While it has created 42 millionaires, the city has won on its wager, too. More than $1.4 billion has been transferred to the treasury since 1982, when after one month, lottery profits totaled $4.2 million. Since 2003, more than $70 million has moved to the general fund every year.

"The lottery has contributed a lot financially to the city," Winter, 82, said in a recent interview. "I don't think anybody was sure how much money it would bring."

City officials now acknowledge that they rely on the lottery to help finance the city's $5.2 billion local budget.

"The money is critical," said Natwar M. Gandhi, the city's chief financial officer. His office gained control of the lottery in the mid-1990s after the five-member lottery board's management was questioned. If the lottery were stopped tomorrow, "we would have to scramble to find $70 million. . . . There would be a hole in the general fund."

Ed Lazere, executive director of the D.C. Fiscal Policy Institute, which analyzes District tax and budget issues, said it may be "dumped into the general fund, but the yield from the lottery is about equal to the District's budget for the University of the District of Columbia or its employment services agency or its juvenile justice agency."

Lottery director Jeanette A. Michael, who has run the agency for five years, said the agency exists "to generate revenue and produce a profit." But it also has paid winners more than $2 billion over 25 years.

Last year, prizes from all the games, including D.C. Scratchers and Powerball, totaled $147 million. At least 65 percent of the money from scratch tickets goes out in prizes, lottery spokesman Bob Hainey said.

At a lunchtime celebration Thursday at the L'Enfant Plaza, Michael thanked the hundreds of customers who stopped by for buying lottery tickets for the past 25 years.

"Every time you buy a lottery ticket, the city wins," said Michael, who is the agency's eighth director.

It's a message that she repeats to her staff members, too. "Dr. Gandhi says think about students who can't get a meal or health services," she says. "If we don't do our job, these children and parents may not have access to those services."

"We believe the $70 million-plus that we transfer to the government is essential," she said.

The transfer became a hot political topic in the 2006 election when Mayor Adrian M. Fenty (D), then on the council, suggested that the city tap the lottery proceeds for use as collateral to borrow $1 billion for school renovations.

His opponent, former council chairman Linda W. Cropp (D), called it "a pipe dream." "It sounds good . . . but the dollars aren't really there," she said. "That money is already being spent."

Now that the schools are getting $100 million from the sales tax, Fenty said he doesn't intend to change how the lottery monies are distributed.

In some states, lottery money is earmarked for programs to help the elderly or the young, officials said. In Virginia, the state constitution requires that lottery dollars be used for public education. Although many District and Maryland residents also think their lotteries pay for education, the money actually is deposited into the general fund.

"When the lottery first started, I thought they said it would go to the city coffers and it would go for education," said Janette Hoston Harris, the city's historian. "It always bugged me that the schools are in bad shape and the lottery makes so much money."

But council member Marion Barry (D-Ward 8), who was mayor when the lottery was launched, said the District's schools already received much of the tax revenue, so the lawmakers decided to use the money to supplement the entire budget.

"It has more than reached my expectations," Barry said. "Seventy-five million dollars is nothing to sneeze at. It lessened our tax burden on D.C. citizens."

It has also made some players wealthy. In 2001, Ihsan Khan, a cabdriver, won a $55.2 million jackpot, the largest single Powerball lottery prize in District history. Lottery officials say Khan, who later became mayor of Battagram, Pakistan, used some of his money to help his city's victims after a 2005 earthquake.

Small-business owners say they welcome the lottery because it draws shoppers, and they receive a commission for selling tickets. Lottery agents earned $16.5 million in commissions last year.

Some criticize the lottery as a tax on low-income people, Barry said, but he doesn't agree.

"Nobody makes anybody play the lottery," Barry said. "It's a voluntary contribution to the D.C. treasury. It was a great vision."

Staff researcher Meg Smith contributed to this report.