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NM Senate OKs buying lottery tickets using debit cards

SANTA FE, N.M. — You might be able to buy a lottery ticket in New Mexico using your debit card in the future.

The Senate voted 25-16 to pass a bill to move in that direction in an effort that supporters say will help boost lagging ticket sales and thus pump more lottery money toward college tuition scholarships.

The legislation eliminates a requirement that 30 percent of gross lottery revenues be transferred to the scholarship fund. It calls for lottery officials to transfer net revenues monthly for deposit into the fund.

The bill by Democratic Sen. John Arthur Smith of Deming garnered debate. Some lawmakers said it was risking funds that were required to be transferred, while supporters said allowing debit-card use would be good for lottery sales and bring in new players with money to spend.

Smith said gross lottery revenues in the state peaked at $148 million in 2008. Scratcher ticket sales have plummeted from $86.6 million in 2008 to just under $70 million in 2014, a 24 percent decline, he said.

Lottery sales need to be resuscitated with a higher percentage doled out in winnings and more investment in advertising, Smith said. Most states allow debit-card purchases of lottery tickets, he said. “We’re trying to re-establish market share by allowing a greater win percentage on scratchers and hopefully bring more money to the bottom-line,” Smith told fellow senators.

New Mexico with its roughly 2 million people is losing out to other states with instant sales at 38th in the nation, he said. “If you don’t have a run-up, you’ve got a problem,” Smith said.

While scholarship expenditures have been increasing, revenue transfers from the lottery have been relatively flat, according to a fiscal impact report on the bill. The transfers averaged $42.2 million from fiscal year 2010 to 2014, the report said.

The bill removes the set percentage transfer, but it calls for lottery officials to move to the state treasury by July every year no less than the amount transmitted in fiscal year 2015 — estimated to be $40 million — effectively setting that as a baseline.

The fiscal impact report presents a scenario of a possible negative impact of the bill. It showed an increase in gross revenues over the next couple of years, but if the transfer stayed at $40 million the lottery would get a less than 30 percent transfer.

However, “removing the 30 percent transfer requirement allows the (New Mexico Lottery) Authority to increase prize payout percentage and allocate more revenue toward other efforts to increase lottery sales. These efforts, over time, may enable the lottery to increase net revenue, thereby increasing the transfer to the lottery tuition fund,” the report states.

Opposing senators said they preferred a dependable level of transfer to the tuition fund.

“This is playing a very risky game with that fund,” said Sen. Gerald Ortiz y Pino, D-Albuquerque, faulting the bill’s premise that more advertising and increased prize money could perk up sales.

Smith said he understands the potential downside, but the lottery needs a shot in the arm. And, he said, he hopes it will pay dividends with more sales, rising to about $170 to $180 million after about five years.

His bill now moves to the House.