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Committee approves ban on video lottery games

SANTA FE – A bill with bipartisan backing that would put the kibosh on New Mexico video lottery games – including online gambling – and divert unclaimed prize money into a popular lottery-funded college scholarship program easily cleared its first legislative hurdle Monday.

However, the measure could face more resistance as it advances, as New Mexico Lottery officials appeared to be quietly building a case against it.

Backers of the bill, House Bill 250, say it would help shore up the legislative lottery scholarship program that is covering most tuition costs for an estimated 16,323 New Mexico university students this semester but is also facing a funding strain tied to increased popularity and rising expenses.

“Right now, the most important thing is to maximize dollars to the lottery scholarship,” said Rep. Jason Harper, R-Rio Rancho, one of the bill’s sponsors.

He said New Mexico is currently one of only 12 states that send unclaimed prize money back into a prize fund.

However, Gov. Susana Martinez last year struck down a similar attempt to shift unclaimed prize money into the lottery scholarship fund, saying it could have actually led to smaller prize payouts, fewer people buying lottery tickets and less money for scholarships.

This year’s proposal is broader, as it would also prohibit the New Mexico Lottery from offering any style of video lottery games and tie any bonuses lottery officials receive to how much money flows into the scholarship fund.

New Mexico Lottery Authority officials did not testify against the bill Monday in the House Labor and Economic Development Committee – it passed on a unanimous 9-0 vote – but they have raised concerns similar to the governor’s in an analysis of the legislation.

Wendy Ahlm, the lottery’s director of advertising and marketing, reiterated those concerns in an email to the Journal . She also provided data showing a portion of unclaimed prize money has been placed into the scholarship fund in recent years to meet a requirement that at least 30 percent of state lottery revenue go toward scholarships.

“The lottery appreciates the important work of the committee and looks forward to the passage of meaningful reform,” Ahlm said. “But … this is not additional millions of dollars that would be transferred to the lottery tuition fund.”

As of June 2016, the New Mexico Lottery reported having roughly $2.6 million in unclaimed prizes, according to the legislative analysis of the bill.

But lottery officials reported that money is already committed to fund the prizes on scratcher tickets that have already been printed and offered for sale.

In all, there is roughly $61 million being paid in the current fiscal year for lottery scholarships, with recipients getting 90 percent of their tuition covered. About two-thirds of that money came from lottery revenues, with alcohol excise taxes covering the remainder.

With the alcohol tax infusion set to expire this year, the lottery scholarship would likely cover only 60 percent of a student’s tuition if additional funding is not provided.

Fred Nathan, executive director of Think New Mexico, a Santa Fe-based think tank that’s supporting the legislation approved Monday, said it would help with the solvency effort.

“This will help close the gap between the demand for scholarship dollars and the revenues available to meet that need,” Nathan told the Journal after Monday’s vote.

Meanwhile, though the New Mexico Lottery has not launched any online games yet, some opponents of gambling expressed concern Monday about the possibility of that happening.

The Lottery Authority angered some lawmakers last summer, when it launched a “Play at the Pump” program at some Albuquerque-area gas stations. The program allows motorists who buy gas using debit cards to buy lottery tickets at gas pumps.

A bipartisan group of House members – including Harper – sent a letter suggesting the lottery might be operating the program illegally because the Legislature didn’t change the law to allow it.

The lottery is governed by a seven-member board of directors appointed by the governor. The board hires the chief executive officer, who runs its day-to-day operations.