With overall lottery revenue declining, Oregon Lottery officials are opening debate on whether to cut more deeply into the video gambling commissions paid to bars and taverns that host the machines.
PORTLAND — With overall lottery revenue declining, Oregon Lottery officials are opening debate on whether to cut more deeply into the video gambling commissions paid to bars and taverns that host the machines.
Last year, the lottery paid out about $187 million in such commissions, averaging about $71,000 for every bar and tavern with machines.
These days, a tavern or bar gets to keep about 23 cents of every dollar a patron leaves behind in the machines. Over the years, the state lottery commission has steadily dropped that rate from a high of 35 percent.
The lottery commission is preparing to issue new contracts to bars and taverns next year and scheduled a Tuesday hearing on the issue. The prospect of lower commission rates concerns bar and tavern owners. Education officials and others say the state should slash the commissions even more and apply the additional revenue to education, parks and other state programs.
"It's a screaming symptom of the economic times," said Katie Bullard, owner of the Dublin Pub in southwest Portland. "People are looking for every additional dollar, and we're not excluded from that."
Bullard said she has never counted on lottery profits to stay in business but she is certain other bar and tavern owners need the money to survive.
The video lottery commissions have been cut five times since the games began in 1992. But host businesses have also seen sales surges spurred by the Las Vegas-style line games the state introduced in 2005.
Video gambling brought in $787 million last fiscal year. But total lottery revenues, which include video and traditional games, declined from $1.25 billion in 2007-08 to $1.1 billion last fiscal year.
State law says Oregon must spend lottery profits on education, parks and other state programs. Over the next two years, about 8 percent of the state's basic school fund, or about $439 million, will come from lottery profits.
Oregon Restaurant Association lobbyist Bill Perry said cutting commissions will only decrease the incentives of bars and taverns to offer the games.
"The critics out there keep echoing that the bars are making too much money," Perry said. "The proof right now is that the system is losing money for everybody, and we should be re-evaluating everything. There is something very wrong with the system."
State Superintendent of Schools Susan Castillo said she wants to see the lottery slash the bars' and taverns' commission rates from 23 percent to 15 percent.
That change would have given state about another $50 million in the current two-year budget, she said.
Castillo said she doesn't believe cutting the retailers' rate will do lasting damage to bars and taverns.
"We've heard the same argument every time this comes up," she said. "We've cut their commissions, and we have more bars and taverns with video lottery games than before."