Betting on Education: Does Gambling Really Help Pay for Ohio's Education?

Ohio Lottery: From the Beginning

The Ohio Lottery was created in 1971. Ohio Senator Ron Mottl spearheaded the campaign to start a lottery and State Issue 1, which created the Ohio Lottery Commission, passed by a 2-to-1 ratio. In July of 1983, the Ohio Legislature specifically earmarked portions of the funds for education. But how much of the revenue from the lottery actually goes to Ohio's primary and secondary education? And, could the failure of the Ohio lottery to fund education be part of the reason
that this year's ballot Issue 3 did not pass?


But is it helping education?

Many states have lotteries, but only some earmark funds to schools. According to the Education Commission for the States, Ohio does earmark a portion of the Ohio Lottery profits to public education: "Pursuant to Ohio Revised Code Section 3770.06 (B), the director of budget and management certifies the transfers to the Lottery Profits for Education Fund.
Fiscal year 2005 payment to the Education Fund totaled $645.1 million."

Though this seems like a large amount of money, it is only a small portion of Ohio's budget for education. According to an article from the Christian Science Monitor, the use of lottery proceeds for education actually caused Ohio to spend less on education.

A study from the Buckeye Institute in Dayton, Ohio indicated that "after Ohio's 1974 promise to devote all lottery winnings to public schools, state spending on education dropped from 42
percent of its total budget in 1973 to 29 percent in 1994."

Forty-nine percent of Ohio's education revenue comes from state sources, including the Ohio Lottery. However, because the state's contribution to education has gone down, the lottery is, in effect, a gamble on education.

As a Christian Science Monitor article notes, in years of recession, lottery revenues go down. Dependency on lottery profits could lead to a serious shortage of funding for schools if the lottery ever goes dry.

Another problem of the counting on lottery funding is that the revenues really aren't that great. According to the Ohio Lottery Web site, 100 percent of the Ohio lottery profits are earmarked for education. Since 1973, the lottery has contributed more than $13 billion to Ohio public education. However, the budget for year 2003 was $14.9 billion.

In 2002, the State Legislature proposed a bill (HB 0093) that would study the effects of the Ohio Lottery on public education and look for alternate revenues for public education. However, the bill did not pass.

The absence of positive changes from the Ohio Lottery inevitably played a big part in the lack of voter support and trust for ballot issue 3.

Issue 3: The Facts

The Basics

Ohio ballot Issue 3, nicknamed Learn and Earn, proposes a constitutional amendment that would take revenues from slot machines and put them toward college scholarships.

The amendment, which by definition would be a permanent addition to the Ohio constitution, would allow 31, 500 slot machines at seven horse race tracks and two non-track locations on the Cleveland riverfront. The Ohio Board of Regents would recieve 30 percent of the proceeds from the slot machines to fund scholarships for high school students.

Prior to enrolling in college, students would have to, according to the official language of the proposed amendment "take core and advanced academic courses, participate in college readiness programs, assessment, and testing at any accredited public or non-public high school in this state, and contribute to public life through voluntary civic activity, and who attend any public or independent not-for-profit institution of higher education authorized by the Ohio Board of Regents and that has its principal office within this state."

The first scholarships would be awarded in 2008, two years after the amendment's proposed addition to the Ohio Constitution. For the first 12 years of the program, full tuition grants would be given to all students in the top five percent of their graduating class, provided they attended a public state college or university.

Where is the Money Going?




In addition to the 30 percent given to the state soley for these grants, small percentages are designated to other state functions. One percent of all revenue is earmarked by the proposed amendment to help fund gambling addiction services. In addition, .6 percent of proceeds go to each county where a horse track with slot machines is located, and three percent goes to the municipality where machines are kept. Cuyahoga county, where both of the non-track facilities are located, will recieve .8 percent of the revenues from those facilities. Counties with one horse track and over 750 thousand residents recieve .4 percent of that counties revenue, and the county seat recieves 2.4 percent of the revenue. Monies distributed to the counties would not be taxed.

All of the remaining revenue is designated for the places that house the slot machines. Fifty-five percent of the revenue goes directly to the horse tracks and businesses, and another six percent of the funds are allocated to them for pocket money. Each member business must pay a $15 million dollar licensing fee.

The Gaming Integrity Commission

The amendment would also create a five member committee called the Gaming Integrity Commission to regulate all gambling created by the Learn and Earn amendment. The governor would appoint people to the committee, and no more than two people on the committee can be members of the same political party. The costs of the committee are to be paid by the monies earmarked for counties and municipalities. If for some reason the GIC is not appointed within six months of the passage of the amendment, the Lottery Commission will control the Learn and Earn slot machines.