Lawsuit seeks to reduce video poker payouts

SALEM, Ore. – Advocates for schools and state parks filed alawsuit Tuesday seeking to overturn what they say are the OregonLottery’s overly generous payouts to bars and taverns with videopoker machines.

The lawsuit said schools and other programs that receive lotterydollars are being shortchanged because of the lottery’scompensation plan, which pays the average video poker retailer$67,000 a year.

“That amounts to a giveaway of tens of millions of publicdollars that should be used to reduce class sizes, recruit andretain highly qualified education staff, and help maintain Oregon’snatural resources,” said Merlene Martin of the Oregon SchoolEmployees Association.

The association was joined by several school parents and parksusers in asking the Oregon Court of Appeals to void the Lottery’snew six-year contract with the video retailers.

The contract, adopted by the Lottery Commission in March,reduced by about 10 percent the state’s payouts to the bars andtaverns, although critics had urged an even larger reduction.

Lottery Director Brenda Rocklin declined to comment on thelawsuit Tuesday, although in March she called the new contract withthe lottery retailers a “fair deal for the state and for theretailers.”

“It is really a balancing act between maximizing lottery revenuefor the state and still giving a reasonable rate of return to theretailers,” Rocklin said in March.

Lottery critics have said, though, that Oregon voters whoapproved the lottery in 1984 never intended to subsidize bars andtavern with video poker profits and that the current payments toretailers are excessive.

“It is unconscionable, and illegal, for the state to pay aretailer $67,000 a year for taking money out of machines andputting it in banks,” said Martin, president of the schoolemployees group.

The state makes about $350 million a year from the Lottery, with80 percent of it from video poker. Two-thirds of the proceeds go toeducation, and the rest go to parks, salmon restoration and otherprograms.

The Oregon Restaurant Association, which represents many of theretailers, had fought any cut in state payments to the bars andtaverns. The group said the retailers shouldn’t be punished formaking the game a financial success for the state.

Margaret Olney, the Portland attorney who filed the lawsuit,said the aim is to persuade the appeals court to find the currentpayouts excessive and to order the Lottery Commission to draw up anew contract.

“The agency would have to go back and do it right,” Olneysaid.