These days you really can’t buy much for a dollar even at a dollar store. So what is a state lottery’s executive director to do when faced with a $1 annual advertising budget? In the case of the Missouri Lottery’s longest serving director, May Scheve-Reardon, the answer is “quit.”
And that’s just what she did the first week in June. Who can run a successful big business, really, with a one-dollar budget?
And it seems like those unregulated (“gray”) electronic gaming machines have factored into Missouri gambling once again. We’re talking specifically about the last attempt to pass a MO sports betting bill.
Scheve-Reardon has criticized the machines, including pointing out how the state — and through it, education — loses tax dollars to them. Some think that may have resulted in an at least somewhat retaliatory budget slashing.
Dollar daze
This happened despite the lottery bringing in about double in sales over the past 13 years, during which Scheve-Reardon led it. In this year alone, the state lottery is expected to bring in about $400 million for education.
“We spent 13 years building an amazing business and slowly, but surely, the Legislature was taking away the tools we needed, “ the lottery chief told stltoday.com.
Stltoday.com points out that most businesses of any noteworthy size allocate 5% to 10% of their gross revenue to advertising. “You have to spend money to make money.” Emissourian.com has called the move “counter-intuitive” to basic business principles.
But it looks like for the time being the Lottery would have to win the lottery to afford to advertise.
From $16 million to $1
That $1 lottery advertising budget comes out of the record-breaking $49 billion budget the legislature passed this session.
In the past, the lottery’s ad budget was as high as $16 million. In 2010, the lottery’s advertising budget came in at around $1 million.
The Fiscal Year 2019 budget was $6.6 million. This past year, the Lottery made do with a $400,000 budget. Scheve-Reardon has said that advertising cuts already affect ticket sales.
In 2011, when a legislator heading the House Budget Committee accused Scheve-Reardon of “doing less with more [money],” the lottery director pointed out that different lottery games require different advertising approaches and varying dollar expenditures.
She said at the time that scratch-off games require more promotional dollars than Powerball does, for instance.
That was another time of rising gas prices, like now, and Scheve-Reardon also pointed out that such a situation calls for more advertising dollars, as well. Lottery players often purchase tickets at gas stations.
“Political” machines?
Currently, some estimated 14,000 to 20,000 very controversial and unregulated electronic gaming machines operate around Missouri; they do so arguably illegally and un-taxed, unlike the lottery.
They’re found in convenience stores, bars, gas stations, and restaurants, especially in the southern part of the state. And lobbyists for the companies behind the machines “contribute heavily” to some state lawmakers’ campaigns. That might support the notion of some that the ad budget slash served as a kind of payback for Scheve-Reardon’s criticism of them.
Supporters — and some prosecutors — contend, though, that the machines don’t qualify as gambling because players get to see if the next bet will win or lose. At least one judge has disagreed and there’s more litigation pending.
Just recently, two Arkansas companies have seemingly entered the Missouri electronic gaming market. Scheve-Reardon has cautioned about the consequences of no legislative action. “By mid-summer, we’ll be swimming in these machines. We are very, very concerned about this trend.”
Scheve-Reardon has attested to the deleterious effect the machines have on lottery revenue. Most notably, lottery ticket sales at convenience stores were down 4.8% through May.
She has also said that she’s considering withdrawing lottery licenses from businesses that allow the unregulated machines on their premises.
13 years serving the Missouri Lottery
Scheve-Reardon has served as Missouri Lottery director longer than anyone else, assuming that position in December 2009.
During her tenure up until last July, sales increased from $968.5 million to more than $1.6 billion. And revenue that goes to public education reached record levels.
This graduate of Affton High School in St. Louis County was the youngest female state rep ever in the Missouri General Assembly. She landed in politics almost accidentally, after accepting a free tee-shirt led to a job on Dick Gephardt’s communications staff during his 1988 presidential campaign.
During her time in the Assembly, she chaired various committees including those for higher education. After term limits ended her time in the legislature, she took on the chairmanship of the Missouri Democratic Party.
In 2011, she told St. Louis Business Journal that her lottery job was “a way to offer excitement and entertaining games to people of the state while having an amazing return to education.” Education receives 20 cents for every dollar spent on lottery games.
Scheve-Reardon plans to stay on as lottery director until July 29.
