The Oregon State Lottery -
Its Background and Approach to Responsible Gaming

by: David Hooper - Public Affairs Manager
Oregon State Lottery

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It is a pleasure to welcome you to the debut of problemgambling.com. I believe this Web site will become an extremely valuable resource as organizations around the country work together to share information about effective approaches to the prevention and treatment of this illness.

As Public Affairs Manager for the Oregon Lottery, I find it especially gratifying that members from all sectors of the gambling industry and the treatment community are combining forces across the nation to address the issue of problem gambling. This cooperative approach has been in place in Oregon since the early 1990's, and reaffirms my belief that it is far more productive to join hands than it is to point fingers. I appreciate this opportunity to present the various programs our state has instituted over the years. Hopefully, some of these elements can serve as success models that will fit into the programs other jurisdictions provide or are developing.

Without question, gambling is a popular and socially acceptable activity. Polling consistently shows that two-thirds of all adults gambled in some form during the previous year, and support lotteries as a means of raising revenue for important state programs. Indeed, the creation of most state lotteries was approved by their citizens at the ballot box, either through the initiative or referendum process.

For the vast majority of people, gambling is simply another form of fun and entertainment. The money they spend on it comes out of the same pocket as the discretionary dollars they spend on movies, concerts, sporting events, or going out to dinner. For some individuals, however, gambling can be an addiction with devastating consequences, not only for themselves but their families and friends as well. While some view this as an irreconcilable dilemma for states that operate lotteries or sanction other forms of gambling, I see it as basic Civics 101: government's job is to carry out the will of the majority while providing for the needs of the minority. Because government programs are the beneficiaries of gambling proceeds, I believe state governments have the highest obligation to provide treatment for that small minority who suffer from problem gambling behavior.

Frankly, problem gambling did not become a significant issue in Oregon until the Legislature passed the laws putting the Oregon Lottery into the video lottery business in 1991. Prior to that time, Oregon, like most other state lotteries, offered only "traditional" games such as Scratch-it tickets, lotto-type jackpot games and daily numbers games. Video lottery gaming was assigned to the Lottery for two primary reasons: 1) to bring regulation to the 10,000 video poker and slot machines that were already present across the state and were being used for illegal gambling; and 2) to replace lost revenue following the passage of property tax limitations. While these laws solved those two problems, the Legislature also recognized the potential for problem gambling this form of gambling could create, and simultaneously made provisions in state law to use Lottery funds for problem gambling treatment.

As with all Lottery proceeds, problem gambling treatment allocations are made by the Legislature, and administered by the Department of Administrative Services. In the 1995-97 biennium, $4 million in Lottery funds were allocated for problem gambling treatment. This $4 million funding level was renewed in 1997-99, with a subsequent addition of another $450,000 from the General Fund. The Legislative Assembly is currently considering a bill that would automatically allocate not less than 1% of all Lottery net proceeds for problem gambling education, prevention, and treatment. This would equate to approximately $6 million in Lottery funds in the next biennium, a 50% increase over past funding levels. Just as importantly, it will provide stable, uninterrupted funding for these treatment programs. Furthermore, if Lottery revenues increase, so will the funding for problem gambling treatment.

These Lottery funds provide gambling treatment programs throughout the state in conjunction with County mental health programs, and are dispersed based on service needs and service delivery proposals. In many cases, counties provide problem gambling treatment directly through their own county mental health program. In other instances, subcontracts are issued to private sector treatment providers who specialize in this particular form of addiction. This Lottery fund allocation is also used for a statewide toll-free number (1-800-233-8479), which provides crisis intervention and refers individuals to the appropriate local treatment program (The Lottery requires this number to be prominently posted in all video lottery retail establishments). These Lottery funds are also used to develop certification standards and training for treatment providers. Lastly, a portion of these funds are used to track client intake and treatment results. This enables the state to gauge service demands and the effectiveness of the individual treatment programs.

In 1994, the Oregon Supreme Court ruled that Oregon Lottery administrative/operating funds may only be used for the direct administration/operation of the Lottery itself. Therefore, the Oregon Lottery is unable to directly fund, administer, or operate problem gambling treatment programs. However, state law does enable the Oregon Lottery to conduct research and advertising. The Lottery has used these statutory provisions to help fund the independent problem gambling research conducted by the Oregon Gambling Addiction Treatment Foundation (OGATF), and to produce public awareness advertising campaigns about problem gambling and the treatment that is available. The Oregon Lottery contributes about $50,000 per year to problem gambling research through the OGATF, and spends about $600,000 per year on problem gambling public awareness and outreach campaigns.

These problem gambling public awareness campaigns are developed in conjunction with the OGATF, of which the Oregon Lottery is a founding board member. By combining the respective expertise of Lottery staff and problem gambling treatment providers, these campaigns are able to deliver messages that are both creatively compelling and clinically correct. In fact, this cooperative relationship resulted in a major shift in the advertising message following focus groups arranged by treatment providers with recovering problem gamblers. The original ads about problem gambling were very grim and hard-hitting. The recovering addicts recalled that the ads were so depressing that they would switch channels before the 800 number came up. They said they didn't need to be told how devastating it was to be a problem gambler. Their advice: send us a message of hope, to tell us that treatment works and what it was going to be like, and encourage our friends and family to intervene. Immediately following the introduction of the new campaign theme, "There's help... There's hope", calls to the problem gambling toll-free number increased by 44%. These results could never have been realized without everyone's mutual concern and, more importantly, involvement.

To summarize these key elements, Oregon 1) provides substantial state funding for problem gambling treatment through each county in the state; 2) conducts ongoing scientific research into problem gambling prevalence and treatment; and 3) sponsors extensive public awareness campaigns on the illness and the treatment that is available. While these are the major and most visible components, the Lottery itself has adopted numerous rules relative to problem gambling. For example, the Oregon Lottery has never advertised its video lottery games, and prohibits its retailers from doing so. In fact, retailers are prohibited from offering any inducement to play, including extending credit. Allowing a person who is visibly intoxicated to play any lottery game is grounds for immediate retailer contract termination, as is sales to minors.

Oregon State law limits the number of video lottery terminals (VLTs) to a maximum of five per establishment. In order to ensure minors do not have access to VLTs, the law stipulates that those devices may only be placed in the age-controlled areas of businesses with an "on-premise consumption" liquor license (i.e.: bars, taverns and lounges where minors are prohibited), versus a convenience or grocery store that minors often frequent, and where alcohol is sold for consumption off-premise. In addition to these statutory conditions, the Lottery has instituted a self-imposed cap on the total number of VLTs at essentially current levels, and will manage its retail base within those limits.

Video lottery game development is another part of the overall equation. For Oregon Lottery video lottery games, the maximum wager is $2, with a top prize of only $600. Dr. Volberg, who conducted Oregon's statewide problem gambling prevalence study, stated her belief that these sorts of limits minimize "chasing" losses and keep the games focused on fun and entertainment rather than hopes of a financial windfall. Oregon Lottery VLTs are set to operate at a "middle of the road" speed of play, use a bare minimum of "bells & whistle" features, and do not use coin-drop.

The Oregon Lottery currently offers only video poker on its VLTs, and has received numerous petitions from its players and retailers to add other games such as "line games" (a.k.a. slot games where symbols are lined up to win), video Keno, video Bingo, and so forth. These other games are offered by Oregon's eight Indian casinos. Despite these marketplace demands for comparable and competitive video lottery games, the Lottery Commission has held off approving any such additions until: 1) it has better information on the potential social impacts; 2) the Legislature provides increased funding for problem gambling education and treatment; and 3) the State has reduced its reliance on Lottery funds for core budgets in programs such as education. Each of these considerations, among others, is part of the Governor's over-arching policy framework for managing gambling in a responsible manner.

In my experience, this mind-set of responsibility is fundamental in the practices and philosophies of state lotteries. As state agencies, lotteries implement the policy decisions enacted by the voters and their elected officials, and are subject to the highest degree of public scrutiny, operational regulation and policy oversight. As state agencies, personal profit motives are not a factor in game development and marketing; the money earned is returned to the citizens as net proceeds benefiting the public purposes they have selected. As state agencies, lotteries consider the needs of their all constituents and endeavor to act as both marketers and regulators of the games they offer. Indeed, the Oregon Lottery's legal mandate is to "maximize revenues commensurate with the public good." I believe the various laws, rules and policies we have adopted in this state enable us to maintain that vitally important balance.

Thanks for taking the time to visit problemgambling.com, and for your interest in what Oregon is doing to address this issue. If you would like more information about the Oregon Lottery, please visit www.oregonlottery.org, which also will provide you with a link to www.gamblingaddiction.com, the web site for the Oregon Gambling Addiction Treatment Foundation.

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David Hooper is the Public Affairs Manager for the Oregon Lottery, and is the Lottery's lead spokesman with the media and its primary contact for members of the Legislature and public. He is a member of the Director's staff, and an advisor to the Lottery and its Commission on all issues related to the agency's public policies. David also is a founding board member of the Oregon Gambling Addiction Treatment Foundation.

David has been an Oregon Lottery employee for 5 years, but has been associated with it since it began 14 years ago. He was an Account Supervisor with the Lottery's first ad agency, and later served as the Communications Manager for the Oregon Economic Development Department, which is a major recipient of Lottery proceeds. David has been in the public affairs & issues management profession for nearly 20 years.

David grew up in Colorado, and moved to Oregon in 1971. He has a 17 year old daughter. David enjoys all forms of outdoor recreation (whenever he gets a chance!), from camping and hiking to sailing and horseback riding.


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