Coming up short: Gaming, tobacco tax revenue lags

Oklahoman Editorial
September 28, 2005

The lottery approved by Oklahomans last year is set to begin in a few weeks with the sale of scratch-off tickets. Our guess is no one's rooting harder for it to succeed than Gov. Brad Henry.

Henry was out front last year in urging voters to approve the lottery, proceeds of which are earmarked for education. He was equally adamant in promoting passage of gaming expansion to benefit education and horsemen, and a tobacco tax increase to fund a series of health care initiatives.

But a not-so-funny thing has happened on the way to the bank. Tobacco tax revenues have yet to meet projections, and the same is true with gaming revenue. Is the lottery next?

The net 55-cents-per-pack tobacco tax was expected to generate about $22.2 million per month. Last month, the total was about $2 million less than that. In July, it was $5.7 million under the target. There are myriad reasons given -- some officials expected, some they did not -- but the bottom line is the tax hasn't delivered as promised.

As for gaming, voters in November approved a state question that allows three pari-mutuel horse tracks to install electronic gaming machines. The first machine has yet to be played. Voters also OK'd placing card games such as blackjack in Indian casinos, and allowing the casinos to play faster electronic games.

But since Jan. 1, the state has only received about $4.9 million from tribal casinos for the games they play -- backers had projected $40.5 million for this fiscal year. State Treasurer Scott Meacham says he expects revenues to increase in the coming months as more new machines are installed, and that it's too early to tell whether initial projections were overly optimistic.

The lottery is set to begin Oct. 12. Even though only about half as many retail outlets as expected will be on line then, the state's lottery commissioner says he expects $65 million for the state by the end of the fiscal year, June 30. We shall see.