Schaefer delays vote on lottery contract Governor suggests dropping Keno, but he later recants

August 12, 1993|By John W. Frece | John W. Frece,Staff Writer

Stung by criticism of Maryland's steadily expanding gambling operations, Gov. William Donald Schaefer balked yesterday at approving a lottery contract he supports and suggested he might abolish the Keno game he started.

The governor unexpectedly refused to vote for a $2.7 million contract to buy 300 instant lottery ticket-dispensing machines, indefinitely postponing the Board of Public Works' action.

The delay on a proposed contract with Interlott Inc. of Ohio came after Comptroller Louis L. Goldstein objected, on the ground that juveniles might illegally use the machines to buy lottery tickets.

"I don't feel like being spotted . . . in favor of gambling," Mr. Schaefer said, adding that he preferred to postpone a decision rather than become the deciding vote in favor of the contract.

Treasurer Lucille Maurer, the third member of the board, had already voted for the contract, calling it "an old game in a new wine cask."

During a sometimes bitter debate on the lottery contract, Mr. Schaefer announced that he has been "giving some thought" to the idea of doing away with Keno, a controversial lottery game that the state introduced in January.

But about an hour later, he retreated from the idea, saying he had only wanted to underscore how difficult it would be to replace the $100 million in annual revenue Keno is projected to bring in.

An aide added that Mr. Schaefer has no plans to do away with Keno, even though the governor said he wanted his budget secretary to look for replacement sources of revenue.

Later, Mr. Schaefer explained, "I just got irritated today."

During the meeting, he conceded to Mr. Goldstein that there was no way state officials or lottery vendors could police instant ticket machines, comparing the problem with that of keeping minors away from cigarette vending machines.

Delaying approval of the contract would only rob the state of expected revenue as the machines attract new players to the state's instant rub-off games, Mr. Schaefer said.

Lottery officials estimated that the delay could cost the state as much as $6 million this budget year and as much as $29 million over the next five years if the machines are not purchased.

Other states that have used the dispensing machines have had substantial increases in sales of instant tickets, said Lottery Director William F. Rochford.

If the contract had gone through, Mr. Rochford said, half of the new machines would have been placed in existing lottery locations and the other 150 in locations such as grocery stores where lottery tickets are not sold.

Sales of about $1,000 per week from each machine have been projected, he said.

"We view this as a very profitable endeavor for the state," said Mr. Rochford, whose agency has been under increasing pressure for several years due to stagnant or falling lottery sales. As the state's lottery market has become saturated with new games, lottery officials have continued to search for ways to attract new players.

Despite the introduction of Keno and other efforts, overall lottery revenue in the budget year that ended June 30 was about $300 million, or about $50 million less than projected. Keno has not performed as well as expected, and it siphoned players away from other games, state officials say.

The contract with Interlott has been in the works since last summer but was held up initially by a challenge from Interlott's chief rival, Lottery Enterprises Inc. (LEI) of California.

LEI officials contended that Maryland's request for bids favored the type of machines manufactured by Interlott, which spits out tickets individually, and excluded the type made by LEI, which pushes out perforated tickets that must be torn off by buyers. Last fall, the state Board of Contract Appeals rejected LEI's challenge.

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