WELCOME TO THE OKLAHOMA PUBLIC HUMAN RESOURCES ASSOCIATION

1. WELCOMETO THEOKLAHOMA PUBLIC HUMAN RESOURCES ASSOCIATION SUMMER QUARTERLY TRAINING CONFERENCE FRIDAY, JUNE 28, 2013 FRANCIS TUTTLE TECHNOLOGY CENTER

2. The “Oklahoma Education Lottery Act” HB1278 passed the State Legislature on March 26, 2003, as State Question 705. State Question 705 passed in all counties at the general election on November 2, 2004. 928,442 (64.68%) for the proposal 507,077 (35.32%) against the proposal.

3. State Question 706, SJR 22 amended the Oklahoma Constitution to create the Oklahoma Education Lottery Trust Fund (OELTF passed in all counties on November 2, 2004, 970,987 (67.94%) for the proposal; 458,122 (32.06%) against the proposal.

4. Title 21: Section 1051 A. - Lottery Defined A lottery is any scheme for the disposal or distribution of property by chance among persons who have paid, or promised, or agreed to pay any valuable consideration for the chance of obtaining such property, or a portion of it, or for any share of or interest in such property, upon any agreement, understanding or expectation that it is to be distributed or disposed of by a lot or chance, whether called a lottery, a raffle, or a gift enterprise, or by whatever name the same may be known. "Valuable consideration" shall be construed to mean money or goods of actual pecuniary value.

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13. Today, there are 45 U.S. Lotteries including D.C. & the U.S. Virgin Islands, with Wyoming to become the 46th. The Oklahoma Lottery is one of the last modern day lotteries to be created. States that have not created or authorized a lottery yet are: Alabama Alaska Hawaii Mississippi Nevada Utah

14. The Oklahoma Lottery sells the following Lottery products: • Scratchers (Instant win Lottery tickets) • ($1, $2, $3, $5; 1:4.81 to 1:3.46; $777 - $40,000) • Numbers games: • - Pick 3 ($1) • - Pick 4($1) • Lotto: • - Cash 5 ($1; 5/36) • Multi-state Jackpot Games: • -Hot Lotto ($1; $1 multiplier; 5/47 & 1/19) • - Powerball ($2; $1 multiplier; 5/59 & 1/35) • - Mega Millions ($1; $1 multiplier; 5/56 & 1/46)

15. Sales estimates for FY’2013, the current fiscal year, are:

16. Operating expenses have been reduced from $9.77 million in FY’2008 to $4.88 million budgeted for FY’2014. From the end of FY’2012, to the FY’2014 budget, payroll has been reduced more than $300,000 and FTE reduced from 34 to 26. If the board approves a couple of new initiatives, we will add 2 more employees in FY’2014, paid for by additional savings.

18. According to the Oklahoma Constitution, the Oklahoma Lottery beneficiaries are: • 1. Kindergarten through twelfth grade public education, including but not limited to compensation and benefits for public school teachers and support employees; • 2. Early childhood development programs; • 3. Tuition grants, loans and scholarships to citizens of this state to enable such citizens to attend colleges and universities located within this state which are accredited by the Oklahoma State Regents for Higher Education or to attend institutions operated under the authority of the Oklahoma Department of Career and Technology Education; • 4. Construction of educational facilities for elementary school districts, independent school districts, the Oklahoma State System of Higher Education, and career and technology education; • 5. Capital outlay projects for elementary school districts, independent school districts, the Oklahoma State System of Higher Education, and career and technology education; • 6. Technology for public elementary school district, independent school district, state higher education, and career and technology education facilities; • 7. Endowed chairs for professors at institutions of higher education operated by the Oklahoma State System of Higher Education; • 8. Programs and personnel of the Oklahoma School for the Deaf and the Oklahoma School for the Blind; • 9. The School Consolidation and Assistance Fund; and • 10. The Teachers’ Retirement System Dedicated Revenue Revolving Fund. • State Statutes set additional parameters: • Items 1 and 2 = 45% • Items 3 through 8 = 45% • Items 9 and 10 = 5% each

19. Issues facing the Lottery • No support from legislative leadership or Governor to change restrictive laws • Periodic attacks on the Lottery by politicians, the press, or anti-gambling interests • Maintaining credibility despite the politics • Maximizing our profit for our beneficiaries • Legal restrictions that limit profitability • Minimum 35% profit requirement • Limits on locations where lottery products can be sold • Limits on types of games that can be offered (video, Keno) • Limits on other aspects of conducting business • Employee pay • Advertising restrictions • Prohibition on some use of the Internet • Restriction to “cash only” for purchase of tickets

20. Largest issue facing the Lottery is one of profitability The Lottery exists to provide funding for Oklahoma education programs. The Lottery Act indicates that all profits go to the State to benefit Oklahoma Education. The Act also says the Lottery is to “Maximize” profits for education. The main restriction on Lottery profitability is the minimum 35% profit requirement. By requiring a set % as a profit, the amount of funding that can be put into prizes is restricted. This limits the acceptance of the products by the players, limiting both sales and profits. Every state lottery that has improved payouts has dramatically improved sales and increased profits for their beneficiary.