Lottery board approves Keno and eLottery; Beshear says move is not being considered for funding pensions

03/22/2013 03:27 PM

The Kentucky Lottery Board announced their decision to offer Keno and Internet-based lottery ticket sales on Friday as negotiations among legislators drag on over how to fund the pension system’s required payments.

The move to allow the sale of tickets was led by Treasurer Todd Hollenbach, who made the motion to allow the gaming change.

In February, House Democrats announced they would prefer to fund the pension system using new revenue. And they rolled out a package of funding sources that included receipts from Keno, Internet lottery sales and instant racing revenue.

House and Senate leaders have been locked in negotiations over whether or not to outline such funding sources as part of broader reforms to the Kentucky Retirement Systems. Those talks have gone on throughout the two-week veto period. Lawmakers are set to return for the final two days of the 2013 session on Monday and Tuesday.

Hollenbach said the move to approve the lotto sales stems from the need for additional revenue in the cash-strapped state but said Gov. Steve Beshear did not ask him to make the move.

The governor has pushed for a large expansion of gaming for several sessions, but told Pure Politics the move was not currently being considered for the pension system shortfall.

“While I favor the expansion, this decision by the board was not part of any discussions among House and Senate leadership and myself regarding funding pension reform, and is not being considered as part of any funding mechanism for pension reform,” Beshear said in a statement to Pure Politics.

House Speaker Greg Stumbo, D-Prestonsburg, also said he did not have anything to do with the decision but welcomed the move by the lottery board.

“As the lottery’s original sponsor, I have long argued that I think the board has the authority to take the action it did today,” Stumbo said.

Senate Republicans have been hesitant to take up any measure that has to do with additional new revenue to deal with the funding the pension system. Senate President Robert Stivers, R-Manchester, told Pure Politics in a telephone interview that he was not in favor of using the possible additional revenue for the pension system.

“It is not something you can count on,” Stivers said of the revenue to the state that could be raised. “There’s too much ambiguity.”

Stivers said he was going to continue to meet with the governor and House leadership in Frankfort over the weekend to try and work out a compromise on the pension impasse.

The move to institute the games will take six to nine months to “ramp up,” according to Hollenbach. But he said in a decade the projections indicate “an additional $85-million a year” in new revenue.

It will be up to the General Assembly to determine how the additional resources will be spent or saved.

Keno is currently offered in 13 states, and the Kentucky Lotto said the game involves players picking from numbers 1 through 10, with the lottery drawing 20 numbers every four to five minutes from a field of 80. Players can win anywhere from $1 to $100,000 on a $1 play.

Hollenbach said that Keno would be rolled out first and that it is mainly a social game typically played at taverns and bowling alleys.

The eLottery system would start a few months later, and would allow individuals to create online accounts to play — and pay for — existing lottery games.

A 2011 U.S. Department of Justice opinion said that Internet wagering within a state is not illegal as long as the game wagered on was legal within the state, and it did not involve sports betting.


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