Arkansas State Lottery, Proposed Constitutional Amendment 3 (2008)

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Proposed Constitutional Amendment No. 3, also known as the State Lottery Amendment, appeared as an initiated constitutional amendment on the November 4, 2008 ballot in Arkansas, where it was approved.[1]

Amendment 3 establishes a state lottery in Arkansas, with the proceeds used to create scholarships for students attending two- and four-year colleges.

Election results

Arkansas State Lottery
ResultVotesPercentage
Approveda Yes 648,122 62.8%
No383,46737.2%

Proponents submitted 138,615 signatures on June 26, 2008, well over the 77,468 required to make the November 2008 ballot. The Secretary of State's office verified July 21st, 2008, that there were sufficient valid signatures. Jerry Cox, president of the Family Council Action Committee, said the group will fight the lottery with a grassroots campaign and possibly with court challenge.

Background of the initiative

Arkansas is one of eight states that did not have a state lottery. Lotteries were prohibited by the state constitution (Article 19, Section 14).

In 2006, Arkansans voted against a similar measure. Halter tried to get his lottery proposal on the ballot during the 2007 legislative session, but legislators did not support the measure, forcing the campaign to gather signatures. However, a new poll commissioned by the University of Central Arkansas this semester (Spring 2008) shows that nearly two-thirds of Arkansans now favor a state lottery.

Lt. Governor Bill Halter proposed the initiative to provide another option for funding college scholarships. The first version of the initiative was rejected by the Attorney General for being unclear. Attorney General McDaniel has expressed concerns about the current approved measure, writing in an opinion issued by his office:

I should point out, however, an argument exists that the term "state lotteries" in the ballot title is unclear, and that the title is incomplete for failing to reveal the amendment's full effect. Nevertheless, because the text of the amendment contains no specifics as to the term "state lotteries," no corresponding summary can be substituted in the ballot title.

While McDaniel has said that he won't endorse the state lottery, it was reported that he received a $1,000 campaign contribution from the Isle of Capri casino in Mississippi. The media attention to the donation prompted the Attorney General to return the donation the following day.

Support

Hope for Arkansas was the official proponent of the measure, and was headed by Lt. Governor Bill Halter. The group said that it believes the lottery will raise up to $100 million in scholarships. "If you look at every economic study, you will find that income level is tightly linked to the overall education level," Halter said. "We need to do something dramatic to expand educational opportunities for Arkansans."

The Arkansas AFL-CIO endorsed the amendment. Union president Alan Hughes said its 30,000+ members will help collect signatures to get the measure on the ballot. "Our members feel this would help things a lot," Hughes said. "They just want the same opportunity their counterparts have in other states, so their families have an opportunity to send their children to college."

In late March, it was reported that Lt. Gov. Halter was visiting several Arkansas cities looking for support from civic clubs and mayors of those cities.

Halter said many families are already crossing into adjacent states to buy lottery tickets. "To me it doesn't make good common sense to have Arkansans subsidizing the education of kids in other states," he said. "I'd rather keep Arkansas money here in the state."

Halter noted that Arkansas ranks 49th in the percentage of adults with college degrees.

"We'll be much better off as a state in our economic and education efforts if we can provide additional opportunities for college for as many students as possible," he said. "One of the major difficulties is the economic and financial stress on Arkansas families."

Lt. Gov. Bill Halter released a list of 31 mayors and county judges who have publicly endorsed his proposed lottery amendment on May 28, 2008. Halter acknowledged that they represent a small fraction of the 500 cities and 75 counties in Arkansas, but he said it was a start.

However, the following day, several of the officials on the endorsement list downplayed their support for the measure. Columbia County Judge Larry Atkinson asked for his name to be taken off the list, noting that he likes the idea of the people voting for the measure but doesn't endorse it. "I’m not for gambling or anything like that, but the people can decide," he said.

Others on the list said they wouldn't go so far as to say they endorse the amendment, though they were fine with being included in the list. "I don’t have any problem with it. If that’s endorsing it, fine," said Lonoke County Judge Charlie Troutman. He said he’ll vote for it, "unless I change my mind.... Am I going to get out and get on the stump and campaign for it? Probably not," Troutman said.

A trade group representing about 3,000 of the approcimately 3,500 convenience stores in Arkansas announced its support Sept. 10, 2008, of the proposed state-run lottery.

"Our members are losing thousands of Arkansas customers and millions in sales to lottery retailers in the border states," Ann Hines, executive vice president of the Arkansas Oil Marketers Association, said in an announcement on the association's web site. "We're losing business and the state is losing tax revenue."

The top-selling lottery retailers in Missouri, Oklahoma, and Texas are located near the Arkansas border.

Funding

The campaign reported in its campaign finance report filed July 15, 2008, that it had raised $477,917 by the end of June and had spent $462,577, leaving $15,340 on hand. Most of the money raised has come from Little Rock developer John Bailey and his family, who have donated $400,000 through June 2008 to support the measure.

John Bailey said his family was inspired to contribute to the campaign by Murphy Oil Corporation's pledge to give college scholarships to all El Dorado (Arkansas) High School graduates. In response to questions about whether he expected any benefot to himself or his business if the lottery is approved, Baily answered, "I hope the same benefit the whole state of Arkansas would have. It's the sheer fact we'll have a greater and larger pool of work force able to work for our company that will have college degrees. I hope the benefit will be for generations to come."

Bailey said he has no financial interest in any companies that do business with lotteries and has no plans to expand into that field.

In July 2008, the campaign reported raising $75,000. Warren Stephens, Little Rock businessman and CEO of Stephens, Inc., donated $50,000 to the effort. The John Bailey family donated an additional $25,000, bringing its total donations to $425,000.

The campaign had nearly $70,000 in the bank at the end of August 2008, according to a financial reports filed Sept. 12, 2008, with the state Ethics Commission. To date, campaign has raised $563,917 and spent $494,030. The bulk of the money raised has come from Little Rock real estate developer John Bailey and his wife, Patricia ($425,000).


Signature drive

Hope for Arkansas hired National Voter Outreach (NVO) to conduct the petition drive. According to a campaign finance report, Hope for Arkansas has spent $10,000 to reserve NVO to conduct the signature gathering campaign.

The campaign filed reports in mid-June showing $97,678 in expenditures to National Voter Outreach in May.

Opposition

Opponents included the Family Council of Arkansas, the Arkansas Faith and Ethics Council, and the Arkansas Democrat Gazette.

Baptist Churches across Arkansas have passed resolutions opposing the measure. "We believe it (a lottery) is predatory, that it is repressive and regressive," said Wes George, pastor of First Baptist Church in Rogers and president of the Arkansas Baptist State Convention, which serves 1,475 churches, at a news conference on Oct. 22, 2008.

The Family Council argues that the lottery will encourage poor families to spend money on lottery tickets instead of their families. Jerry Cox, executive director of the group, also says that the state lottery will act as a gateway for multiple other gambling activities.

Cox says he believes voters will turn down the amendment at the polls, noting, "I think that this measure could be defeated with a good public awareness campaign."

Cox argues that state lotteries take money from poor people, who spend a greater percentage of their income on the games, and redistribute it to more affluent people, who are more likely to take advantage of college scholarships.

Family Council directed more of its funds towards another initiative, the Unmarried Couple Adoption Ban, which was sponsored by the group.

Cox criticized Halter on July 15, 2008, for using the lieutenant governor's office—and thus tax money—to promote the lottery proposal, admitting that it is legal for Halter to use his office to promote the measure, but questioning the ethics of it.[2]

"Bottom line, I think it's legal but it doesn't pass the smell test," Cox said. "I think the state of Arkansas has indirectly subsidized this lottery effort."[2]

Halter defended the state paying the travel costs of his staff to speak on behalf of a lottery proposal. State law allows Halter and his staff to use the lieutenant governor's office to promote the proposed lottery, but he's required to file reports with the state if the office spends $500 or more related to advocating "qualification, disqualification, passage, or defeat." Halter's office said it has spent less than $500 to promote the lottery as of mid-July.[2]

Jerry Cox said in mid-September 2008 that the group was working on its advertising plan. "We're working on some radio spots, and today I met with our graphic design person to talk to him about putting together a newspaper ad," he said. "We also took to our graphic design people some wording for a little push card that would be suitable for church bulletin inserts or just handing out door-to-door."

The Family Council probably will not buy TV time unless additional contributions make that possible, Cox said.

The Arkansas Faith and Ethics Council argues that a lottery is a "notoriously unstable and inefficient revenue source." They suggest that a better estimate for revenue from a lottery is about $50 million, about half of the estimate being used by supporters of the amendment.

The Arkansas Faith and Ethics Council has a sister organization, Arkansas Committee for Ethics Policy that has a No Lottery Arkansas Campaign website. That site is www.nolotteryarkansas.com.

The Arkansas Democrat Gazette opposed the measure in an editorial saying it would create an immoral culture, funnel money away from Arkansas businesses, make the poor poorer, and increase gambling addiction without significantly helping the students of the state.

Fayetteville Superintendent Bobby New said a lottery would just add to the financial stress on many Arkansas families, trading one problem for another.

"I think it creates a real drain on our kids who are already poor," New said. "It provides a mechanism for non-disposable income becoming disposable."

New said he agrees that the state needs to help students pay for college, but he said the lottery proposal could do more harm than good if low-income families spend their paychecks on lottery tickets.

"I think it's a worthy cause to provide scholarships to our graduating seniors, but I don't think a lottery is the way to fund it," he said. "I think we need to find a creative and less invasive way to fund scholarships."

The United Methodist Church in Arkansas launched a campaign July 14, 2008, against the proposed state lottery. Representatives of the denomination's state conference said a lottery would prey on the poor and could open the door to casino gambling.

The United Methodist Church is the state's second-largest religious group, with about 179,000 Arkansas members. Southern Baptists are the largest religious group in Arkansas, with about 665,000 members.

"One of my great concerns is what happens when we allow the government to become gambling hustlers," said the Rev. Roger Glover, senior pastor of Dardanelle United Methodist Church.

The Methodists plan to raise money through church members to fight the proposal. Glover said the conference will encourage each of its more than 700 congregations to have a Sunday service devoted to the issue.

Glover and Scott Trotter, a Little Rock attorney and member of Pulaski Heights United Methodist Church in Little Rock, are co-chairmen of United Methodists Against Gambling, which has been registered with the Arkansas Ethics Commission as a ballot question committee in opposition to the proposal.

Trotter said that polls indicate that the lottery is currently favored by a majority of the voters, but he expects that to turn around, noting that "they haven’t heard the facts about this proposal yet." Trotter said he would welcome a debate with Halter on the merits of the proposal. Halter said he would consider participating in such a debate.

The Methodist prohibition against games of chance goes back to its 18th century founder John Wesley, who believed that gambling violated responsible stewardship and love of neighbor, according to Rev. Phil Hathcock, who oversees Methodist congregations in Pulaski County, Arkansas.

Glover said he expects the Methodist group to work with the Arkansas Committee for Ethics Policy to defeat the proposal just as they did against a similar measure in 2000 that included casino gambling.

Stanley Reed, president of the Arkansas Farm Bureau Federation, said July 22, 2008, that the group probably won't decide until September whether it will actively oppose the proposed lottery amendment, but opposition to a lottery for education has been a long-standing policy of the federation.

Dr. Michael Nelson is the Fulmer Professor of Political Science at Rhodes College and wrote in The Chronicle of Higher Education in opposition to the lottery. Dr. Nelson contends that "a steeply disproportionate share of lottery tickets are going to be bought by poor and working-class people and a steeply disproportionate share of the college scholarships are going to go to the sons and daughters of middle and upper-middle-class families." He called these claims "two of the least-disputed findings in the academic literature on the subject" and added, "It’s kind of curious that it’s Democrats who promote lotteries, but it’s been one of the few winning issues they’ve had in the South.” Dr. Nelson believes the advocates of the lottery would be serving the state better by persuading taxpayers to fund scholarships with taxes rather than using "the power and moral authority of the state to sucker poor people into losing money in weak-odds lotteries so that kids whose families can afford to send them to college can do so at a discount."

Opponents of the lottery have argued that voters should turn down the measure because it gives a free hand to lawmakers to hash out the details of the lottery and the scholarship fund however they see fit.

Funding

Billionaire Jim Walton donated $75,000 to the Family Council Action Committee's campaign against the lottery. Walton is the chairman of Arvest Bank and is the son of Wal-Mart founder Sam Walton.

Walton's contribution brings the Family Council Action Committee's total contributions through August 2008 to $77,111. The committee has spent $3,472, leaving it with $73,639 on hand.

Jerry Cox, executive director of the Family Council, said, "We had not asked for the donation. I ... very quickly called to thank him for the donation, and like a lot of people at his level we weren't able to talk to him, but I conveyed our thanks to him through his secretary and then followed that up with a very nice thank-you letter for such a generous gift."

Cox said the Family Council plans to use the money primarily for advertising.

Competing estimates

Two very different estimates—$40 million apart—of how much the lottery would likely bring in if this initiative passes were released on June 25, 2008.

The first, released by Arkansas Advocates for Children and Families, estimated the take at $61.5 million annually and was part of an 8-page report entitled "Gambling On Our Future: Why a State-Sponsored Lottery is Still a Bad Bet for Education and Families in Arkansas." The report also said a lottery would add more unfairness to the state tax system, do little to improve access to higher education, and "prey among those who stand to lose the most from gambling."

Hope for Arkansas countered with a 15-page report defending Halter’s $100 million estimate. "We are pleased that their [Arkansas Advocates for Children and Families] report reaches the same conclusion as does ours: A scholarship lottery will create tens of millions of dollars in new college scholarships without raising taxes," said Hope for Arkansas spokesman Bud Jackson.

Jackson said it's inaccurate to describe a voluntary lottery as a tax and added that it's a common myth that lotteries are funded mostly by low-income people.

The Arkansas Department of Finance and Administration estimated a lottery would bring in $55 million annually.

The Missouri Lottery Commission estimated in July 2008 that Missouri could lose more than $25 million in lottery ticket sales in the first fiscal year if Arkansas implements a state lottery.

Polls

See also Polls, 2008 ballot measures.
Month of Poll Polling company In Favor Opposed Undecided
October 2008 University of Arkansas 65 percent 33 percent 3 percent

Status

Lt. Gov. Bill Halter announced at a May 13, 2008, press conference that more than the 77,468 valid signatures required to qualify for the November ballot have been collected. The group will continue collecting signatures until the July deadline, in order to cover any signatures that are invalidated.

Proponents submitted 138,615 signatures on June 26, 2008, well over the 77,468 required to make the November 2008 ballot. The Secretary of State's office announced July 21, 2008, that sufficient valid signatures were filed to make the November ballot.

Jerry Cox said the Family Council Action Committee will fight the lottery with a grassroots campaign and possibly with court challenge.

Cox said the group may ask the state Supreme Court to review the measure to make sure it's not misleading voters. "We’re going to look at this very closely and decide if we have a good case," Cox said. "The Supreme Court has in the past actually removed measures from the ballot that had such fatal flaws in them that they felt like it would be detrimental to the people of Arkansas and they wouldn't really know what they were voting on."

Halter responded to Cox’s suggestion of a court challenge by saying that he hoped opponents would let the democratic process play out.

Attorney General Dustin McDaniel said Aug. 22, 2008, that he is confident the proposed constitutional amendment could survive any court challenges.

"My office worked very hard on approving the language of this amendment and making sure it was defensible and regardless of how I feel about it, if anyone files a lawsuit I'm confident we will successfully defend it and keep it on the ballot so the people have a right to vote on it," McDaniel said.

Arkansas Family Council filed a petition with the Arkansas Supreme Court on Sept. 19, 2008, arguing that the State Lottery Amendment's title and name should be found to be "inaccurate, incomplete and misleading" because they don't define lotteries and don't warn voters of potential consequences of authorizing a state-run lottery.

"The popular name and ballot title of the proposed amendment do not adequately inform the voters of the effect of the amendment regarding casino gaming," according to the complaint.

Family Council Director Jerry Cox said that from the wording of the proposal, "the voters aren't going to realize it's actually repealing part of the constitution that bans the establishment of casinos."

Bud Jackson, a spokesman for Halter's lottery campaign, said "This is yet the latest example that the Family Council, a special interest organization, will do anything to impose its will upon the entire state of Arkansas and do anything to prevent Arkansans from having the right to vote on this themselves."

The Arkansas Supreme Court agreed to expedite the hearing, scheduling oral arguments for Oct. 13, 2008.

In oral arguments before the court on Oct. 13, 2008, justices considered challenges by the Arkansas Family Council, which argues that the proposal should better define the games and could allow for the introduction of casinos in the state.

Assistant Attorney General Matthew McCoy said the measure doesn't repeal the ban on lotteries but creates a specific exemption for state-run lotteries that raise money for college scholarships. Jess Askew, a lawyer representing Hope for Arkansas, said that it would be "politically impossible" for lawmakers to use the amendment to open casinos.

The state Supreme Court issued its ruling on Oct. 16, 2008, rejecting the claims of the Arkansas Family Council and keeping the proposal on the ballot for a vote Nov. 4th.

According to the 6-0 decision, "It is not necessary that a ballot title include every possible consequence or impact of a proposed measure."

See also

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