Taking a Chance

The Texas Legislature may have killed the goose that laid the golden egg—and Governor George W. Bush’s goose could be cooked—if dire forecasts about state lottery revenue prove to be correct. To balance the state budget this past spring, lawmakers cut the winners’ share of lottery revenue from 55.5 percent to 50.5 percent—ignoring warnings from Gtech, the company that runs the games, that participation would surely drop and with it state revenue. Instead, the Legislature forecast that the state’s income from lottery sales would rise by $770 million over two years. It looks as if Gtech was right: In the five weeks after the lower prizes took effect on September 1, lottery ticket sales have averaged $61.8 million a week—far below the $77 million necessary to balance the budget. We’ll skip the math, but if the trend continues for two years, the treasury would be almost $553 million short; if sales drop off by 40 percent, as they did in California after prize money was reduced, the shortfall would be in excess of $1 billion. Bush’s problem: If the budget turns out to have been balanced only with smoke and mirrors, and if Texas is plunged into a fiscal crisis, some blame will fall on the person who signed the bill into law.

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