The House Committee on Licensing and Administrative Procedures Oct. 8 looked at two favorite issues among social conservatives in the state: liquor and lottery tickets.

Liquor stores too close to small-town schools?

It is easier to get alcohol near a school, church, or other like establishment, in rural or suburban Texas than in urban Texas.

That was the message of officials from the Texas Alcoholic Beverage Commission (TABC) and Saginaw ISD, near Fort Worth.

The committee considered possibly changing that via the Alcoholic Beverage Code. TABC administrator Alan Steen called the current statute the “simplest confusing thing you’ve ever seen in your life.”

The statute currently requires establishments that make 50 percent or more of their profits on alcohol sales to locate at least 300 feet from a church, school, public hospital, or other such establishment in a non-urban area. In a city of 900,000 or more, liquor stores must locate at least 1,000 feet from a school, public or private.

But Kristen Escovedo, communications director for Saginaw ISD, suggested a 1,000-foot distance for all alcohol establishments, regardless of local population. She cited the example of a Big Daddy’s Liquor Store about one block from an elementary school. “That is about 300 feet,” she said.

She also lamented that the distance requirements do not apply to packaged liquor stores.

“We are asking our students to be good citizens and to refrain from drinking until they’re 21,” she said. “And we are … by putting liquor stores so close, especially to our secondary schools, putting the temptation literally in front of their face.”

Escovedo said she would not be opposed to grandfathering older establishments so that they would not be forced to move if greater distance requirements become law.

A “rescue plan” for lottery sales?

Don’t blame the Wall Street crisis for declines in lottery ticket sales, Texas Lottery Commission executive director Anthony Sadberry said October 8, blame Ike.

The Category 2 hurricane deluged and knocked out power in the Houston-Galveston area, normally the state lottery’s leading sales district. Sales were already down from the start of the fiscal year, Sadberry said, but Ike made things worse.

Sadberry said after the Sept. 13 storm passed, only six lottery sales terminals of just over 5,000 in the district were online and available for the sale and validation of tickets.

 Terminals have gradually come back online, he said, but nearly 300 were still down at the end of September. Sales for the first three weeks in the Houston sales district were down 36 percent, compared to the same period last year. Through the first four weeks this fiscal year, overall sales lagged by 16 percent, compared to FY 2008.

Sadberry did not use the slumping ticket sales to push video lottery terminals at race tracks, but then again, he didn’t have to. Committee chairman Ismael “Kino” Flores (D-Mission) reprised his own lament, reported a few days earlier in the Houston Chronicle, to wit that ticket sales had fallen because the Legislature would not allow new forms of gambling.

“If we continue to make the lottery restrictive, we’re going to continue to see this,” Flores said, “so in a way I don’t think you need to stand up and justify it to us why the sales are down …”

Sadberry asked the committee for an additional $10 million annually for advertising. In 1993 the agency had $40 million.

But Rep. Charlie Geren (R-Fort Worth) said the lottery seems to advertise that it is used to fund education, “and that’s not selling any more lottery tickets.”

Geren went on to say that if the lottery should advertise only the tickets it sells. “I think we need to try to advertise to sell it, not to talk about where the money goes,” he said.

Ironically, when Sadberry later briefed the committee on the troupe of financial giants who argued for privatization before the Senate State Affairs Committee on August 27, Geren wisecracked, “It would have been good for Lehman Brothers to get it, wouldn’t it?”

Observing that 78 percent of lottery sales are made at convenience stores, Flores suggested setting up pay-at-the-pump machines. But that could create problems with making certain that potential lottery ticket buyers are of age, activists have warned. The commission is currently awaiting an Attorney General’s on the use of the magnetic strip of a driver’s license to sell lottery tickets. The Baptist-affiliated Christian Life Commission is on record as opposing such devices, as the state does not allow them for the sale of other products that require age-verification, like cigarettes.

The agency continues to support existing retailers and recruit new ones in order to optimize revenue to the foundation school fund, Sadberry told the committee. The Texas Lottery has about 16,000 licensed retailers who sell lottery products. Although the retailer base contains a variety of trade styles, the number of retailers has remained about the same since 1992, Sadberry said.

Geren said he was surprised at how static the number of lottery retailers has remained in light of the state’s booming growth, especially in the Dallas-Fort Worth Metroplex, where he said new gas stations and convenience stores were popping up “on every corner.”

Sadberry said the retail base number has grown, but not at the same rate as the state.

Increasing the number of sales locations involves expanding into new venues outside of traditional lottery locations, Sadberry said. The agency is actively working with the lottery operators to enhance resale and recruitment efforts, he said.

Flores suggested perhaps selling lottery tickets in more places, like restaurants and bars.

Sadberry agreed that that would have a “positive impact,” saying the commission is “aggressively looking at expanding the retail base.”

Sadberry said that Texas Lottery retailers have received over $2.5 billion in commissions and bonuses over the years. In the legislative appropriations request just submitted, the commission seeks the authority to use an additional 1.5 percent of sales as a performance-based incentive to retailers who meet or exceed sales goals or other performance criteria. Compensation to retailers, currently five percent of sales, has not changed in 16 years. Sadberry said that Texas ranks among last in the country in compensation paid to lottery retailers as a percentage of sales.

The executive director said if ongoing renegotiations with lottery operator G-Tech go south, the state might consider bringing lottery operations in-house, which would require legislation. The contract with G-Tech is up for renewal in 2011. The lottery operator by contract receives 2.699 percent of lottery ticket sales in Texas.

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