Oregon Lottery officials brief Ways and Means subcommittee on revenue, beneficiaries and bond use
March 26, 2025 | General Government, Ways and Means, Joint, Committees, Legislative, Oregon
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Carl Strauss, controller of the Oregon State Lottery, told the Ways and Means Subcommittee on General Government on March 26 that the lottery operates as a self‑sustaining enterprise and transfers net profits to the state to fund constitutionally and statutorily designated beneficiaries and debt service.
The presentation explained the lottery’s business model, the large share of revenue produced by video lottery terminals, how transfers are prioritized to pay bond debt service, and recent bond activity including roughly $500 million in issuance that includes about $330 million for new infrastructure projects and a refinancing expected to save the state about $13 million.
The briefing matters because lottery proceeds are a significant recurring resource for the state budget and bond payments, and because committee members pressed officials on how lottery policy choices — such as prize payout rates, the retailer footprint and product mix — affect revenues and communities that receive the funds.
Strauss opened by describing the lottery’s mission, saying the agency aims to “operate a lottery with the highest standards of security and integrity to earn maximum profits for the people of Oregon to commensurate with the public good.” He told the subcommittee the lottery is a semi‑independent agency that does not receive state appropriations and is not allowed to take on outside debt or advances from other state agencies.
Strauss and committee staff walked members through the lottery’s stakeholder structure: commissioners appointed by the governor and confirmed by the Senate set policy and approve games; the legislature appropriates transferred revenue and approves bonding; and retailers — roughly 3,800 locations statewide — sell games and receive sales commissions. Strauss said the lottery maintains a wait list for retailers because the current statutory or policy footprint limits active retail locations to about 3,800.
Committee members pressed Strauss on the share of play returned to winners and who sets that percentage. Strauss said that a large share of each dollar played is returned as prizes — committee members and Strauss discussed figures in the low 90s (about 93–94 percent) — and that the commission establishes prize payout policy, subject to confirmation with lottery policy staff.
Strauss said video lottery accounts for the largest share of sales and transfers to the state. When asked for counts of video terminals, Strauss estimated roughly 2,200–2,400 terminals in the retail network and noted some retailers operate more than one terminal. A committee member asked whether the lottery tracks operating costs by game type; Strauss said the agency does track costs internally and offered to provide that breakdown as a follow‑up.
The presentation listed the lottery’s beneficiaries and the percentages used when transfers are distributed: constitutional beneficiaries cited in the briefing included 18 percent for education, 15 percent for parks and natural resources, and 1.5 percent for veteran services. Statutory beneficiaries cited included 1 percent for problem‑gambling treatment and prevention, 2.5 percent for county economic development, 1 percent for county fairs, 1 percent for college athletics, and approximately 4 percent for outdoor school; Strauss described those as statutory allocations that follow the constitutional transfers and the state’s debt‑service priorities.
On priority of payments, Strauss said lottery‑backed bond debt service is paid before many of the other distributions: “debt service does get paid first,” he told the committee. Committee members and staff clarified that lottery transfers go to the state, which then supports bond service and appropriates the remaining amounts to constitutional and statutory beneficiaries.
Strauss described the lottery’s contingency reserve as a small amount approved by the commission to cover working capital and shortfalls — he said it covers roughly two and a half months of operating expenses — and that administrative savings and unclaimed prizes are transferred to the state when available.
On recent and planned bond activity, Strauss and staff described a large issuance in the current process: about $500 million overall, of which roughly $330 million was identified for new infrastructure projects and the remainder used to refinance 2015 debt. Strauss said the refinancing is expected to save the state about $13 million. The lottery’s transfers to the state were described in the briefing as roughly $950 million in the prior year; Strauss and staff emphasized those dollars fund debt service and the constitutional and statutory programs after debt obligations are met.
Committee members asked about sports betting, college athletics distributions and gambling addiction funding. Strauss said sports betting offered through the lottery’s partnership (cited in the presentation as DraftKings) does not include NCAA events; it is limited to professional sports. LFO staff cited Oregon Revised Statutes (ORS) 461.543 when explaining the sports‑lottery account distribution mechanics, saying the statute directs that 70 percent of the 1 percent set aside for college athletics goes to non‑revenue producing sports and that half the money must be made available to women’s sports activities.
On problem‑gambling funding, members asked whether the 1 percent set aside aligns with the types of games that create the most need for prevention and treatment. Strauss said he would research the question and, if applicable, point the committee to the lottery’s safer‑play materials or other reports that examine problem‑gambling impacts.
No formal votes or policy actions were taken at the informational hearing. Committee members requested follow‑up material, including: (1) a breakdown of operating costs by game type; (2) further detail on the retailer wait list and turnover policies; (3) confirmation of who sets prize payout percentages; and (4) citations or pages in supplemental materials that address problem‑gambling impacts.
The subcommittee’s co‑chairs and staff closed the session after asking Strauss and lottery staff to make themselves available for follow‑up questions.
Ending: The presentation was informational; the committee did not take formal action. Staff agreed to provide additional data on retailer policies, game operating costs, prize‑payout authority and the lottery’s safer‑play analyses.
The presentation explained the lottery’s business model, the large share of revenue produced by video lottery terminals, how transfers are prioritized to pay bond debt service, and recent bond activity including roughly $500 million in issuance that includes about $330 million for new infrastructure projects and a refinancing expected to save the state about $13 million.
The briefing matters because lottery proceeds are a significant recurring resource for the state budget and bond payments, and because committee members pressed officials on how lottery policy choices — such as prize payout rates, the retailer footprint and product mix — affect revenues and communities that receive the funds.
Strauss opened by describing the lottery’s mission, saying the agency aims to “operate a lottery with the highest standards of security and integrity to earn maximum profits for the people of Oregon to commensurate with the public good.” He told the subcommittee the lottery is a semi‑independent agency that does not receive state appropriations and is not allowed to take on outside debt or advances from other state agencies.
Strauss and committee staff walked members through the lottery’s stakeholder structure: commissioners appointed by the governor and confirmed by the Senate set policy and approve games; the legislature appropriates transferred revenue and approves bonding; and retailers — roughly 3,800 locations statewide — sell games and receive sales commissions. Strauss said the lottery maintains a wait list for retailers because the current statutory or policy footprint limits active retail locations to about 3,800.
Committee members pressed Strauss on the share of play returned to winners and who sets that percentage. Strauss said that a large share of each dollar played is returned as prizes — committee members and Strauss discussed figures in the low 90s (about 93–94 percent) — and that the commission establishes prize payout policy, subject to confirmation with lottery policy staff.
Strauss said video lottery accounts for the largest share of sales and transfers to the state. When asked for counts of video terminals, Strauss estimated roughly 2,200–2,400 terminals in the retail network and noted some retailers operate more than one terminal. A committee member asked whether the lottery tracks operating costs by game type; Strauss said the agency does track costs internally and offered to provide that breakdown as a follow‑up.
The presentation listed the lottery’s beneficiaries and the percentages used when transfers are distributed: constitutional beneficiaries cited in the briefing included 18 percent for education, 15 percent for parks and natural resources, and 1.5 percent for veteran services. Statutory beneficiaries cited included 1 percent for problem‑gambling treatment and prevention, 2.5 percent for county economic development, 1 percent for county fairs, 1 percent for college athletics, and approximately 4 percent for outdoor school; Strauss described those as statutory allocations that follow the constitutional transfers and the state’s debt‑service priorities.
On priority of payments, Strauss said lottery‑backed bond debt service is paid before many of the other distributions: “debt service does get paid first,” he told the committee. Committee members and staff clarified that lottery transfers go to the state, which then supports bond service and appropriates the remaining amounts to constitutional and statutory beneficiaries.
Strauss described the lottery’s contingency reserve as a small amount approved by the commission to cover working capital and shortfalls — he said it covers roughly two and a half months of operating expenses — and that administrative savings and unclaimed prizes are transferred to the state when available.
On recent and planned bond activity, Strauss and staff described a large issuance in the current process: about $500 million overall, of which roughly $330 million was identified for new infrastructure projects and the remainder used to refinance 2015 debt. Strauss said the refinancing is expected to save the state about $13 million. The lottery’s transfers to the state were described in the briefing as roughly $950 million in the prior year; Strauss and staff emphasized those dollars fund debt service and the constitutional and statutory programs after debt obligations are met.
Committee members asked about sports betting, college athletics distributions and gambling addiction funding. Strauss said sports betting offered through the lottery’s partnership (cited in the presentation as DraftKings) does not include NCAA events; it is limited to professional sports. LFO staff cited Oregon Revised Statutes (ORS) 461.543 when explaining the sports‑lottery account distribution mechanics, saying the statute directs that 70 percent of the 1 percent set aside for college athletics goes to non‑revenue producing sports and that half the money must be made available to women’s sports activities.
On problem‑gambling funding, members asked whether the 1 percent set aside aligns with the types of games that create the most need for prevention and treatment. Strauss said he would research the question and, if applicable, point the committee to the lottery’s safer‑play materials or other reports that examine problem‑gambling impacts.
No formal votes or policy actions were taken at the informational hearing. Committee members requested follow‑up material, including: (1) a breakdown of operating costs by game type; (2) further detail on the retailer wait list and turnover policies; (3) confirmation of who sets prize payout percentages; and (4) citations or pages in supplemental materials that address problem‑gambling impacts.
The subcommittee’s co‑chairs and staff closed the session after asking Strauss and lottery staff to make themselves available for follow‑up questions.
Ending: The presentation was informational; the committee did not take formal action. Staff agreed to provide additional data on retailer policies, game operating costs, prize‑payout authority and the lottery’s safer‑play analyses.
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