Leading Republican senators expressed worries Monday that selling the Texas lottery to a private company could allow the expansion of gambling in the state to slot machines and other new games.
The lottery's annual $1 billion payments to public education and the state's role in regulating the lottery if it were sold also were the subject of questions by members of the powerful Senate Finance Committee.
Sen. Troy Fraser, R-Horseshoe Bay, wondered whether a private company operating the lottery might view slot machines as a form of gambling similar to the lottery.
"My concern is is that this is opening the door to the mentality of slots in 7-Elevens," Fraser said. "I don't want slot machines in 7-Elevens."
Republican Gov. Rick Perry is proposing selling the lottery for at least $14 billion to fund cancer research, health insurance and education.
Documents prepared for his office by financial firms wanting to manage the deal for the state said a private company could look to make the lottery more profitable by establishing games like video slot machines or by letting people buy tickets at home on their digital televisions, according to a review of the documents last week by The Associated Press.
Sen. Jane Nelson, a Lewisville Republican and a past ardent opponent of attempts to legalize video slot machines, asked Lottery Commissioner James Cox in his appearance before the committee whether he envisions a private company trying to expand the scope of games.
"I'm very concerned about this proposal of selling the lottery if it would lead to an expansion ... of allowed games, and who would make that decision," Nelson said.
Cox, though he said lottery officials aren't part of the governor's office discussions with financial consultants, said there are a number of ways a sale could be structured. He said state laws and the sales contract would determine what gambling activities would be condoned.
The potential price of the lottery also raised questions from senators.
"The price tag seems to change daily, by billions," said Sen. Kevin Eltife, a Tyler Republican.
Perry has said $14 billion is a conservative estimate. Consulting firms that prepared documents for Perry's office said it could go as high as $28 billion.
"I read somewhere that someone said, you know, the private sector, if they buy it, they're very smart. They'll know how to maximize the return on the investment. Are we not smart enough to run the lottery?" Eltife said.
Perry said last week that a private company run by "smart people" would make "substantially more money" off of the lottery than the state does.
Lottery officials said Monday that the state operates the lottery under constraints set by the Legislature. Its advertising budget is capped and tied to the amount of payouts.
Eltife suggested the state could find ways to change the lottery to make it more profitable under state ownership.
Sen. Royce West, D-Dallas, also asked questions about the profitability of the lottery.
The Texas lottery reported more than $3.77 billion in sales in the 2006 fiscal year, the biggest total in 14 years. But the lottery was about 4 percent behind in overall sales for the first weeks of the current fiscal year, state officials testified.
The lottery was created under the Texas Constitution, Sen. Florence Shapiro, a Plano Republican, noted as she asked whether the sale would require a constitutional amendment. Shapiro also questioned what role the state would have in oversight if the lottery were sold.
Lottery Executive Director Anthony Sadberry said it's possible it would require a constitutional amendment, or at least legislative action, to sell the lottery to a private firm. He and Cox also said under the current setup the lottery commission has the responsibility of overseeing and regulating the lottery.