The Pew Charitable Trusts

WASHINGTON - For as long as anyone in statehouses around the Bible Belt can remember, the region's traditional opposition to state-sanctioned gambling has been rooted in one unshakeable stricture: gambling is a sin. Now, however, state leadersand ultimately votersmust make a difficult choice between a new economic logic and an old moral certainty historically used to defeat gambling measures.

Alabama, South Carolina, North Carolina and Tennessee are addressing the gambling issue again this year, with each state either already having passed or on the brink of passing bills allowing referendums on state-operated lottery systems.

In 1988, Virginia and Florida became the first states to approve lotteries in the generally gambling-wary South.

Governors and legislatures throughout the South are emulating the example of former Georgia Gov. Zell Miller, who in 1993 staked his administration on pushing through a lottery to fund education programs.

Since 1993, the Georgia lottery has provided $580 million in funding for the HOPE scholarship program. More than 319,000 Georgia students who completed high school with a B average or better have received scholarships so far.

Governors of neighboring states, including Alabama's Don Siegelman, have seized on the success of the Georgia program as the rationale for their states to follow suit.

The Alabama House approved Siegelman's lottery plan on March 9, voting 70-31 in favor of a referendum on a lottery that would fund new education programs. The measure is expected to pass the Senate, despite internal chaos created by a political fight over the power of the Alabama Lieutenant Governor.

"This was a joint effort of Democrats and Republicans working together," Siegelman said after the vote. "They are giving Alabama an opportunity to vote on the most important piece of education legislation in this state's history."

Siegelman says that his lottery plan will closely track Georgia's system. Projections from his office claim the lottery will raise at least $150 million a year for education programs, including college scholarships and pre-kindergarten programs.

To pass the plan, lawmakers in both houses must approve the measure by a three-fifths majority. State voters will then decide whether to lift the constitutional ban on lotteries.

A South Carolina bill setting a November 2000 statewide lottery referendum passed the Senate last month 37-8. A companion bill is scheduled for sometime next week in the Republican-controlled House and appears likely to pass. After killing a similar lottery proposal last year, South Carolina legislators are ready to heed public opinion polls showing support for a lottery by a consistent 2-1 margin.

South Carolina's Board of Economic Advisors has projected that a state lottery would take in $200 million in sales and $90 million in profits in its first year.

The lottery issue in South Carolina received new life last fall with Democrat Jim Hodges' upset victory over incumbent governor David Beasley. Beasley, a born-again Christian, was staunchly opposed to all forms of gambling.

Hodges, who was once a gambling foe, effectively capitalized on the issue to become the state's first Democratic governor in 12 years. In one of his more memorable campaign ads, an actor portraying a Georgia convenience store owner drawled, "Here in Georgia, we just love David Beasely."

South Carolinians buy an estimated $96 million worth of Georgia lottery tickets each year, according to the Georgia commerce department.

"The Georgia lottery has had more to do with influencing the desire of South Carolinians to vote on [a lottery] than anything else," said South Carolina House Speaker David Wilkins. "The same thing will happen in North Carolina."

In North Carolina, fear of losing even more revenue to neighboring states has bolstered support for a lottery.

While a lottery bill has been submitted and defeated in the North Carolina legislature every year since 1983, North Carolina's projected $500 million budget shortfall weighs heavily in this year's decision.

North Carolinians already spend an estimated $150 million a year on the Virginia and Georgia lotteries, and South Carolina's vote has North Carolina leaders envisioning even more money slipping across the borders.

"Look at the population centers close to our border, from Charlotte on our side of the line to Myrtle Beach on the their side," said North Carolina state senator Tony Rand when introducing the Senate lottery bill. "We already know that the biggest volume dealers in Virginia are near our state line. That's certainly going to be true with South Carolina."

Rand's bill earmarks lottery profits for cleaning up waterways, improving school technology and establishing college scholarships for high school graduates with B averages or better. Fifty percent of lottery revenues would be returned to the public as prize money.

Adding to the number of states leaning toward a lottery is Tennessee. Earlier this month, a House subcommittee gave fast track status to a bill calling for an August 2000 referendum for a constitutional convention to decide the issue.

If passed, the bill would create a 33-delegate convention to assemble on November 20, 2000. The convention delegates would then place the issue on a statewide ballot referendum for a future date.

Supporters of a lottery again point to education funding as its primary benefit. Tennessee Higher Education Commission Chairman A.C. Wharton says the state needs to look for funding alternatives.

"If there are (other) revenue sources out there, let the people speak," Wharton said in releasing the Commission's $1 billion budget recommendation for the state's public colleges.

The lottery has been a controversial issue in Tennessee for the past 20 years. Gov. Don Sundquist, who opposed a lottery during his first term, now says that he would favor a public vote on a lottery if its revenues were spent on education.

Opponents of the lottery measures throughout the South include religious interests traditionally opposed to gambling and policy groups that have concerns over the effects of lotteries on other state revenue sources.

Liberal and conservative Christian churches in North Carolina have formed an uneasy alliance against a state lottery they feel would contradict Christian values and undermine public morality.

Liberal churches say a lottery would prey on the poor and exploit the vulnerable. Conservative religious leaders say a lottery would undermine families.

Proving the old axiom that politics makes strange bedfellows, lottery proposals brought together the Protestant and Catholic churches of North Carolina. Working under the aegis of The Council of Churches, Protestant and Catholic leaders sent a letter of protest to the North Carolina legislature. The state Baptist Convention, the state Episcopal church and United Methodist bishops all adopted the letter.

"When something is a really bad idea, you'll see a lot of cooperation," the letter read. "This is about morality. This is about right and wrong. Fortunately, we agree on those issues."

Opposition to the North Carolina lottery proposal has also brought together the conservative John Locke Foundation and the liberal North Carolina Budget & Tax Center.

According to a joint study released by the two groups, a state lottery could cost North Carolina at least $36 million each year in sales tax revenue. The report said that lottery sales would mean lower overall retail sales, as consumers spend more disposable income on lottery tickets instead of other items.

"We're assuming that every dollar spent on a lottery ticket is one not spent on something else," said the study. "That something is usually taxed and the lottery ticket isn't. Obviously, the government gets a net revenue flow from the lottery, but what this simply shows is that there are some offsetting losses."

Researchers who keep tabs on lottery profits also warn states not to count on the huge revenue figures captured by the first states to introduce lotteries.

Two Duke University researchers who have studied lotteries for the past decade warn that within the past six years, lottery sales have flattened or declined in five of the six southern states with lotteries. Only Georgia's ticket sales have increased ever year since the lottery's inception.