The mass exodus of bars and taverns from the video poker business, predicted by industry economists to result if the state increased its cut of the proceeds, hasn't materialized.

In March, the Oregon Lottery Commission reduced to 29 percent, down from 32 percent, the compensation that retailers could keep from the state-owned video lottery machines on their premises. The move was preceded by warnings from the industry that any cut would lead retailers to tell the lottery to come pick up their machines - a move that would have meant less revenue for education, job creation and other lottery-funded programs.

How many of the state's 2,158 video-lottery retailers decided not to renew their contracts when the old ones expired June 26?

Nine so far, with an additional 35 that haven't renewed their contracts yet, but still may, according to Marcia Hutchins, who oversees retailer contracts for the lottery.

That comes to between 2 percent and 0.4 percent of retailers who aren't keeping video poker. Economists had said in a report commissioned by the Oregon Restaurant Association that 15 percent would ask the lottery to remove their machines if there was any cut in their compensation.

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Political activist Steve Novick, who argued for deeper cuts in compensation so the state could increase money for public services, said the fact that 98 percent or more of the retailers are keeping video poker means the bar and tavern owners' lobbying arm overstated the negative hit that would result from a drop in commissions. And it also means the Oregon Lottery Commission made a poor decision when it comes to getting the maximum revenue possible for the state, Novick said.

Under the prior compensation plan, retailers' average commission was $74,000, or 32 percent of sales. Under the new contract, the average commission is forecast to be $67,000, or 29 percent of sales.

If the compensation cut were truly more than bars and restaurants could economically bear, Novick said, more of them would have gotten out of the lottery.

"This tells me two things," Novick said. "First, the Oregon Restaurant Association spent months lying through its teeth. Second of all, the Oregon Lottery has exposed itself as the least businesslike organization in human history."

Bill Perry, a lobbyist for the Oregon Restaurant Association, said it was too early to draw any conclusions about how the new rates, in place for just more than a week, would affect the bottom line for bars, taverns and gambling parlors. If they don't get rid of the machines, they'll make other adjustments, such as cutting employment, reducing or eliminating benefits, or curbing operation hours.

"There's going to be a negative ramification from this. Whether it's small or big nobody really knows," Perry said. "It's just too early to tell."

Among the nine businesses to get rid of video poker machines, only one is in Lane County. Jo Federigo's Restaurant & Jazz Club did not renew its contract for video lottery. But owner Jerome Seljan said the reason wasn't that compensation was dropping by three percentage points.

"I know the argument. I think it's specious," he said. "I would have liked to keep my video poker machines."

It was the lottery's requirement that he remodel to allow patrons who use wheelchairs to access video poker machines, a costly undertaking, that prompted Seljan to opt out.

Frank Wilson, owner of Frank's Restaurant & Lounge in Mapleton, was among the retailers to threaten that he'd have the lottery haul the machines away if it cut retailer compensation.

Although he said he resented the lottery's reducing retailers' takes, he said he wasn't considering getting rid of the machines now.

"Oh sure we're going to keep the machines," he said. "The cut wasn't as bad as we thought it would be."

Source: David Steves, The Register-Guard