Bars, taverns and restaurants with video poker machines do not employ more staff than those without the terminals, according to a report from an economic consulting firm.

The report, commissioned by the Oregon Lottery and conducted by ECONorthwest, also says video poker retailers need less than $10,000 a year in compensation to get a fair rate of return on their lottery investment. The roughly 1,900 bars and taverns received an average of $80,000 in compensation this past fiscal year for carrying the video poker terminals.

advertisement
Party Poker
The biggest online poker room with thousands of players.
Choose one of the following games:
Texas Holdem Poker, Omaha Poker, Omaha Hi,
Seven Card Stud, Stud 8 or Better.
Receive a 20% bonus of your first deposit up to a $100!!!
Party Poker

The Oregon Restaurant Association disputed the findings, which undermine its arguments against reducing the retailers' take. Lottery commissioners are considering cutting the compensation rate, currently an average of 32 percent of net proceeds, to generate more state revenue for schools, parks and other programs.

Lottery commissioners begin public hearings on the issue Thursday in preparation for a new long-term contract with retailers. The report, along with a recent state study that showed Oregon pays retailers more than similar lottery jurisdictions, should be a topic of conversation.

Some retailers have argued that the rates help pay for security and other workers needed by establishments with video poker machines. But researchers found that, in general, retailers with the machines did not have more staff or pay higher wages than those without them. For example, bars and taverns without video poker averaged 11.6 employees, compared with eight for places with video poker.

Bill Perry, lobbyist for the restaurant association, said the study relied on government and other data, not the actual costs incurred by retailers.

"The guys who make $100,000 to $150,000, they're making that money because of something they're doing, whether it's changing the establishment, adding more labor, lowering food costs, whatever," Perry said.

The report says average annual expenses for five machines range from $6,700 at a rural tavern to $8,700 at a small Portland tavern. The expenses would include items such as partition remodeling, padded stools, rent and utilities.

To recover those expenses and earn a 15 percent rate of return on the investment, the report says, a retailer would have to generate an average annual compensation ranging from $7,661 at a rural tavern to $9,781 at a small Portland tavern.

Lottery Director Brenda Rocklin and Kerry Tymchuk, the commission chairman, declined comment until they have studied the report.

Steve Novick, a Portland lawyer who has lobbied against the current rates, said the report validates what previous independent government studies have found: Retailers would profit comfortably with rates at 15 percent.

"Every amount above $10,000 a year is gravy. You need $10,000 to turn a profit, and the rest is cash injected into the bloodstream," he said.

Source: Associated Press