Wide Variety of Sales Outlets : Odds on Finding Lottery Tickets Will Be Excellent

Don’t be surprised, come late September or early October, if you go to buy a set of false teeth and the dental lab clerk tries to sell you a lottery ticket.

Or if you go to get a can of worms and the bait shop man is pushing a little $1 lure to riches.

Or you go to buy a muffler, or a cookie, or a dozen roses and you get a least one lottery ticket sales pitch in the process.

You’ll likely be able to buy lottery tickets while your pet gets spayed or your clothes get dry-cleaned, and in hospitals and Laundromats, on sightseeing boats, in bowling alleys, yogurt shops and poker parlors, and at race tracks.

California lottery officials want your money and they’re working overtime these days planning ways to get it.

Scanning the list of nearly 20,000 businesses that have been given provisional authorization to sell tickets in California this fall gives rise to the question: Where won’t you be able to buy one of the little instant-winner “scratch-off” tickets?

Roger Kluth hopes the answer will be almost nowhere.

Kluth is in charge of selecting the ticket retailers, and if he has his way lottery tickets will be as plentiful in California this fall as keno crayons in Las Vegas. “I want to sell tickets, man” Kluth said.

Out of each dollar spent on a lottery ticket, 50 cents will be returned in prizes, at least 34 cents will go to state education and not more than 16 cents will go to administer and promote the lottery.

Starting in a few weeks, the lottery will begin advertising how much fun and fortune can be derived from playing the games. Less emphasis will be given to the odds. Out of 400 million tickets to be sold in the beginning six weeks of the games, there will be only 45,135,000 awards--40 million of them will be $2 winners, 5 million will be $5 winners, 100,000 will be $100 winners, 15,000 will be $500 winners, 10,000 will be $1,000 winners and 10,000 will be $5,000 winners. The remaining 354,865,000 tickets will be losers.

Odds Against Winning Big

While lottery officials are promising several millionaires in its first game, the odds against becoming one of those lucky winners are 25 million to 1. First you must be one of the 100,000 out of 400 million to scratch out a $100 winning ticket, then you must be one of 10 people out of 6,250 whose names will be drawn from a drum, then you must hit one of 10 spots on a 100-spot wheel during a prime-time telecast.

But odds are not a concern of Kluth. He is a 40-year-old bureaucrat on loan to the California State Lottery from the Department of Finance, and his job is to make sure no one in California who wants to buy a lottery ticket has to go far to spend his or her dollar.

Each retailer will get to keep a nickel on every $1 ticket sold and also can pocket all unclaimed $2 and $5 prizes. Kluth thinks that’s the reason almost 30,000 businesses applied over the last several weeks to market tickets.

“There’s money in these tickets,” Kluth said, “they all figure they’re going to get rich.”

There also is worry over competition. If one grocery store in a neighborhood opts to sell tickets and the one down the street doesn’t, the non-seller’s business could suffer. “A lot applied out of necessity,” Kluth said.

Inmate Among Applicants

Included on Kluth’s lists of applicants--the majority of which will be approved--are upholstery shops, travel agents, tool renters, feed stores, veterinarians, plumbers, wrecking yards, doughnut shops, yarn stores, bail bondsmen, airports, auto parts dealers, swap meets, jewelry stores, state building cafeterias, driver training schools, bicycle shops, the American Legion, beauty shops, banks, computer stores, new car dealerships, insurance agencies, lock shops, dress shops--establishments as trendy as hot tub centers and as strait-laced as antique dealers, as moral as churches and as freewheeling as beer halls. Even one prisoner applied to sell lottery tickets from his jail cell.

Among the businesses sending in the largest number of applications were liquor stores, cocktail lounges, grocery, drug and convenience stores--including several large chains--and video shops. There also are hundreds of check-cashing services, which operate mainly in poor neighborhoods.

Several who applied say that they did so for the money and that they have no qualms about getting into the gambling business.

“Our general fund is sorely in need of additional revenue,” said Mayor Ralph Larsen of Madera, one of several cities that applied to sell the tickets at City Hall. “We’ll just be a vehicle for dispensing lottery tickets which are sanctioned by the state. . . . The people of California determined they wanted a state lottery, is that not correct?” Larsen said.

Few Applied From Carmel

“The obvious reason I applied is I’m trying to get as many people coming through the door as I can,” conceded Patrick Dwyer, owner of the Maxwell McFly’s Bar in Carmel, a town that doesn’t cotton much to commercialism and and sent in very few applications--19 out of several hundred businesses. Dwyer said he was one of the exceptions because “I think of Carmel as a place to have a good time.”

Dorothy Knight of the Delano Chamber of Commerce--chambers up and down the state applied--said her group was motivated by a dingy looking headquarters. “We’d use some of the money to repaint the office,” said Knight. “We need money. All chambers of commerce are poor these days.”

As for the Oroville Hospital, the largest employer in that Northern California foothill city, it got its inspiration from Assistant Hospital Administrator Joseph DiRuscio, who once worked for a hospital in New Jersey that operated a highly successful lottery outlet in its lobby.

“More people go through this hospital in a week than any other business in town . . . and we’re open 24 hours a day,” DiRuscio explained. “The profits would go to help build a new wing.”

Notifications Mailed

Last week, the state began mailing notification to 19,825 applicants that they have provisional approval to sell tickets. The prospective retailers now will undergo security checks and an on-site inspection before they get a permanent contract to market tickets. Kluth expects at least 90% to be approved. Those rejected will be replaced from among the nearly 10,000 applications that didn’t make it in the first round.

Lottery officials will be judging the would-be agents on the number of hours their business is open, the amount of foot traffic through the store, the number of times the cash register rings in a day and the type of product sold.

“They have to sell something that’s compatible with a lottery ticket, something that costs a buck, like candy or gum or cigarettes that will inspire impulse buying,” one official said. “We don’t want someone who sells airplanes. What are you going to do, buy an airplane and a lottery ticket?” (At least one airplane dealer applied.)

Just how extensive the security checks will be is still a matter of debate around the lottery headquarters in Sacramento.

“We want the best retailers and the ‘cops’ (the lottery’s security unit) want to spend 24 man hours checking every applicant--somewhere in between is going to happen,” Kluth said.

Felons Have Applied

Several convicted felons have asked to sell the tickets and it will be up to Lottery Director Mark Michalko to decide which ones are approved.

“I’ll be looking at the conviction and what it pertains to and decide each one on a case-by-case basis,” Michalko said, adding that he will try to be lenient with those whose run-ins with the law occurred several years ago. “We’ll take into account they may have been rehabilitated.”

Michalko said that at a minimum FBI and state Department of Justice background checks will be made on each applicant.

The prisoner who has applied, incidentally, will not be granted a contract because of a rule barring people whose only business would be selling lottery tickets.

Michalko has not yet decided whether to approve applications from company-owned 7-Eleven stores. Last year in New York, a then-vice president of the convenience stores’ parent company, Southland Corp., pleaded guilty to conspiracy to bribe a tax official. Oregon has barred company-owned 7-Eleven stores from its lottery.

7-Eleven stores operated by franchisees (there are about 1,200 in California) are not expected to be affected by the felony conviction.

L.A. County Tops List

Applications have come from nearly every city, town, village and wide spot in the road in California except the state’s least populated county, Alpine. Kluth said he hopes to entice some business in that out-of-the-way mountain area near Lake Tahoe to sell the tickets before the lottery begins.

Los Angeles County had the most applicants--8,960--and will wind up with about 6,000 outlets, based on its population. Remote Sierra County in the north had seven applicants. Using post office Zip Codes as a population guide, Kluth’s office will try to make sure there is at least one ticket seller for every 1,250 people.

Before they are allowed to market tickets, the provisional retailers will get a 1 1/2-hour lesson, including the finer points of the hard sell.

“Sell at the cash register. The customer’s money is out at that point,” reads the training manual. “The instant lottery ticket is a mass consumer product that relies upon impulse purchasing.” And the manual cautions retailers not to forget what’s in it for them: “Recognize that the lottery ticket is part of your product line with its own profit margin and not only a way to support education in California.”