Voters lose out in their bet on the lottery

They buried Leo McCarthy 2 1/2 weeks ago, and today the former lieutenant governor and Assembly leader speaks from the grave.

That’s because I’m resurrecting an old interview with him about one of his passions: the perils of gambling. It included playing the seemingly innocuous California Lottery, which was sold to voters in 1984 as a panacea for inadequate school funding.

Over the years, I had received zillions of inquiries from readers, asking: Whatever happened to all the lottery money that was supposed to go to schools? My short answer: The voters got hoodwinked. The panacea became a pittance. The lottery pays out only roughly 2% of what the state allots to schools. I decided to write about it and phoned McCarthy.

He wasn’t feeling well when I called two years ago, almost to the day. But he graciously endured and even express-mailed me a thick report by the National Gambling Impact Study Commission, on which he served.

Then I didn’t use any of it. Didn’t write the column. Breaking news got in the way, or something.

McCarthy succumbed to a long illness Feb. 5, at 76, in his San Francisco home. But he felt just as strongly about gambling and the lottery until the day he died, according to his son, Niall McCarthy, 39, a San Francisco attorney.

“One of Dad’s concerns was that the gambling industry was such a powerful lobby and there was no voice on the other side discussing the deleterious effects,” the son says.

Leo McCarthy -- a good government, highly ethical politician with an intense focus -- had been one of the lottery’s loudest critics from the start.

“I didn’t think it was a good idea to teach schoolchildren that the way their education was being paid for was by encouraging people to gamble on impossible odds,” he told me.

“The central message we try to teach young children is that they have to work for what they get. They have to study hard and earn their way. It seemed to be a very contradictory message that we would fund their education by encouraging a high percentage of low- and middle-income people to bet a dollar at 20-million-to-1 odds, thinking they can win a prize.”

Actually, the California Lottery currently is offering the best odds ever on winning $1 million. It’s peddling a new raffle, with the odds at 500,000 to 1 -- assuming all 5 million $5 tickets are sold by March 17. If not, the odds rise. There’ll be at least five $1-million winners, and up to 10 depending on how many tickets are hawked. As of Friday, about 2.6 million had been.

Those 500,000-to-1 odds, although mind-boggling, seem like sure bets compared to the nearly 176-million-to-1 odds on winning the multi-state Mega Millions jackpot.

The lottery is required to fork over 34% of its gross to schools; 50% goes to prizes and 16% to overhead. Last year, the schools’ take was $1.3 billion, a record.

Still, state Supt. of Public Instruction Jack O’Connell also has always opposed the lottery, but mostly for a different reason than McCarthy.

“In the long run it hurts education,” O’Connell says. “The perception is that the lottery is fully funding schools, that they have all this money. It’s not stable, and it’s not predictable.”

Moreover, O’Connell adds, when money gets tight in the Capitol, the Legislature and governor use the state’s lottery winnings “to supplant, rather than supplement” school funds. Money that otherwise would go to schools gets shifted to noneducation programs.

“What’s the most commonly asked question I get from people? ‘Jack, what about all that lottery money?’ ”

Republican George Deukmejian was governor when voters passed the lottery, and he also opposed the ballot initiative, pushed by lottery vendors.

“George knew that voters were being sold a bill of goods,” says his former chief of staff, attorney Steve Merksamer. “If you want to have a lottery, have a lottery. But don’t pretend there’s some social utility to it.

“He thought for the government to rely on money from gambling enterprises was not particularly good public policy. Also, people who couldn’t afford to play, would play.”

Studies have proved Deukmejian to be right.

Too many poor people squander money on what they fantasize as a retirement plan.

“Low-income households spend a larger amount of their wealth on lottery tickets than other households,” according to a report last year by the California Research Bureau of the State Library. They often pay for the lottery tickets, the report said, by cutting back on groceries, delaying rent and ignoring other bills.

“Lotteries are the entry point into problem gambling,” the report added. It also said that “underage youth have little difficulty in purchasing lottery tickets” even though it’s illegal.

California has 333,000 adult “pathological” gamblers and an additional 589,000 merely “problem” gamblers, the report estimated. That’s nearly 1 million people hooked on betting.

The state has an Office of Problem Gambling that is supposed to help people fight addiction. But it’s tiny, with only three full-time staffers and a $3-million budget. That’s barely enough to pay for two telephone help lines plus some radio ads and outdoor signs.

Lottery spokesman Rob McAndrews responds to critics by noting that the lottery, after all, was created by California voters. He says: “We make every effort to promote our product responsibly.”

The voters made a bad bet.

McCarthy gets the last word:

“I don’t have an evangelical view of gambling. If someone wants to spend their recreational dollars on gambling and it doesn’t hurt their families or themselves, I don’t care.

“What bothers me is that a significant number of people who play the lottery really are spending a high percentage of their discretionary income. These are folks who are scratching out a living. They’re reaching out for some hope. And state government is really taking advantage of them.

“It’s pathetic.”

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George Skelton writes Monday and Thursday. Reach him at george.skelton@latimes.com.