Oregon House Speaker Tina Kotek recently made news by proposing a change in the way bars and restaurants are allowed to sell lottery tickets. Current law says that a bar/restaurant cannot generate more revenues from lottery sales than from food and beverage sales. This has led some lottery outlets to sell massive amounts of cheap liquor to more than match their lottery ticket sales. Tina thinks this is a terrible situation, so she has proposed a fix: change the law so that more than half the profit of the bar/restaurant must be generated from food and beverage sales.
Tina obviously doesn't understand the economics of the bar and restaurant business in Oregon. As a professional business appraiser, I have valued a number of bars/restuarants that sell lottery tickets. What I, and other business appraisers have learned, is that the bars and restaurants that sell lottery tickets, are lucky to break even on their food and beverage sales. Virtually all of their profits come from lottery ticket sales. In reality, the lottery business is subsidizing the food and beverage business.
So the next time you visit your favorite corner tav, give a word of thanks to the fool playing the video poker machine for keeping your bar bill down.
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