OCTOBER 2006

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ONE-on-ONE Lottery Commissioner Gary Peters Considering Chaldeans’ dominance in Metro Detroit’s convenience story industry, it’s no surprise that 33 of the state’s top 40 lottery retailers are Chaldean. The lottery is big business, both for the state and for its retailers. In 2005, the lottery raised some $667.6 million for the state’s schools, and paid retailers about $152.6 million in commissions. $1.179 billion was awarded in prizes. Gary Peters, commissioner of the Michigan State Lottery, was appointed by Governor Jennifer Granholm in 2003. Peters serves as the lottery bureau’s CEO and is responsible for its overall management and operation. Peters was a member of the Michigan Senate from 1995 to 2002. He served as Chair of the Senate Democratic Caucus and Vice Chair of the Finance, Education, Judiciary and Natural Resources Committees. Peters also currently serves as a Lieutenant Commander and a Seabee Combat Warfare Specialist in the United States Naval Reserve. The commissioner recently sat down with The Chaldean News’ Vanessa Denha-Garmo and Joyce Wiswell to discuss the lottery and its impact on retailers. Chaldean News: Could you explain the commission structure with retailers? There was a big outcry a few years ago when a Chaldean retailer sold a winning Mega Millions ticket and complained he only received a $2,000 bonus. If he had been in Illinois, he would have received $1 million. Gary Peters: The lottery pays a 6 percent bonus on sales and a 2 percent bonus on in-store redemptions. Retailers receive an additional 1 percent on instants if they meet the quarterly sales goal. If you look at total commission structure in Illinois Gary Peters and Michigan, ours is more generous. The idea is that most retailers do not sell the Mega Millions jackpot — most retailers would prefer to earn money on every single transaction and every sale rather than just the jackpot of the Mega Millions. More people win this way. However, we did change the jackpot commission structure so that retailers get $5,000 for selling a Classic Lotto 47 jackpot ticket and $50,000 for selling a Mega Millions jackpot ticket. CN: How does the lottery compete Nidhal Dishow of Sterling Heights was a $2 million prize winner at a March 25 Pistons game. Other big Chaldean winners have included Yousef Sharif of Swartz Creek ($2 million split with three other finalists on June 29, 2005) and Mona Al-Falahat of Roseville, who won $2 million on March 23. with Michigan’s 20-plus casinos? GP: One way we are competitive is that we have increased our prize payouts. Casinos have higher payouts; our payouts have to be higher. Traditionally it was a 50/50 payout, now we are moving out to a 65 percent and up payout. We up in the upper tear compared to the rest of the country with prize payouts for instants because we changed that. The players want more prizes. I have been slowly increasing more payouts and more winning experiences. Very few PHOTOS COURTESY OF MICHIGAN LOTTERY people will have the experience of a million-dollar prize, but if you have a $25 experience, it is a great winning experience. You can do a lot more $25 prizes than you can $1 million. CN: Do increased payouts mean commissions for retailers will go down? GP: We will not reduce commissions. The increased prizes are being taken out of the state’s side. But we are making up for it by increasing sales. This also helps the retailers. We have put sales reps on a compensation plan to work with our retailers. The more the retailers do, the better the reps will do. We are like any other sales and marketing operation. The reps are successful when their retailers sell. CN: We have recently seen more competition between retailers, where they are paying out bonuses on lottery wins in order to increase traffic in their stores and get the reimbursement commission. What do you think of this? GP: It is an issue, and it has to be the State Legislature that fixes it. I don’t have the power to tell folks that they can’t pay out higher. I can shut them out if they pay less than the prizes we pay — those are criminal charges — but I can’t do anything if they pay more. If legislation comes forward [forbidding this practice], I would support it. I don’t think the extra payout is increasing sales, it is just moving sales from one store to the next. CN: There are currently about 8,000 traditional lottery machines in the state. Do you plan on adding more? GP: I am not anticipating more licensees. The license requirement has changed a bit. Before, a retailer had to qualify based on instant tickets sales. The reason we did that is, we don’t charge retailers for the machine and we pay $75 a month for the dedicated line for that machine. We don’t want to put machine everywhere if it is not profitable for us. We have relaxed that a bit ... if you want a machine you have to pay for it. There is a one-time fee of $420.10 to get the telecommunication line installed. There is a Terminal Minimum Sales Performance Fee which requires retailers to maintain an average of $500 a week in sales. If you go below the rate, you have to go back to paying for the machine. Retailers can make the business decision themselves. CN: How do you deal with the issue of compulsive gamblers playing the lottery? GP: We take this very seriously. We run a good business for the state that is important for education funding, but we need to be responsible as to how we market. We don’t market the lottery as a way to get fast cash; we market it as fun and entertaining. We put $1 million a year into the compulsive gaming hot line. The number is printed on our tickets and our machines. If someone calls, they get a live person to talk to, and they are referred to help. We have PSAs [public service announcements] on TV about problem gaming. We produce those commercials, going above and beyond what the Legislature has mandated for gaming. Lottery is not the same gaming situation as you get at a casino. It is not instant; you have to wait for the numbers. If folks have a problem with gaming it is usually more intense gaming situations. We did have an instance where we shut down a retailer’s machine when the owner showed excessive use. I said that he would have to produce a letter from a therapist showing he has gotten help for his addiction, and then I would turn the machine back on. He has yet to produce the letter. TOP 10 LOTTERY SELLERS JUNE 2005-JUNE 2006 Oak Liquor and Wine #80590 * 13700 W. 8 Mile, Oak Park MGM Food Center #14436 * 13433 W. 8 Mile, Detroit King of Gratiot Carmen’s Liquor & Deli #17857 * 14650 Gratiot Ave., Detroit Stop N Shop #34133 265 S. Outer Drive, Saginaw Gratiot Fairmont Market #18196 * 14999 Gratiot Ave., Detroit Danny’s Fine Wine #80183 * 23063 Coolidge Hwy., Oak Park New Northend Market #14371 * 21601 Coolidge Hwy., Oak Park Town & Country Liquor #17703 * 16261 West 12 Mile, Southfield Thrifty Scot #18454 * 12021 Harper Ave., Detroit M T Loonies #71857 6648 Lewis Ave., Temperance * DENOTES CHALDEAN-OWNED 24 CHALDEAN NEWS OCTOBER 2006
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