Now-Defunct TouchPlay Boosted Iowa Lottery

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Now-Defunct TouchPlay Boosted Iowa Lottery

DES MOINES -- Iowa Lottery sales jumped more than 60 percent during the state budget year that ended June 30 -- an increase driven largely by profits from now-darkened TouchPlay terminals, according to a report by the Sioux City Journal.

Lottery sales in the state totaled a record $339.5 million during Fiscal Year 2006. In Fiscal Year 2005, the lottery posted a then-record $210.7 million in sales.

Sales at TouchPlay terminals totaled $121.4 million in FY 2006. Sales of instant scratch tickets increased by 3 percent to $106.6 million and Powerball sales jumped 31 percent to $71.1 million, the report said. The numbers released this week illustrate TouchPlay's explosive growth. Sales from the video lottery games added up to only $6.4 million in Fiscal Year 2005.

Lawmakers voted in March to pull the plug on the more than 6,000 TouchPlay terminals installed in hundreds of convenience stores, bars and grocery stores across Iowa. Backers of the ban argued that the slot machine-like terminals were bringing casino-style gambling to places lawmakers never intended. The ban took effect in May.

Iowa Lottery spokeswoman Mary Neubauer said although the lottery is always working to develop new products, there's nothing on the horizon that would match TouchPlay's revenue potential. "So our budget figures going forward will reflect smaller revenues and smaller sales because, obviously, TouchPlay won't be part of our product mix in the future," she said.

Senate Republican Leader Mary Lundby of Marion, who spearheaded the drive to ban TouchPlay, said she has no regrets about the loss of future lottery revenues. "I think the Legislature made the right decision," Lundby said. "For once, it wasn't just about money."

But business owners who argue that lawmakers cost them hundreds of millions of dollars in investments don't agree, the Sioux City Journal said. Some have filed lawsuits against the state seeking damages or are withholding revenue payments owed to the lottery.

The state's largest owner of TouchPlay machines, Royal Financial, a West Des Moines company that distributes the machines at convenience store chain Kum & Go, filed suit against the Iowa Lottery, seeking damages for money lost because of the ban.

Although Royal is just the latest in a series of businesses that have sued the state for breach of contract, its suit is notable because it claims the lottery's chief executive personally asked Kum & Go founder Bill Krause to get involved in the TouchPlay program, reported the Des Moines Register. Krause also owns a stake in Royal Financial.

According to the lawsuit, Iowa lottery chief Dr. Ed Stanek "stated he needed one private party to take the lead and purchase one thousand (TouchPlay devices) in order to make the program viable. Without such a purchase, the entire TouchPlay program could fail. He requested that Krause be that party ... The Lottery Authority represented to Royal Financial that the TouchPlay program would last for a minimum five-year period, that Royal Financial would recoup its investment and expenses," the suit continued.

Krause said in a statement, "Whatever political pressures they may face, our state officials always have a responsibility to honor their word. That's especially true in a situation where they approach a private citizen with a request to invest millions of dollars so the state can balance its budget. A private citizen or private company committed to doing the right thing for our state should never suffer the loss of millions based on government officials' arbitrary decisions."