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Lottery vows not to add retail sites in poor areas

– The private company chosen to run the Hoosier Lottery says it won’t target low-income neighborhoods to boost sales but will replace retailers in those areas who leave its network.

GTECH Corp.’s approach is similar to one it adopted in Illinois, where company officials say they wound up with one less retailer in poor neighborhoods. But critics say the company’s failure to disclose which Indiana ZIP codes it’s targeting for expansion by heavily redacting its business plan suggests it has something to hide.

“I can’t imagine any kind of trade secret that would be disclosed by saying which ZIP codes they plan to target. I would bet a week’s pay those ZIP codes would line up with some of the most disadvantaged ZIP codes in Indiana,” state Sen. Brent Waltz, R-Greenwood, told The Indianapolis Star. “The only reason I would want to hide that is if it was something that from a public relations perspective is very damaging.”

Rhode Island-based GTECH, which won the contract to oversee daily Hoosier Lottery operations in October, says it plans to aggressively expand the number of Indiana retailers selling lottery tickets as part of an effort to increase state revenue by $500 million over the next five years. The list of stores it plans to target includes Dollar General, Family Dollar, Dollar Tree and Wal-Mart.

GTECH’s business plan includes a section titled “Retailer Penetration Targets by ZIP Code.” The plan also says increased advertising “is critical” but redacts all references to dollar figures.

William Zielke, chairman of the State Lottery Commission, told the Star in November that GTECH would not target areas where income is below 60 percent of the state median.

“The whole goal is to not increase in those areas,” GTECH spokeswoman Angela Wiczek said.

Wiczek said the company does plan to replace retailers in those areas that stop selling tickets. A similar strategy was employed in Illinois, where in 2011 Northstar Lottery Group, a partnership led by GTECH, became the first company in the nation to take over a state’s lottery operations.

A Star analysis found that the company attracted more than 230 new retailers in census tract neighborhoods with incomes less than 60 percent of the state average in its first year. That represents more than 20 percent of the 1,143 new retailers GTECH added during that timeframe.

Wiczek said GTECH committed not to target ZIP codes where average household income was $30,000, or about 53 percent of the Illinois average. By that standard, she said, GTECH added only 65 new retailers in “off-limit” ZIP codes, and those replaced 66 other retailers in low-income ZIP codes that left the lottery’s network.

“We are not increasing retailer penetration in those ZIP codes,” she said.

Hoosier Lottery officials say GTECH will be allowed to replace retailers in low-income ZIP codes that leave the lottery’s network but cannot offer its sales associates incentives to canvass in those areas.

Instead, GTECH can add new retailers in those areas through routine visits by lottery associates, general advertising and word of mouth, said Geoff DePriest, director of business plan compliance for the lottery.

DePriest estimated that only 6 percent to 7 percent of Indiana’s lottery retailers are in ZIP codes where income is below 60 percent of the state average.

Critics say those who can least afford to play will still be affected by the expansion effort.

“Lower-income citizens are an easy prey to the false promises of the lottery industry,” said the Rev. Dan Gangler, spokesman for the Indiana Conference of the United Methodist Church.

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