The operation of slot machines on U.S. military bases in Europe and Korea generates millions of dollars in revenue annually to fund morale, welfare, and recreation (MWR) programs for troops and their families.

What worries MWR officials is how to replace those funds in the next several years because of planned decline in U.S. troop levels overseas that will force the mothballing of hundreds of profitable slot machines.

One solution, DoD officials say, is for Congress to allow the sale of state lottery tickets in stateside exchanges, replacing revenues from one game of chance with another. Exchanges would collect 5 percent to 8 percent in commission on every ticket sold. A portion of those revenues would flow to MWR programs such as golf courses, bowling alleys, and marinas. (The law doesn’t allow the military to use tax dollars for these activities.)

Roger C. Schulrud, a retired Navy senior chief machinist’s mate, thinks lottery ticket sales on base are a fine idea. Military people are no different from other Americans in their desire to play, Schulrud says. Why not sell tickets in exchanges so the proceeds can support the military community?

“If someone hits it big on base, just think what that would do” for exchange traffic and MWR funds, says Schulrud from his home in Wausau, Wis.

More than 178,000 retail outlets across 41 states and the District of Columbia already sell state lottery tickets. In 2004 these retailers earned more than $3 billion in commission on lottery sales of almost $49 billion.

This past spring, DoD proposed to Congress that military exchanges be allowed to grab a piece of that action. The proposed legislation would carve out one exception: No exchange would attempt to compete with blind vendors who already sell lottery tickets on base, in certain locations, under provisions of the Randolph-Sheppard Act.

Army and Air Force Exchange Service (AAFES) officials argued for the proposed legislation to offset a sharp drop in MWR funding expected from a drawdown of U.S. forces, particularly from Europe and Korea, through 2009.

Peter Isaacs, chief operating officer for the Army Community and Family Support Center, estimates that the Army’s inventory of slot machines will drop by 800, lowering MWR revenue for the Army alone by $50 million.

The pullback is projected to cut in half current net MWR funding of $100 million from slot machines operations at U.S. bases overseas.

John M. Molino, deputy undersecretary of defense for military community and family policy, said in an interview that a bigger motivator for AAFES is the business opportunities stateside lottery sales would present.

State lottery officials likely would encourage military involvement. They encourage retailers to participate by noting that lottery tickets sales attract customers. Pennsylvania lottery officials say 80 percent of lottery players buy at least one other item when they purchase their tickets.

Total lottery ticket sales last year averaged $183.70 for every man, woman, and child living within lottery states, according to the North American Association of State and Provincial Lotteries.

AAFES officials haven’t analyzed their potential revenue gain, Molino says. “Whatever share that is,” he says, “they would like to get a piece of it.’’

In FY 2005, AAFES paid “dividends’’ of $242 million to the Army and Air Force to support MWR. Re-stationing of overseas forces to stateside bases is likely to have a “substantial” impact on that dividend, says Army Maj. Gen. Kathryn G. Frost this past April, before retiring as AAFES commander.

Congress declined to take up the issue in 2005 but at least a few lawmakers are expected to oppose base lottery ticket sales on the moral grounds that military shoppers shouldn’t be encouraged to gamble.

Congress likely will give the proposal more serious consideration next year when it reviews the impact on exchange sales and MWR funding of the drawdown overseas.
Schulrud says he would buy tickets on visits to Fort McCoy, Wis., about 90 miles from his home.

Military people, says Schulrud, will buy their lottery tickets somewhere. “Might as well spend on the base instead of in town.”

Tom Philpott is a freelance writer and syndicated news columnist. His column, "Military Update," appears in 48 daily newspapers throughout the United States and overseas.