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

Military exchanges want a piece of that action.

Congress is weighing a first-ever proposal from the Department of Defense to amend current law to allow lottery ticket sales in stateside exchanges, except where such sales would pinch the businesses of blind vendors already selling lottery tickets on base.

Army and Air Force Exchange Service officials, in drafting the proposal, argued that lottery sales would help to offset a sharp drop in revenues for morale, welfare and recreational activities from a drawdown of U.S. forces from Europe and South Korea through 2009.

The troop pullback is expected to cut in half about $100 million in net MWR funding from the operation of slot machines at U.S. bases overseas.

John M. Molino, deputy undersecretary of defense for military community and family policy, confirmed that the loss of slot-machine revenue was the reason given to Congress by AAFES officials to urge approval of lottery ticket sales in exchanges. But a bigger motivator for AAFES, he said, is the obvious business opportunities stateside lottery sales present.

State 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 said. But he added, "Whatever share that is, they would like to get a piece of it." Navy and Marine Corps exchanges also would sell lottery tickets if the proposal wins approval.

Molino said he has no sense yet if other lottery retailers will oppose ticket sales in exchanges. Currently, the law allows only blind vendors to sell lottery tickets on base. Molino said he doesn't know how many blind vendors do so, but the proposed legislation would bar exchanges from encroaching on their sales.

Peter Isaacs, chief operating officer for the Army Community and Family Support Center, said the transfer of troops stateside will relieve some of the need for MWR facilities in Europe and South Korea, but also will strain stateside facilities.

"It's not like these people are going away. We're going to see some significant increases in the populations of certain (continental United States) installations. ... The slot-machine program has been one of the major components that allows us to fund those things," Isaacs said.

Exchange profits also fund MWR programs. Indeed, the Army last year received $150 million from AAFES. But Isaacs predicted the overall gain to MWR from exchange lottery ticket sales would be relatively modest.

"If you look at what the average citizen spends per capita, per year on lottery, it's a fair amount. But then AAFES gets a percentage of that, and then it's divided between us and the Air Force and AAFES. So the trickle-down effect applies," said Isaacs.

MILITARY UPDATE

By Tom Philpott