Supporters of a Boston Olympics in 2024 have pledged an operating budget funded without taxpayer money, but a recent exchange between a representative of the Olympics committee and the Massachusetts State Lottery Commission may suggest otherwise.
A consultant on the Boston Olympics bid asked about partnering with the lottery earlier this month to raise money to pay for the Games, according to the Massachusetts Lottery.
Lottery executive director Beth Bresnahan told Olympics organizers that using lottery funds would require one of two actions. Either the state legislature would need to agree to divert lottery proceeds to the Olympics or Olympics executives would need to make a lottery ticket licensing agreement with a third party vendor.
Following the exchange, Boston 2024’s executive vice president Erin Murphy Rafferty said the group was no longer pursuing lottery funding for a possible Olympics.
But the conversation indicates that the Boston 2024 committee is exploring alternative funding options — and some economists would argue, public funding options — to finance their bid, contrary to the group’s stated goals.
Andrew Zimbalist, an economics professor at Smith College, said the conversation makes clear that Olympics supporters “are exploring public money.”
“What does it mean to pledge no public money and then explore the lottery? It’s a direct contradiction,” he said.
The conversation between lottery officials and Olympics supporters was first reported by CommonWealth Magazine.
Experts predict a Boston Olympics would require an operating budget of about $4.5 billion, which Boston 2024 says will be covered by private donations, television revenue, corporate sponsorships, and ticket sales.
According to Boston 2024’s plan, an already approved $13 billion transportation bond will cover the bulk of the infrastructure improvement costs, and sporting events will be held at local colleges and universities. The $1 billion to $2 billion needed for security costs would be paid for by the federal government.
But Olympic Games rarely stick to their budgets, and historically, overrun costs are to be expected.
“The finance plan presented to the USOC does not depend on any revenue from the state lottery or any other government-run entity,” Rafferty said.
She said Boston 2024’s plan has a “generous cushion built into our budget to account for any cost overruns, as well as a robust insurance policy to protect the city against any liability.”
In the e-mail exchange with lottery officials that took place in early December, Olympics organizers asked about a licensing agreement with the lottery ticket vendors similar to those of Boston sports teams.
Those agreements are not negotiated with the lottery but instead with third party vendor MDI Entertainment, said Christian Teja, the director of communications at the Massachusetts State Lottery Commission.
Payouts on these agreements have varied. There have been six Red Sox lottery games since 2006, making about $10.5 million in licensing fees for the team, according to Massachusetts State Lottery data. The Celtics received about $1.4 million in fees for four lottery tickets during the same time period.
Lottery funds have been used to cover costs accrued during the London and Montreal Olympics.
“London had a budget of about $4 billion and ended up spending $18 billion, while simultaneously claiming they were under budget,” said Victor Matheson, an economics professor at the College of the Holy Cross.
The National Lottery there diverted about 1.8 billion pounds to pay for venue construction, infrastructure improvements, and Olympics-related programs, according to the country’s Olympic Lottery Distributor’s website.
But in doing so, lottery-funded programs in the non-profit sector saw funding cuts of 60 to 70 percent, according to The Guardian. For opponents of a Boston Olympics, that’s a concern.
“This is to the core of why we oppose the Olympics,” said Liam Kerr, of No Boston Olympics. “It’s taking money from an existing priority and putting it elsewhere.”
In Massachusetts, lottery net proceeds are funneled into the state’s general fund to be redistributed to cities and towns based on the Legislature’s local aid formula, Teja said.
Diverting money from this fund would diminish the amounts received by Massachusetts communities, which use it for school, transportation, infrastructure projects and more.
“Most economists would say it’s a terrible way to fund a mega-event,” said Matheson. “Every dollar taken from the lottery to the Olympics is one that’s not going back to the Commonwealth.”
Lottery officials have historically opposed such efforts.
“We do not want to be put in the position of choosing one good cause over another nor divert much needed local aid dollars from cities and towns,” wrote Bresnahan, in the e-mail conversation with Simon Kotzeff, a consultant with Bain & Co., a group involved in Boston 2024.
This inquiry was not the first time the Massachusetts Lottery has been approached about the possibility of partnerships, but none of these efforts have passed through the Legislature. Most recently, state Representative John J. Binienda of Worcester filed unsuccessful legislation directing the state lottery to issue a $2 scratch ticket to fund snow and ice removal after a series of bad winter storms in February 2013.
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