Lotteries: A Failed Policy
Survey: 21% Say Lottery is Most Practical Path to Wealth
According to the survey of 1,000 Americans by Opinion Research Corporation for the Consumer Federation of America and the Financial Planning Association, 21% of Americans believed that the lottery would be their most effective and practical strategy for accumulating several hundred thousand dollars. This percentage in addition, was higher among lower-income individuals, with 38% of those who earn less than $25,000 pointing to the lottery as a solution.
Survey- 21 percent say lottery is most practical path to wealth
Lotteries Have Failed as a Funding Source for Education and Other Public Services
When its meager revenue stream is considered in the context of the central role the lottery plays in our debt culture and its responsibility for creating hundreds of thousands of addicted gamblers across the nation, it is irrefutable that lotteries have failed as public policy. Here are just a few of the many prominent examples of how the lottery has failed as a revenue source despite the promises made by predatory gambling supporters:
California voters were promised that if they voted for a state lottery, the revenues would address the state’s education funding woes. Yet today, the lottery’s revenues makes up only 1.3% of the state’s education budget, according to this Los Angeles Times story
A recent report to the Florida Legislature showed, after adjusting for inflation, the lottery's contribution to education will soon be lower
than in 2002. A continued slide, the state analysts said, would cast doubt on the purpose of the game, according to The Tampa Tribune.
Florida also earmarks some lottery revenues for its Bright Futures scholarship program which go mostly to students in higher-income areas.
In 2009, a report
by the Rockefeller Institute of Government concluded that predatory gambling exacerbates long term budgetary problems for states.
Even The Casinos Call the Lottery Bad Policy
This story from the Seattle Times
discusses how casino companies are fighting the introduction of a state lottery in Nevada. They call the lottery a regressive tax on the poor because they spend a higher proportion of their income on lotteries.
Lottery Advocates, Opponents to Face Off Again in Nevada Legislature
The State Lottery: A Failure of Policy and Ethics
This powerful essay by Elizabeth Winslow McAuliffe in Public Integrity
shows how the lottery is a public policy failure by spotlighting two fact-based conclusions: 1) the evidence indicates that the original aims of the state lottery have not been fulfilled; and 2) the lottery cannot be defended as an ethical enterprise for government.
The State-Sponsored Lottery
The Reverse Robin Hood Effect
Using data acquired from the Florida Lottery Commission, Florida scholars assessed what groups were benefiting from the lottery-funded Florida Bright Futures Scholarships and who were being harmed. Not surprisingly, the study reported that the "net benefits of the scholarships accrue disproportionately to counties with heavier concentrations of white, wealthy, and well-educated households." The study concluded by stating: "If the Florida Bright Futures Scholarships are going to be made more equitable, the citizens who are harmed -- the poor, the less-educated, and minorities, as well as citizens who care about fairness -- need to get involved."
The second study below uses survey data and finds similar results.
The Reverse Robin Hood Effect - The Distribution of Net Benefits From the Florida Bright Futures Scholarship
Some Futures Are Brighter than Others - The Net Benefits Received by Florida Bright Futures Scholarships
North Carolina Community College Students Become “Collateral Damage”
The North Carolina House recently voted on a budget that will cut financial aid from lottery funds to low-income community college students. Since creating the state Lottery in 2005, lawmakers have "tinkered with the formula" that initially allocated 10 percent of half its net proceeds to need-based college scholarships.
Aid to North Carolina Students Cut to Repay Debts
Government’s Monopoly of a Failed Policy
Yale Law School’s Stephen Carter wrote a terrific column in April 2011 on state lotteries. Carter writes: “Why on earth do we allow the government to hold a monopoly on the very profitable (if rather disgusting) business of persuading the suffering to part with their money in the hope of a munificent return they are all but certain never to see? In other words, why is the government in the lottery business at all?”
The state lottery is a failed policy and more and more intelligent thinkers like Carter are speaking the truth about it.
End the Government's Lottery Monopoly
Lotteries Generate More Revenue Than Corporate Income Taxes in Some States
In this Reuters opinion piece, David Cay Johnston examines the shift in 11 states that shows, lotteries, the most heavily taxed consumer product in America, generate more revenue than state corporate income taxes. For example, the Rhode Island Lottery netted the state more than $3 for each dollar of state corporate income tax in fiscal 2009. Johnston also spotlights how the increasing trend toward easy reliance on lotteries has not translated to increased revenue for states.
U.S. Lotteries and the State Taxman
Mass. Lottery Officials Knew and Encouraged Manipulation of Game
The Boston Globe
exposed that just three groups of bettors accounted for most of the winning tickets statewide for the lottery game Cash WinFall. Massachusetts Lottery officials initially said they were surprised to learn that just a handful of gamblers had taken over the $2 games and announced new rules to limit the dominance of sophisticated bettors.
Upon further investigation, the Globe
"has found that lottery managers for years allowed and some say even encouraged the groups to manipulate the game, Cash WinFall. They provided extra ticket machines and printers to accommodate the biggest player, a retired store owner from Michigan, so he could buy more tickets faster. Gerry Selbee, whose gambling group spent millions of dollars on the game, said the regional director in Western Massachusetts personally thanked him for propping up flat lottery sales."
Mass. Lottery Officials Helped High Rollers See Windfalls
2012 Bloomberg News “The Sucker Index”
ranked U.S. states by what it called "The Sucker Index" using 2010 data from the US Census and annual reports from state lottery commissions. The total dollar amount of prizes awarded was subtracted from ticket sales, and then the difference was divided by the total personal income of each state’s residents.
2012 Sucker Index
Money for lottery tickets could be better spent on education
This story in The Chicago Reporter
chronicles the funding problems that have plagued the city's education system. The article proposes that instead of buying lottery tickets, that give only 30 cents per dollar to the school system, Chicago's children would be better served with contributions directly to the schools.
2012 Better Odds- Money for lottery tickets could be better spent on education
10 reasons why lotteries are bad for the economy
This article from Salon.com
outlines the ten strongest reasons why state lotteries hurt the economy and the poor. It explains how lotteries not only hurt those who play, but also hurt local business and help foster crime.
2013 10 reasons state lotteries ruin the economy
Article outlines 18 signs that the lottery is preying on the poor
This article from Business Insider
shows 18 ways in which the lotteries prey on and take advantage of America's poor. By examining several cases from several different states, one can see how badly this nationwide trend affects the nation's most disadvantaged.
2012 18 Signs That The Lottery Is Preying On America's Poor
Lotteries hurt winners, losers, and their communities
Lotteries hurt those who win, those who lose, and their surrounding communities, as explained in this article from ThinkProgress.org
. Those who win face problems such as drugs, bankruptcy, and familial tensions, those who lose deal with crippling poverty, and their surrounding areas tend to spend less and less on education.
2013 How Lotteries Are Bad For Players
Mega Failure: Why Lotteries Are A Bad Bet For State Budgets
Below is a great, concise piece by Think Progress, a political blog of the Center for American Progress, about how lotteries have been a major policy failure because they are highly regressive and are an unsustainable revenue source, ultimately worsening state budget imbalances.
2012 Mega Failure- Why Lotteries Are A Bad Bet For State Budgets
Investigation of Iowa Lottery shows improvements need to be made
This in-depth, exhaustive study of the Iowa shows that the lottery has to make improvements to protect its customers and its integrity. The author uses the investigation to create a list of improvements the lottery can make to improve. Take some time to read this interesting investigation.
2009 Taking Chances With Integrity Iowa Lottery
Survey of literature on the economics of lotteries
Below is a survey and summary of the many existing works regarding the economic impacts of lotteries in the US. It underscores the need for more unbiased research in this area, as well as giving an informative look into the how lotteries impact the economics of towns, states, and the country as a whole.
2012 The Economics of Lotteries- A Survey of the Literature 2-20-2012
NY schools see stagnant aid in face of rising lottery revenue
Below is an article that details the growing gap between lottery profits and aid for education in New York state. While the revenues for the New York lottery have soared in recent years, the percentage that is allotted to the schools of New York has remain unchanged. The article also chronicles the ongoing debate over lotteries in the state of New York and is a great read for anyone looking to see the impacts of lotteries on education.
2013 Lottery revenue soars, but schools fear 'shell game'
Arizona lottery revenue may not be going where promised
This article, from The Arizona Republic,
documents how difficult it is to find where Arizona lottery profits are going. Instead of directing a portion of profits directly to, for example, K-12 education or health care, the lottery puts money into a general fund. This money could be going to Arizona schools, or it could be going to the pensions of Arizona lawmakers, but because of the nature of the general fund, it is impossible to track. The article shows how the amount of money the lottery says it puts back into the community can be deceiving.
2013 Arizona Lottery revenue has grown, but tracking how funds are used proves difficult
Much of lottery revenue comes from those already receiving government subsidies
This in-depth report from the Federal Reserve Bank of St. Louis studied the relationship between income and lottery revenue and found that a large portion of lottery profits come from people who receive some financial subsidy from the government, suggesting the lottery profits from those with the least disposable income.
2008 Income and Lottery Sales- Transfers Trump Income from
Oklahoma lottery produces disappointing results
This Journal Record
article outlines the argument behind the opposition to the Oklahoma lottery, especially in light of its failure to live up to promises in the past decade. This piece gives an interesting look into the debate over lotteries and shows another example of the failure of government's experiment with gambling.
2013 It’s time to cut our lottery losses OK
NC lottery does not provide promised education funds
This article by the North Carolina Justice Center explains how the North Carolina lottery is not living up to its promises of education funding. After providing an initial bump in funds for education, the level of education funding has now dropped back down to below pre-lottery levels. The old argument that the lottery will pay for its moral evils by giving money to schools is now defunct, according to the article, because the state spends less on education than it did before the lottery was put in place. Now that the lottery no longer provides money for education, it is no more than "a regressive tax that falls mainly on the poor".
NC Lottery: A Failed Experiment
Poorer MA communities receive disproportionately low aid from lottery
20% of all Massachusetts lottery revenue goes to the state's Unrestricted General Government Aid program, which then uses its own systems to determine which communities need the most help and doles out aid accordingly. The only problem is that the system used by the program is becoming more and more out of touch, and the program is now taking aid from the poorer communities to give to more affluent, well-off cities and towns. The poorer communities often give the most in lottery revenue, as the poorer a neighborhood is, generally the higher the lottery revenue, only to receive significantly less in aid than they give in profits. Meanwhile, more affluent towns give little in lottery revenue, but receive much larger amounts of aid. This Boston Globe
story explains why the lottery's most profitable towns aren't receiving what they put in.
2014 Lottery often gives aid to affluent
MA lottery takes from poor to give to rich
The Massachusetts lottery is, what the author of this Boston Globe
article calls, "a Robin Hood in reverse". Like most lotteries, it generates the most profit from poorer communities, filled with impoverished people who feel the only way to get out of their dead-end situation is to get lucky on the lottery. However, these poor communities receive back in aid a fraction of what they put in through revenue, while richer towns enjoy much higher levels of aid than they contribute to the system. It amounts to nothing more than a regressive tax, taking from those who have run out of luck. Unfortunately for those poor Massachusetts residents who think that $5 scratch tickets will help one day lift them from the bonds of poverty, the sad reality of the lottery is, the more you play, the more you lose.
2014 Lotteries — Robin Hood in reverse
Investigating the Lottery’s “luckiest woman”
This 3-part series, from Philly.com
, examines the story of Joan Ginther, a woman from Texas who won millions off of scratch tickets over several years. Her story captured headlines worldwide when she won $10 million on a single scratch ticket in June 2010. Mathematicians estimated the odds of someone winning as much as Ginther has at 1 in 18,000,000,000,000,000,000,000,000, or 18 septillion. However, this series explains that with a little luck and patience, it might not be so difficult to cheat one of America's biggest industries.
2014 Lottery’s ‘luckiest woman’ bet flabbergasting sums on scratch-offs
2014 How Lottery legend Joan Ginther likely used odds, Uncle Sam to win millions
2014 Lottery mystery yields clues to missing $7.5 million prize
The Lottery tax journey
Below is a chart that shows how your wages are taxed and hit with fees when you buy a Lottery ticket. It turns out "Lucky Joe" isn't so lucky after all- over $10 of his original $13.82 is taken out for taxes and fees. Follow the path Lucky Joe's wage takes when he buys a Lottery ticket and discover just how much the Lottery is taxing everyone who buys a ticket.
2013 The Lottery Wage Drain chart
Lottery winning streak raises questions
The statistics behind winning the Lottery- be it a scratch ticket or a multi-million dollar jackpot- show that it is next to impossible for one person to win more than a handful of times. That's why Lottery officials are scratching their heads at certain players who have turned in hundreds of winning scratch tickets yearly. Statistically, these people would have to be spending millions and millions of dollars to win this many times, but they aren't. This has led many to believe that these lucky winners are actually middlemen- used by actual winners to help evade taxes taken out by the Lottery. This Boston Globe
article explains how some players seem to have luck that never runs out.
2014 Some winning streaks have defied belief
State Lotteries and Consumer Behavior
This report revealed that household lottery spending is financed primarily by a reduction in non-gambling expenditures, not by a reduction in expenditures on other forms of gambling. The introduction of a state lottery is associated with an average decline of $46 per month, or 2.4 percent, in household nongambling expenditures. Low-income households reduce non-gambling household expenditures by 2.5 percent on average, 3.1 percent when the state lottery includes instant games. This report was complied by Melissa Schettini Kearney at the Wellesley College and National Bureau of Economic Research.
2015 State Lotteries and Consumer Behavior
The Lottery is a tax, an inefficient, regressive, and exploitive tax
Max Galka of Metrocosm compiled data from the New Your State Lottery which illustrates the deceptive methods used by the state governments to advertise, distribute revenues, reveal expenses and inflate ticket costs. He also goes on to explain why it is not a tax on the stupid but a tax on addicts and their families.
2015 The lottery is a tax, an inefficient, regressive, and exploitative tax
Study shows citizens reduce their spending on key household items when they play the lottery
This paper by Univ. of Maryland Professor Economics Melissa Kearney reveals that household lottery spending is financed primarily by a reduction in non-gambling expenditures, not by a reduction in expenditures on other forms of gambling. The introduction of a state lottery is associated with an average decline of $46 per month, or 2.4 percent, in household non-gambling expenditures. Low-income households reduce non-gambling household expenditures by 2.5 percent on average, 3.1 percent when the state lottery includes instant games.
State Lotteries and Consumer Behavior
Once again Massachusetts tops the lottery sales charts with sales over $5 billion last year. The individual sales average was $740 per capita, with 50 communities (lower incomes) topping $1000 per capita. A total of $3.6 billion was paid out in prizes, regressively of course, with a few big winners and thousands of free tickets which were mostly losers. $985.8 million was returned to the towns and cities as unrestricted aid,
Sadly, the distribution system is inherently unfair. The distribution is based on population and median home values, and not on lottery ticket sales. The poorest communities that sell the most tickets per capita may be far down the list of recipients. Little goes to meet the needs of those who are addicted to the Lottery.
Lotteries are the vilest, most predatory of all gambling venues, As Les Bernal was quoted, “The $30 dollar scratch ticket is a Hail Mary investment strategy for poor people that seldom works out.”
See also http://www.enterprisenews.com/opinion/20160526/
Battle of kottery game suppliers
In a display of just how competitive and nasty the lottery business can be an employee of Scientific Games in Alpharetta, Georgia downloaded thousands of computer files, which included intellectual property, trade secrets, contracts, marketing and sales plans and data files. He then accepted a position with International Game Technology.
Scientific Games filed suit in Federal Court in Gainesville, Georgia. Scientific Games claimed that the files contained a “roadmap for stealing away business” by underbidding. A total of 13,800 items were downloaded to external hard drives. Scientific Games asked for a temporary restraining order to prevent the release of the files. Just how effective that will be without also accusing the former employee of theft remains to be seen. This is the most massive theft among gambling companies of which I am aware.
Associated Press, “Lottery firm says its ‘most prized’ secrets have been stolen,” http://wate.com/2016/06/26/
U.S. Senator John Thune, a Republican from South Dakota, has sent a letter demanding a hearing to the leaders of the Multi-state Lottery Association. He claims the lottery association has done little to assure that the theft cannot occur again.
Eddie Ray Tipton was convicted last year while director of security for MUSLA of rigging a multi-million dollar jackpot in the Iowa Lottery. He faces trial this month for other rigged lotteries in Kansas, Colorado, Oklahoma and Wisconsin.
The MUSLA fired Tipton, discontinued use of his computer, and has cooperated with the police. Senator Thune is not sure that is enough to prevent other riggings.
Chris Francescani, Senator Demands Answers on Lottery
, NBC News, June 29, 2016, Available at http://www.nbcnews.com/news/us-news/