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Lottery Business Practices

Despite their status as a public agency, state lotteries join casinos in using the most predatory business practices in America.
  • Lotteries collect 80 percent of its profits from the financial losses of 10 percent of its users.  Researchers Charles Clotfelter and Philip Cook reported to the National Gambling Impact Study Commission that the top 5% of players accounted for 54 % of total sales.
  • State governments pay millions to probe the thoughts and habits of potential lottery players, analyzing what they buy at convenience stores, whether they rent videos, go to theme parks, even how they feel about owning things and belonging to a group.  This fact also proves that government is actually working overtime to create new gamblers, directly contradicting the lottery's claim that "citizens are already gambling." These studies also show the lottery relies on the poorest and least educated.
  • Lotteries seek to “reach people who have never played,” by proposing to sell tickets in more places, including online, in restaurants and in Walmart, and offering more intense games.
  • The games are designed to override people’s common sense, especially people who don’t believe they have control over their lives. According to Anthony Miyazaki of Florida International University in Miami who has spent more than a decade researching lottery players: “If you feel control is on the outside, then you’re more likely to trust your life to fate or something else.”
  • Lotteries are exempt from truth-in-advertising laws.
  • The advertising content and practices of state lotteries target specific groups or economic classes of people. It's racial-profiling, Lottery-style. The Illinois Lottery, for example, has a $1.6 million contract with an outside firm to market the lottery to African-Americans and another $1.6 million contract with a firm to market to Hispanics.
  • State lotteries spend large sums to game creators and researchers to monitor players' responses to new games and advertising. In states like Florida, for about $2.4 million a year, global market researcher Ipsos Reid regularly surveys thousands of Floridians. The researchers ask hundreds of questions about the lottery games people play — where, why and how much they spend on each one. They ask about the messages they perceive from lottery ads. And they ask about their attitudes toward life, fate and gambling. The consultant breaks out the answers by gender, race, age, income and education, devoting special attention to Hispanics, and then sorts people into six categories based on their lottery spending and attitudes. In addition to the Thrill Seeking Dreamers, there are Upscale Gamers, Conflicted Players, Indifferent Jackpot Dabblers, Concerned Followers and Prohibitionists.
  • Those in the category "Thrill Seeking Dreamers" are the lifeblood of the lottery. They make up 15 percent of the adult population, but they account for 50 percent of the lottery's revenue. Most of them are women. Their income and education tend to be low or moderately low, though most have full-time jobs, and they "live for the moment," said a 2006 Ipsos Reid marketing study.

Texas Lottery 2010 Study Shows the Lottery Squeezing More Money Out of a Smaller Amount of People

This 2010 Texas Lottery Commission report finds that the percentage of Texans using the state's lottery has plunged to one-third, the lowest level ever measured. The decline in fiscal 2010 — from 41.7 percent of residents to 33.8 percent — represents the second-largest year-to-year decrease since the Texas Lottery started in 1993. Yet despite this massive drop, the total amount of money spent on Texas Lottery tickets has held steady, which means a smaller amount of people are spending a lot more on tickets. It explains why Texas sells a $50 scratch ticket. Texas Lottery Demographics Report 2010

Try the “Get Rich Lottery Simulator”

The Get Rich Slowly blog recently had a post about the lottery and called it "an investment of fools." It also includes a "Get Rich Lottery Simulator" which demonstrates each person's 1 in 175,000,000 chance of winning.
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New York’s Latest Way of Enticing its Citizens to Lose Money

The latest ad campaign for the New York Lottery consists of the slogan: "Be Ready." According the New York Times article below, the message of the campaign is that "anyone who plays the instant games...ought to be prepared to win immediately in a moment of instant gratification." It Only Takes an Instant, Lottery Ads Declare

Online lottery sales, meant to draw in younger gamblers, draw opposition

Lotteries tell the public "people are gambling anyway" but there is no question that lotteries are actively targeting and creating new gamblers to get them to lose their money. In this story, the Maine Lottery Director describes the strategy: “While our lottery revenue generation is doing reasonably well, our consumer or customer head count participation is flat to slightly down....the lottery needs to bolster sales to the “Generation Y” segment of the population, 18-to 30-year-olds that embrace the Internet." Online lottery sales, meant to draw in younger gamblers, draw opposition

Lotteries seeking ways to sell lottery tickets at ATM machines

State lotteries are constantly looking for new ways to get citizens to lose more money more frequently. Below is a Request for Proposals issued by the Minnesota Lottery to review methods to sell lottery tickets at ATM machines. Lotteries seeking ways to sell lottery tickets at ATM machines

Lottery tickets may soon be purchased with credit cards

A recent rise in online gambling has caused some states to allow consumers to purchase lottery tickets online. However, as this article explains, this allows problem gamblers to rack up huge amounts of debt more quickly and more easily. 2013 Buy Lottery Tickets with a Credit Card

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

Series delves into business practices of OR lottery

This must-read series from OregonLive details the business practices of the lottery in Oregon and reveals quite a bit about the Lottery- a public policy and a program created and supported by the government.

In the first installment, the author explores the revenue gained from slot machines. In Rhode Island for example, a state of about 1 million people, the lottery collected over two-thirds of its $782 million from slots.  It also shows the impact that the rise of video slot machines is having on gamblers.

2013 Oregon Lottery- Revenues grow on the increase in video slots games

Secondly, the series shows that the rise of slot machines has had a particularly strong impact on problem gamblers. This government-sponsored program, as this article shows, continues to raise revenue from problem and addicted gamblers.

2013 Oregon Lottery- Agency pushes slot machines as problem gamblers pay the price

Next, the series shows that, just as tobacco companies were hit with legal issues once their business practices and the toxicity of their product was discovered, states that offer video slots could be liable for the harm it does to problem gamblers. It continues to draw parallels between the tobacco industry and the gaming industry, saying both create a product that is engineered to profit off of people's addictions

2013 Oregon Lottery- Games, like tobacco earlier, could face liability lawsuits

Finally, the series concludes by offering real stories of problem gamblers who chronicle their struggle with gambling and express their outrage that a state-sponsored program is using their addiction to raise money.

2013 Oregon Lottery- Reader stories of state-sponsored addiction (day 1)

FL Lottery shuts down more stores after fraud allegations

This article by the Palm Beach Post documents the Lottery's scramble in Florida to shut down certain stores after a previous investigation by the paper revealed fraud going on between store owners and Lottery players, allowing some players to win an incredible amount of times against all odds. The total of stores that the Lottery has closed down now totals 14 and some of those involved could face criminal charges if these allegations are true. Florida Lottery suspends sales at 11 more stores after newspaper investigation

Massachusetts Lottery

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.”   http://www.milforddailynews.com/20160520/ 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/

Lottery Rigging

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/

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