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Lotteries: Who Really Plays

For more information about the role predatory gambling plays in America’s debt culture and pushing citizens into poverty, please also visit our Debt Culture and Poverty section.

Study finds strong link between lottery sales and poverty

This detailed study by Cornell University shows that state lotteries get a disproportional amount of sales from the poor and disadvantaged and examines the reasons behind why those who have the least spend the most on the lottery. While it is for many a source of entertainment to play, the study finds that the real reason for this trend is that those stricken with poverty look to the lottery as a way to improve their lives and help them escape their poverty. However, the lottery will often hurt, not help, their financial predicament, further pushing these Americans deeper and deeper into a downward spiral of crippling poverty.

Cornell Univ study -Entertainment Poverty and the Demand for State Lotteries

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

Hope and Hard Luck: Poorest Counties Lead State in Per Capita Lottery Sales

This first-rate 2010 report by Sarah Ovaska of North Carolina Policy Watch details how the most impoverished counties in North Carolina spend the most money on the state lottery. The report below also includes a link to a county-by-county map detailing lottery sales.

Hope and Hard Luck – NC Policy Watch

South Carolina Study Shows Households Earning Under $40K Make Up 54% of the Lottery’s Frequent Players

A recent review of demographic studies commissioned by the South Carolina Education Lottery showed: African-Americans made up 19% of the state’s adult population but accounted for almost 39% of frequent players; people in households earning under $40,000 accounted for 28% of the state’s population but made up 54% percent of frequent players; people with no high school diploma accounted for 8% of the state’s population and 21% of frequent players; and people whose highest educational achievement is a high school diploma or GED made up 25% of the total population and 34% percent of frequent players.

South Carolina Lottery Demographics 2009

Why Poor People Play the Lottery Even More When Times Are Tough

Yale University’s Emily Haisley analyzed why poor people play the lottery even more when times are tough. Read this New York Times story about her report.

Citation: Carnegie Mellon University (2008, July 24). Why Play A Losing Game? Study Uncovers Why Low-income People Buy Lottery Tickets.

Lotteries Hurt the Economic Security and Well-Being of the State’s Families

In its recent report, Arkansas Advocates for Children and Families concludes that a lottery hurts the economic security and well-being of the state’s’ families – regardless of how much money it raised. The report lays out the following reasons: 1) Lotteries function as regressive taxes that disproportionately hurt the economic security of low-income families; 2) Lotteries are unstable sources of tax revenue that can decline from year to year. Overall, any positive effect on state budgets tend to fade over time; 3) Lotteries and other forms of gambling often lead to negative social and economic consequences for children and their Lotteries function as regressive taxes that disproportionately hurt the economic security of low-income families costs which must often be borne by the state; 4) Researchers have found that Georgia’s “Hope Scholarship” lottery, often cited as a model for lotteries in other states, is disproportionately funded by low-income households, while higher-income, more-educated households disproportionately benefit from the scholarships; 5) A lottery would do little to improve access to higher education among the lowest-income citizens and would prey upon those who stand to lose the most from state- sponsored gambling; and 6) If increasing access to higher education is indeed important to Arkansas’s future economic success, then the state should commit to finding a stable, reliable and fair source of funding for it.

Arkansas Advocates for Children and Families 2008 report

Myopic Risk-Seeking: The Impact of Narrow Decision Bracketing on Lottery Play

This 2008 study from the Journal of Risk and Uncertainty highlights the fact that the lottery appeals to people earning lower incomes and that these individuals spend a disproportionate amount of money on the lottery when compared to people with higher incomes. Additionally, the results suggest that the combination of myopic decision making and the “peanuts effect” – greater risk seeking for low stakes rather than high stakes gambles – can help explain the popularity of state lotteries.

Myopic Risk-seeking – The Impact of Narrow Decision Bracketing on Lottery Play

Poor People Spend 9% of Income on Lottery Tickets

This blog post from WalletPop.com outlines the reasons why people on low-incomes spend so much on lottery tickets: the hype about big jackpots, the ritual of playing and the fact that many people believe that playing the lottery is best way to achieve financial security.

Poor People Spend 9 Percent of Income on Lottery Tickets

Who Pays for the Lottery?

In 2007, the California Budget Project reported on the possible privatization of the state lottery. It reported that the poor, non-white, urban and less educated spend a higher portion of their income on the lottery than other demographics. Our government and our citizens would never tolerate a program that was known to disproportionally burden the urban, ethnic, poor and less educated. So, why do states both tolerate and promote state lotteries?

California Budget Project – Gambling on the Future

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

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

80% of Lottery Profits Come From 10% of the Players

According the New York Times: “States are also trying to bolster the number of ‘core’ players, according to interviews with lottery officials in several states. Such players typically represent only 10 percent to 15 percent of all players but account for 80 percent of sales, according to Independent Lottery Research, which does research and marketing for state lotteries.”

For Schools, Lottery Payoffs Fall Short of Promises

The $50 Ticket: A Lottery Boon Raises Concern

This New York Times story spotlights how state lotteries are luring citizens to lose more money at a faster clip by offering higher priced scratch-off tickets. Once only a $1, now states like Texas are selling $50 scratch tickets.

2007 The $50 Ticket- A Lottery Boon Raises Concern

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

IL lottery gains overwhelming majority of revenue from poorer areas

This article by The Chicago Tribune outlines the problems encountered by the Illinois lottery. The lottery in Illinois has encountered sluggish sales and failed to bring in necessary revenue. Furthermore, poorer neighborhoods are bringing in the stark majority of sales, showing that the most disadvantaged in the Chicago community are often the most vulnerable to the lottery.

2013 IL Lottery – poorer neighborhoods bring in most revenue

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)

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

The link between poverty and lottery sales is undeniable, according to article

This article by The Hartford Courant, written in response to a taxpayer-funded study that concluded no link between poverty and lottery sales, presents the findings of several other studies that have time and again found an irrefutable link between poverty and lottery sales, and poverty and gambling addiction. The author offers insightful comments on these many past studies that have found this strong link and finds the faults in the one study that has concluded otherwise.

2009 Want False Hope With That Lottery Ticket

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

Winners and losers feel the sad reality of the Lottery

With Lottery jackpots reaching unthinkable highs recently, more and more players are buying tickets to try their shot at, sometimes, upwards of $1 billion. Unfortunately, the historic problems with the Lottery continue to worsen. More and more, it is the poor who are buying tickets- not as a cheap source of entertainment- but as a last resort, blowing what little money they have. Furthermore, even if one hits that nearly-impossible jackpot, the result is not as joyous as you might think- one-third of all Lottery jackpot winners declare bankruptcy, the majority say their lives have not improved since winning the jackpot, and new studies show that recent Lottery winners have lower happiness levels than those who have recently become quadriplegic. This op-ed from CNN details the sad reality of today’s Lottery.

2013 The big swindle- In lotteries, the poor are the biggest losers

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

In MD, the lower the income, the more likely you are to play the Lottery

This article from the Maryland Reporter details why the lower-income communities in Maryland play the Lottery disproportionately. For example, Park Heights, one of Maryland’s poorest neighborhoods with a median income of $35,000, gave the most money to the Lottery in the entire state- a whopping $34 million. A truck driver from Park Heights told the Reporter that, “We play to make some extra money… I want some extra money. We all do.”  Lower-income communities disproportionately believe the path to wealth is the Lottery, not responsible saving and spending. However, with every Lottery ticket, as this article explains, residents only fall deeper and deeper into poverty.

Low-income players drive lottery sales as a big source of state revenues

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