Lotteries

A Nation in Debt: How We Killed Thrift, Enthroned Loan Sharks and Undermined American Prosperity

This essay written by Barbara Dafoe Whitehead appeared in the July/August 2008 issue of The American Interest. It is excerpted and adapted from For a New Thrift: Confronting the Debt Culture, a report released in May 2008 by the Commission on Thrift. Whitehead exposes how anti-thrift institutions like state lotteries, casinos, payday lenders and credit card companies hinder the average American’s ability to save their earnings and get ahead financially. These institutions have been the main contributors to the growing amount of consumer debt accumulated in recent decades. Whitehead calls on the public to reform these institutions and to advocate for a culture based on saving and wealth-building.

Whitehead – A Nation in Debt

LesA Nation in Debt: How We Killed Thrift, Enthroned Loan Sharks and Undermined American Prosperity
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U.S. Department of Justice Links Gambling and Crime Among Arrestees

U.S. Department of Justice – Office of Justice Programs National Institute of Justice, July, 2004
This report, funded and published by the U.S. Department of Justice studied people who had been arrested in Las Vegas and Des Moines, Iowa. They found significant connections between gambling and crime. “More than 30 percent of pathological gamblers who had been arrested in Las Vegas and Des Moines reported having committed a robbery within the past year, nearly double the percentage for low-risk gamblers. Nearly one-third admitted that they had committed the robbery to pay for gambling or to pay gambling debts. In addition, about 13 percent said they had assaulted someone to get money.

DOJ Study- Gambling and Crime Among Arrestees

LesU.S. Department of Justice Links Gambling and Crime Among Arrestees
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Exploring the Limits of Responsible Gambling: Harm Minimization or Consumer Protection?

Predatory gambling in Australia has matured faster than that in America, providing valuable lessons on addiction. Mark Dickerson, a noted academic from the University of Western Sydney, shared his work at McGill University in Montreal, Canada. Essentially, Dickerson proves conclusively that the only truly “responsible” gamblers are professional gamblers. Gambling is designed, marketed and packaged to carry customers beyond the point of reason and control. Dickerson believes there are methods the gambling operators could employ to ameliorate these dangers. But operators are unlikely to voluntarily jeopardize revenues from its victims. The study provides remarkable insight into how predatory gambling works and what it does to its customers. The second report below was also written by Professor Dickerson and it deals with similar issues as the study above. In the second report he notes the difficulty of identifying problem gamblers and suggests ways the operators could reduce harm.

Limits of Responsible Gambling

Reframing Responsible Gambling

LesExploring the Limits of Responsible Gambling: Harm Minimization or Consumer Protection?
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Lottery Revenue Comes Largely From People Already Receiving Government Support

Studies of lottery spending, including this study from the Federal Reserve Bank of St. Louis in 2008, show lottery revenue comes largely from Social Security, unemployment and other forms of government support. Government, in other words, is paying government — with an enormous amount of money being siphoned off by gambling interests. It also reflects a key reason why predatory gambling worsens state budget deficits over time and taxpayers end up footing the bill.

St Louis Federal Reserve Lottery Study 2008

LesLottery Revenue Comes Largely From People Already Receiving Government Support
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Citizens Are Not Adapting to Availability of Predatory Gambling But They Are Adapting to Losing More Money Than Ever Before

Some researchers funded by predatory gambling interests attempt to argue that after the introduction of extreme forms of gambling into a community addiction rates will spike but then, over a period of years, addiction rates will decline once people “adapt” to its availability. It is called the “social adaptation theory.” Here is a memo showing why this theory is misplaced and how the only thing people are adapting to is losing more money than ever before.

Rates of Addiction Increase Because of Predatory Gambling

LesCitizens Are Not Adapting to Availability of Predatory Gambling But They Are Adapting to Losing More Money Than Ever Before
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The Message of Government at the Time of “The Greatest Generation”

During the Great Depression, leaders like New York City Mayor Fiorello La Guardia (watch the brief news clip below) aggressively went after those who preyed on the financial struggles of his city’s working class.

What we now call “The Greatest Generation” challenged citizens to help make America and their families stronger by buying government savings bonds. Today, the daily voice of government to most citizens during the worst economic crisis since then is casinos and state lotteries. After forty years, it’s time government pulled out of the predatory gambling business because it is a failed policy.

The video is part of a “25 years ago today” UN newsreel story issued September 24, 1959.

LesThe Message of Government at the Time of “The Greatest Generation”
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Women Embezzlers Increasing Across Nation

In Minnesota, five of the six most prolific alleged embezzlers last year were women, according to the 2011 Marquet Report on Embezzlement. The U.S. Sentencing Commission says that embezzlement is the only offense nationwide where women outnumber men. The Boston-based Marquet Report, which analyzes prominent embezzlement cases with losses of more than $100,000, found that women made up 64 percent of the alleged perpetrators nationwide. Motive and opportunity are the main reasons to why women are embezzling, and in 2011, 22 percent of embezzlement cases were directly motivated by gambling.

Women Embezzlers Increasing Across Nation

CkirbyWomen Embezzlers Increasing Across Nation
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Video Lottery and Treatment for Pathological Gambling: A Natural Experiment in South Dakota

This paper explores the fact that when video lottery machines were turned off in South Dakota, the inquiries about gambling and the number of individuals receiving treatment for problem gambling diminished abruptly. When the machines were turned back on, there was a prompt increase in both of these categories.

These changes occurred despite the fact that alternative forms of legal gambling were available (i.e., scratch tickets, Indian Reservation casino gambling, and multi-state lotteries). This suggests that video lottery gambling machines presents a unique risk for the development of problems severe enough to prompt treatment. These data suggest little substitution of other forms of gambling occurred when video lottery gambling was not available.

Video Lottery and Treatment for Pathological Gambling – A Natural Experiment in South Dakota

CkirbyVideo Lottery and Treatment for Pathological Gambling: A Natural Experiment in South Dakota
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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

LesStudy shows citizens reduce their spending on key household items when they play the lottery
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Predatory Gambling Has More of a History of Corruption Than Any Other Business

In the wake of the October 2010 indictments of four State Senators, Gary Palmer of the Alabama Policy Institute wrote about the historical connection between the legalization of gambling and government corruption. He quotes former U.S. Senator Paul Simon of Illinois who declared predatory gambling “…has more of a history of corruption than any other industry.”

Alabama Policy Institute – Elections or Indictments

CkirbyPredatory Gambling Has More of a History of Corruption Than Any Other Business
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