The Economic Consequences of State Lotteries

The Economic Consequences of State Lotteries

The Economic Consequences of State Lotteries

The Economic Consequences of State Lotteries

Synopsis

Examining the economic impact and consequences of state lotteries, this book focuses on the efficiency and equity of state government revenue and expenditure policy. The authors offer an analysis of equity issues by studying the Illinois and Florida lotteries, and address efficiency considerations through an examination of six education-supporting lotteries and their allocation and administration of revenue. Among the other topics discussed are the effect of lottery taxes on other sources of revenue, whether lottery tickets are purchased at the expense of necessities, and possible policies for enhancing lotteries.

Excerpt

This book investigates one of the true growth areas in public sector financing--lotteries. While the modern wave of lotteries began over twenty-five years ago in New Hampshire, the 1980s have spawned tremendous growth in gambling taxes of all kinds. Twenty of the thirty-three states now operating lotteries have begun doing so since 1980. As a consequence of this proliferation, it is of paramount importance that studies of the economic impacts of lotteries be brought to the forefront--and soon.

The first step in the analysis is a review of the previous literature and data concerning the economics of lotteries. This material is presented in Chapter 1, which begins with a summary of statistical information about the nation's lotteries. Thereafter, we review the scholarly literature about lotteries to gain insight into the economic evaluation of the lottery tax.

Specifically, any tax has both equity and efficiency implications, and lotteries are no exception. the equity issues are considered in Chapter 2. the equity of a tax involves the distribution of the burden of the tax on ability-to-pay grounds and the distribution of the benefits relative to expenditures on the taxed good or service. These issues are addressed by considering the budgetary incidence (i.e., the incidence of the tax paid less the benefits received) of the lottery in Florida.

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