Government Lotteries Are for Suckers

By Hoar, William P. | The New American, January 9, 2006 | Go to article overview

Government Lotteries Are for Suckers


Hoar, William P., The New American


ITEM: The Nashville (Tenn.) City Paper for December 1, 2005, reported: "College students on a state lottery scholarship can breathe a sigh of relief. The state announced Wednesday that it expects to have enough money to fully fund the lottery scholarship program when it extends to all four collegiate grade levels next fall."

The paper continued: "The announcement came during the Tennessee Education Lottery Corporation's presentation of its expected future revenues to the state's funding board, which helps formulate Tennessee's annual budget. After the presentation, Department of Finance Commissioner Dave Goetz said that it was 'encouraging' that the lottery corporation's estimates were similar to the expected revenues the state's fiscal review committee submitted."

ITEM: A press release issued by the Multi-State Lottery Association, promoting the Powerball game, reported on December 4: "Players should carefully check their tickets after every draw. Even if there are no jackpot winners there are always tens of thousands of winners at other prize levels. Players purchased more than $19.7 million in tickets between Wednesday and Saturday night. The lotteries sold more than $2 billion in Powerball tickets in FY05. That translates into more than $600 million for worthwhile state projects."

CORRECTION: Leaving aside the morality of having the government spend tax dollars to encourage gambling, the alleged financial benefits of state lotteries are vastly overstated. Moreover, the targets of lotteries are generally those who can least afford to spend money, and have a minuscule chance of striking it rich.

The regressive nature of lotteries is borne out not only by common-sense observations, but by numerous studies and reports. The government in New Jersey is among the most aggressive in promoting its lottery; a study by the Star-Ledger of Newark not long ago showed that it is largely low-income areas of that state that are fueling the sales of such tickets.

According to the data, the New Jersey Lottery sells an average of $250 worth of tickets annually per capita in areas where the average income is below $52,000--more than twice the amount as in areas where incomes are above $100,000, despite the fact that the higher income areas have more money to spend. In addition, there are more lottery ticket retailers in lower-income areas (even taking into account that people may play the lottery in areas other than where they live).

A broader study, made a few years ago at the behest of the U.S. Congress, found that the poorest players of the lottery not only spend a higher proportion of their income on tickets but also a larger actual total. Those with the least education spent the most. The National Gambling Impact Study Commission, for example, found that lottery participants in households with incomes under $10,000 spent $597 per capita each year, compared to $196 by those with household incomes over $100,000.

To combat a negative stigma toward lotteries, proponents of lotteries are quick to argue that the games of chance fund various "worthwhile" projects--which is how they get their foot in the door with the legislatures in the first place. …

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