State Lotteries: Advocating a Social Ill for the Social Good. (Reflections)
Heberling, Michael, Independent Review
Fifty years ago, anyone caught "playing the numbers" might be in serious trouble with the law. At that time, the government acted as if protecting citizens from the evils of gambling was one of its inherent responsibilities. Today, Americans legally bet more than $36 billion a year on the lotteries in thirty-seven states and the District of Columbia (Bresiger 1998). These gambling operations are not only state sanctioned, they are state run and state promoted as well. How could such a complete turnaround have taken place?
In almost every case, the lottery was presented to state legislators as a means of raising revenues without having to raise taxes. Not surprisingly, this option had a great appeal to both Republicans and Democrats. The "puritanical" objections to filling state coffers by means of a gambling scheme were quickly diffused by three arguments. First, because people are going to gamble in any event, it is better to place that gambling within the protection of the law rather than to leave it in the seamy environs of gangsters and thugs (Simon 1997). Second, the lottery is one of the most benign forms of gambling. Many do not even consider it "real gambling." Spending a dollar's worth of loose change on a lottery ticket every once in a while bears little resemblance to gambling at Las Vegas or Atlantic City. Besides--the third argument--it's for a "good cause." All remaining misgivings about the state's promotion of a vice disappear when the promoters make clear that all proceeds will be used "for the children" or for some other honorable cause. Eighteen states earmark their lottery revenues for education. Pennsylvania's lottery supports its senior citizen programs.
Once adopted, the lottery certainly delivered as advertised. This painless revenue windfall was treated as if it were manna from heaven. State legislators across the country came to view this "voluntary tax" as a permanent wellspring that released revenues in the general fund for a multitude of other uses. Funds previously earmarked for education were diverted to meet an endless list of "worthy unmet needs." As long as the lottery money continued to roll in, nobody saw the lottery for what it had become: a legislative "bait-and-switch" funding game.
The lottery euphoria, however, almost always subsides as the game's novelty starts to wear off. This cooling usually occurs four or five years into the program. As ticket sales plummet, the dark side of the government's shell game becomes visible. Because the lottery revenues no longer cover the education (or other specific) funding requirements as advertised, some form of corrective action (or coercion) becomes necessary. The options most frequently selected are not pretty: raising taxes, beefing up the ad campaign to entice new players, and devising new, more exciting (and addictive) versions of the game. Most states end up pursuing all three options.
The ephemeral infusion of lottery dollars always results in prodigal spending, which, in turn, forces state legislators to raise taxes in order to shore up the budgetary shortfalls that develop when lottery revenue sags. Legislators keep their fingers crossed and hope that nobody remembers that the lottery was supposed to have made additional taxes unnecessary. Obfuscation about proceeds earmarked "for the children" will also keep people from asking probing and potentially embarrassing questions such as, "What happened to all the education money that was in the general fund?" A study by Money magazine found that from 1990 to 1995 taxes grew three times faster in lottery states than in nonlottery states. In 1971, Governor Thomas Meskill of Connecticut successfully lobbied for a lottery by arguing, "Giving people the choice to raise money purchasing lottery tickets will let your state hold the line on taxes." In 1991, however, Connecticut legislators enacted the state's first income tax even though lottery sales had reached $671 million in the previous year (Keating 1996). …