Session 4:
Lotteries, the Poor, and the State

Our foremost concern with lotteries is their impact on the poor. As studies have shown -- including those conducted by lotteries themselves -- poor people spend a much larger proportion of their income on the lottery than do those in middle- or upper-income brackets. In fact, recent studies suggest that the poor spend more on the lottery in absolute, not merely proportional, terms. If we conduct state lotteries principally because they raise public funds, then lotteries seem to violate our strong commitment to progressive taxation -- the idea that those who are better able to pay should bear a greater portion of public burdens. At the very least, the costs of our common projects should not fall disproportionately on the poor.

The lotteries' defenders respond that this charge of "regressive taxation" implies that the poor are coerced, when no one is forced to play. While true, the defense underestimates the significance of lottery advertising, which tends to undercut the stress on voluntariness. The state does not merely tolerate lottery expenditures, as it does with other "sin tax" items like alcohol and cigarettes; the state actively encourages people to play. Unless state law requires the lottery to disclose the true odds of winning (and few do), lottery ads generally overstate or obscure the chances of winning, in order to make the worst bet in gambling seem attractive. Black jack tables return 98% of the wagered money back to winners, and casino slot machines return 92%, but lotteries generally pay out around 50% of the amount wagered. And the odds of winning a large jackpot are astronomical (up to 1 in 80 million for certain multi-state lotteries). A person who buys a ticket in that lottery is forty times more likely to be hit by lightning than to win the jackpot.

Beyond misrepresented odds, lottery advertisers target the poor in ways that are particularly troubling. Lottery ads prey on a sense of economic hopelessness, claiming to offer a real chance of financial success -- a chance that work and saving, the messages seems to suggest, cannot provide. Ads promise to take you from "your street to easy street," or show pictures of people who go from tattered clothes one moment to tuxedos, champagne and expensive cars, proclaiming "It could happen to you!" The lotteries' claim that "there is nothing wrong with dreaming" becomes even more suspect in light of their advertising strategies. Billboards and radio commercials focus on lower-income areas and markets, while ad campaigns and new games are timed to coincide with the release of government benefit checks. Lotteries are sold the same way as any other product: identify likely consumers, then stimulate their desire.

Of course, the lottery isn't just another product, and the state isn't just another business. First, to say the least, it is something of an anomaly that the state, which we believe to be God's instrument for achieving the temporal common good, now promotes greed and denigrates work and saving. As social commentators William Galston and David Wasserman write, "The state's promotion of gambling belies its commitment to reducing the influence of morally arbitrary factors on the lives of its citizens and to supporting the virtues of thrift, hard work, and responsibility." Second, the deceptive nature of lottery advertising contributes to a general and corrosive distrust for the word of government officials. Third, by raising revenues through lotteries -- the "easy way"-- public officials bypass an important step in political accountability: decisions about taxation provide an occasion for debating the proper functions and objects of government. Where something needs be done for the common good, the community should fund it; but if the community is unwilling to support a particular project, then we should seriously question the state's justification in pursuing it. And fourth, the lottery represents a betrayal of the state's special responsibility for the vulnerable. Through deception and by preying on their desperation, the state takes from the poor what they can little afford to give.

Despite these concerns, there seems little chance for returning to an era when states did not promote gambling. As we have seen over the last few years, compulsive gamblers are not the only ones who are addicted: given the general anti-tax atmosphere, state officials have come to depend on lottery revenues in their budgeting. The problem is that lottery revenues are not always dependable, especially as additional forms of gambling come on the scene. When lottery revenues start to decline, officials look to more exciting games: in the 1970s this meant weekly and then daily drawings, and finally instant games. In the late 1980s and through the 1990s, even those games began to fail to hold players' attention, so lotteries have turned to even faster games like keno and video lottery. And the faster games do generate revenues: South Dakota's video lottery terminals account for a significant majority of the state lottery's revenues, and a 1996 Oregon study noted that video poker revenues in a two-year period were more than the total state lottery revenues from the six years before the video games were introduced. The increased revenue may be a blessing to the state treasury, but it seems to have been a curse to pathological gamblers. At more than ten games a minute, gamblers liken the machines to "crack" cocaine -- quick to addict and quick to bring the addict to ruin. That states would rush to supply these machines, especially under the deceptive cloak of a "lottery," gives further evidence of the problems noted above.

For Discussion

1. Identify and discuss the aspects of your state's lottery:
   
   
   1. Does your state have a lottery?
      
      
   2. Are the lottery revenues "earmarked" for particular programs? Which ones?
      
      
   3. If so, what kinds of games does it offer?
      
      
      • numbers (pick 3, pick 4)?
      • scratch cards?
        
        
   4. Does the lottery use electronic games as well?
      
      
      • Video lottery terminals?
      • keno?
        
        
2. Have you ever played the lottery? Why did you play?
   
   
3. Pay attention to lottery advertising during the coming week.
   
   
   1. How many print ads did you see -- newspapers or magazines? Billboards? Radio or television ads?
      
      
   2. What messages did those advertisements convey? Does your state limit the type of messages that lottery advertising can use?
      
      
4. Count the number of stores, restaurants and gas stations you patronize this week that sell lottery tickets or have video lottery. Does the number surprise you?
   
   
5. Do you think it is wrong to sell lottery tickets, or to offer video lottery games? If you owned a store or restaurant, would you offer lottery games -- knowing that it is a significant source of revenue for the business?
   
   
6. Much of states' enthusiasm for gambling has been driven by the revenue that gambling (and especially the lottery) generates; coupled with a pervasive hostility to tax increases. Any restriction or elimination of lotteries would probably require some tax increases. Would you be willing to support such increases? Is so, why? If not, why not?