How State Lotteries Transfer Income from the Poor
While the odds are against them, in 1994 people wagered $34.5 billion on lotteries -- with state governments receiving $14.1 billion as their share. In a 1995 survey in Money magazine, 11 percent of respondents even said the best way to achieve financial security is to play the lottery.
Critics claim the benefits of lotteries have been oversold, while the costs to society are ignored. They cite studies showing that:
Lotteries contributed only 2.2 percent of state government revenues in 1992.
Although more than half of all state lottery revenues are dedicated to education, they are more often used as a substitute for other funds.
Rather than improving state economies, lotteries simply transfer wealth from the many to the few, and ticket sales decrease other retail purchases by about the same amount.
There is evidence that lotteries transfer income from the poor to the middle class:
For example, lottery-funded college scholarships in Georgia go to students in families with a 1994-95 average income of $44,876, compared to the state's average household income in 1993 of $31,663.
Ticket sales are highest in neighborhoods with the lowest income levels and the highest proportion of minority residents.
The poor are more likely to play than any other income group, and spend a larger faction of their income.
There are also studies showing lotteries create societal costs that have to be weighed against income to the state. For example, lottery gaming is second only to alcohol among illegal teen activities; and adopting a lottery is associated with a 3 percent increase in a state's crime rate and a doubling of the number of compulsive games.
Thirty years ago, only New Hampshire permitted a lottery. As recently as 1960, lotteries were banned in every state. Today, 36 states and the District of Columbia have legalized state-run lotteries. However, the administrative costs for lotteries have risen faster than those for any other form of revenue collection -- and revenues decline after a few years.
Source: John Hill, "Theft by Consent: The Lottery's Economic and Social Impact on Alabama," 1996, Alabama Family Alliance, P.O. Box 59468, Birmingham, AL 35259.
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