What exactly is wrong with a state lottery? That’s the question we hear all the time. What’s the problem? If people want to buy lottery tickets, we should let them buy lottery tickets! The problem is that a lottery, like any heavy tax, saps money out of the economy. It is a detrimental, inefficient program that never truly lives up to the expectations of the voters.
1. Lotteries are a very bad bet mathematically. The nerdy flaw. Mathematicians agree that in a standard lottery (as is conducted by most states), the odds of a single ticket winning the jackpot are roughly one in fourteen million (that’s 1/14,000,000)! This means that, statistically speaking, only one out of every fourteen million tickets you purchase will have the winning numbers.
As Arkansas Business pointed out in a recent editorial, "[In order for the lottery to generate the $100 million per year Lt. Governor Halter promises], Arkansans would have to gamble away almost four times that much, and only a handful of them would win more than they lose." It’s bad math, and does nothing to protect the welfare of the citizens who lose money playing the lottery every day.
2. Lotteries constitute a tax. But lottery ticket-sales are voluntary. No one is required to buy a ticket. That may be true, but the fact of the matter is that while no one is required to buy a ticket (they have a choice), those who do purchase tickets have no say over how much of the ticket-price they pay goes to the government; the government just takes whatever profit is left over after the ticket is paid for.
According to a study done in Maryland, the state keeps 32% of lottery ticket sales (for more information, click here). That means that if you pay $5 for a lottery ticket, you are, in effect, giving $1.60 directly to the government. If the average lottery player spends $30 - $35 each month on lottery tickets, they are giving roughly $10 - $11 directly to the government in the form of lottery ticket tax revenue. That’s an extremely high sales tax that the state has a monopoly on!
When this practice is applied to tobacco products, we call it a "tobacco tax;" when it’s applied to soft drinks, we call it a "soft drink tax;" when applied to alcohol, we call it an "alcoholic beverage tax;" and when we apply it to the cars sitting in our driveways, we call it a "property tax." But when we apply the very same practice to lottery ticket sales, we call it "funding education," or "a voluntary means of collecting revenue." Please. It’s a tax, and an extremely high one at that.
3. The lottery tax hurts the poor. Politicians have called the idea that poor people are more inclined to play the lottery "an urban myth." As Arkansas Business recently pointed out, apparently "it's a myth also perpetuated by Duke University researchers working for the National Gambling Impact Study Commission in 1999 and the Federal Reserve Bank at St. Louis, which repeated the findings in a report on lotteries just last year: ‘[L]ow-income groups spend a larger share of their incomes on the lottery and they also spent more in absolute terms.’"
Poor people are much more inclined to play the lottery than middle- or upper-class citizens are. We know that the lottery has a very hefty sales tax tied to it. Since lottery games are played most heavily by low income individuals and families, it seems fair to say that this program constitutes an unfair, regressive tax on the poor in our state.
Arkansas Business further points out that, "Unfortunately, the share of Arkansans who are living in poverty is significantly higher than the national average (15.8 percent vs. 12.3 percent), so a lottery would be that much more regressive in its effect here than elsewhere." This means that the detrimental effects of the lottery would only be magnified here in Arkansas to a degree greater than the states that border us.
The state has a responsibility to enact legislation that does not harm its citizens. A state-sponsored lottery would only hurt its poorest citizens by taking the precious dollars they cannot afford to lose.
4. The lottery is failing in other states, and has not lived up to expectations. Most states have a lottery. Therefore, Arkansas should have a lottery. That’s the logic lottery-proponents espouse. Right now, fewer than ten states do not have at least one state-sponsored lottery in place. Arkansas is one of those states.
A quick lesson in groupthink: The idea is that if the vast majority of the United States have a lottery, it must be a good program. What this doesn’t address is why lotteries have consistently struggled to stay in operation in most of those states.
Let’s take Tennessee for example. After researching Tennessee’s lottery program, our team found that Tennessee’s initial lottery game saw a consistent decline in ticket sales during the first few years it operated. How did they offset this decline? First, they increased the cash prizes. This temporary fix helps keep ticket sales on the upswing for a little while, because when more money is on the line, people buy more lottery tickets.
But what about education funding? Remember, the government only takes what is left over after cash prizes and administrative costs; some quick 8th grade math tells us that increasing the cash prizes means less money is getting earmarked for education. The lottery is still generating less money for education. So what does the state do? They add another lottery. The truth is that, last we checked, Tennessee has five lottery games designed to benefit education, and the program is still struggling. In fact, this has been the story in virtually every state that has legalized state-run lottery programs. The only thing that seems to keep the lottery illusion alive is its continual expansion—hence why we now have multi-state lotteries with multi-million dollar cash prizes: it’s all designed to keep people going back for more lottery tickets.
Regardless of how the state justifies keeping the lottery in place, the only expectations it lives up to are the expectations of those who oppose it.
