Professional Documents
Culture Documents
Martin Tomlinson
As seen in the second column, it was found that players who earned
less than $10,000 a year and players who earned more than $70,000 a
year spent, on average, the exact same sum of money ($139) playing
the lottery. Data like this has been used by many lottery proponents
to “prove” that the rich and the poor contribute equally to the lottery.
However, there is a huge disparity between the percentage of their
270 Chrestomathy: Volume 2, 2003
income being spent. The players earning less than $10,000 spent an
average of 1.51% of their annual income playing the lottery, while
players earning more than $70,000 spent an average of .18% (Detroit
Metropolitan Area Survey 1991). This means that as a proportion of
income, the very poor in this survey were spending over eight times as
much money on the lottery as the very wealthy. This seems to suggest
strongly that lotteries are doing more to propagate social inequality
than they are to alleviate it. The problem is further exacerbated because
much of the net proceeds go to college scholarship programs which
primarily benefit the rich and middle class. Thus, in many ways lotteries
function as a sort of reversal of folk hero Robin Hood’s motto: they
take from the poor and give to the rich.
Another problem with state lotteries is the problem of
diminishing returns. It has been conclusively shown that while lottery
revenues initially boom, after several years overall revenues plateau.
This causes a major problem for most states, which have earmarked
lottery revenues for specific programs such as senior citizen care or
education. These programs will continue a rapid pace of growth and
will always demand more and more funding as time goes on. So what
happens when the programs the lottery was set up to fund need more
money than the lottery can provide? This is a problem that many
states have had to deal with. The usual response is to try to boost
lottery revenues through either the creation of new games or an
increase in lottery marketing, oftentimes both in conjunction. This
seems to be very questionable ethically. The duty of a state government
is to protect the welfare of its people, which it seems to be violating
by trying to convince them to spend their money on gambling. A good
example of this is Ohio, where officials time state lottery commercials
and newspaper advertisements to coincide with the distribution of
state payroll, welfare, and social security checks. States that experience
revenue declines also often turn to other forms of legalized gambling
such as video poker and keno machines.
Lottery commercials are also not subject to the same Federal
Trade Commission truth in advertising regulations as standard
commercial advertisements, and states use this to their advantage.
They market the lottery as a way to get rich and change your life without
having to work. The states do this without being honest about the
Tomlinson: Economic Inequalities of State Lotteries 271
virtual impossibility of actually winning a big prize. One such
commercial in Connecticut featured a winner of a grand prize saying,
“When I was younger I could have planned my future. But I didn’t.
Or I could have made some smart investments. But I didn’t. Heck, I
could have bought a one-dollar Connecticut lotto ticket, won a jackpot
worth millions, and gotten a nice big check every year for 20 years.
And I did! I won!” The commercial ended with a voice-over saying,
“Odds of winning are 1 in 30 (Nelson 2001).” This gives viewers the
distinct impression that they have a 1 in 30 chance of winning a prize
that may change their life, when in fact the 1 in 30 consists mainly of
small prizes of only a few dollars. Governments which rely on lottery
revenues also necessarily rely on lottery players’ ignorance of the true
odds of winning a large prize in the games. If playing a pick 6 game
with 42 numbers (common among many states), a player has an
approximately 1 in 5 million chance of getting all six numbers correct
(NCALG 2003). If the game is increased to 49 numbers, as in
California, the chances decrease to 1 in 14 million (NCALG 2003).
You have a much better chance of being dealt a royal flush or being
killed abroad by a terrorist than winning even the simplest lottery
(Walsh). If you bought 100 tickets every week from the time you
were 18 until you were 75, you would have a 1% chance of ever
winning the lottery (and you would be spending nearly $300,000) (Walsh
1996). Even as gambling goes, the lottery is a bad bet. Typically
around 50% of gross lottery revenues are spent on payouts, which
means you can expect to get back 50 cents on every dollar you spend
on lottery tickets. On long odds super lottery games the odds fall
even lower, in some cases as low as 5%. On the other hand, an
informed player can expect to get back about 98 cents on the dollar in
casino games like blackjack, baccarat, slot machines, and craps (Walsh
1996). You can get back 95 cents on the dollar by playing roulette or
betting on football games (Walsh 1996).
Another criticism of state lotteries is that they are a highly
inefficient way to raise money for programs. Lottery revenues are
typically a very small percent of a state’s total revenues. Overall, for
every dollar in total lottery revenue, typically between 30 and 40 cents
are actually spent on the programs they are earmarked for (Tanner
2002). The other 60 to 70 cents go towards payouts and running the
272 Chrestomathy: Volume 2, 2003
lottery commission. Lottery critics point out that in almost every case
the same revenues could be achieved by substantially less than a 1%
sales tax increase (Averill 2002). State lotteries have also been linked
to other social ills. Many critics have said that lotteries lead to an
overall increase in gambling, especially gambling among minors. Grun
and McKeigue (2000) studied gambling rates across income brackets
before and after the United Kingdom instituted the British National
Lottery in 1995. Figure 2 displays their data, which shows that the
National Lottery brought increases in gambling expenses across the
board, and huge jumps in the percentage of income spent on non-
lottery gambling among the poor and working classes.
It would seem that the poor are also much more likely to be
active players, since lack of education and poverty are so strongly
correlated. Furthermore, as Figure 4 shows, McCrary and Pavlak also
found that blacks are much more likely to play “instant games” where
drawings are held daily or more than once a day (McCrary and Pavlak
2002, 16).
These instant games are much more likely to appeal to active
players, since they can buy a ticket and find out whether they won
over a short period of time, sometimes in a matter of minutes. Instant
276 Chrestomathy: Volume 2, 2003
games also tend to have lower payouts per dollar spent than do the
bigger weekly games, meaning players of instant games are highly
unlikely to ever get much of their money back.
Net Spending, Benefit, and Net Benefit from Georgia State Lottery by
Social Characteristics (Rubenstein and Scafidi, 2002)
Conclusion
When studying the data on the actual impact of state lotteries
on social inequality, one cannot help but come away astonished. The
fact that it is a “voluntary tax” gets the government off the hook for
many practices which would be considered unconscionable if they
came to pass through direct taxation. For example, imagine if a
government leader came forward with a new tax plan that would take
$140.67 per year from every minority household and $184.81 per year
from all working poor households. Furthermore, the government leader
would go on to say that this money would be used to give $115.40 per
year to every white household and $383.89 per year to every upper
class household. The public outcry over such a plan would be harsh
and swift, and this government leader would likely not be a leader for
much longer. However, these are the proven statistics of the Georgia
lottery, which not only enjoys substantial support in Georgia, but is
being used as the model for state lotteries across the nation. Likewise,
if a politician advocated levying a 1.51 percent income tax on those
earning less than $10,000 a year, people would call him or her a cruel
hearted miser with no sympathy for the Americans in poverty who are
struggling to survive day to day. However, these are the real statistics
in Detroit, and politicians who advocate similar lottery plans are touted
as sympathetic legislators who are diligently working to help the poor
receive new educational opportunities.
It cannot be reasonably said that state lotteries are a major
source of the social inequality in our country. Race, education, and
class are all certainly much more important factors in keeping the rich
in wealth and keeping the poor in poverty. However, our country
seems to be going in the wrong direction in terms of the growing gap
Tomlinson: Economic Inequalities of State Lotteries 281
between rich and poor, and the trend badly needs to be reversed. State
lotteries seem to be a perfect example of the type of institutions in
this nation that subtly exacerbate the problem of inequality. It fits
perfectly within the context of Marx’s theory of class conflict, as the
case could certainly be made that lotteries are merely an institution
created by the rich to take money from the poor and consolidate it in
the hands of the privileged. All the while, state lotteries give the poor
and minorities the illusion that they have equal opportunities at
educational success, and if they fail to break out of poverty it is through
some fault of their own. In reality, however, these disadvantaged
groups will rarely see any of the lottery revenues. Lottery revenues
are consistently concentrated at the highest levels of education, where
most disadvantaged students will never get. This is because the quality
of the public schools is rarely improved by lottery revenues, and
oftentimes becomes even worse. This means that almost without
exception disadvantaged students will never get the fundamental
knowledge and skills to succeed in college. Even if they do happen to
meet the requirements for a lottery-sponsored scholarship, it seems
highly unlikely that they will be able to sustain a 3.0 grade point average
at the college level. If they fail to meet this, they will lose the
scholarship and be forced to drop out of college, only marginally better
off than if they had never attended college at all. Perhaps the worst
part of this sequence is that the social and political leaders can then
claim, “It’s not our fault: we gave them a chance and they failed.”
So what can be done about lotteries? The easy answer is to
say get rid of state lotteries, but lotteries have become so entrenched
at this point that it seems highly unlikely. There are, however, ways in
which lottery funds can be used to benefit the disadvantaged and
underprivileged. A fundamental shift would need to take place, with
the lottery revenues being diverted from higher education to elementary
education. If the lottery money was used to rebuild and improve
failing public schools, it would go a long way towards helping to bring
about social equality. However, this, too, seems unlikely, given how
firmly entrenched the concept of lottery money for scholarships is.
This system could also be tweaked to help promote social equality.
Grade point average requirements could be discarded or lessened for
students from underprivileged backgrounds or failing schools. Perhaps
282 Chrestomathy: Volume 2, 2003
the lottery could also be used to finance special programs for the poor
or minorities where they would not be subject to the same high school
achievement requirements as most scholarship programs. Another
possibility is using lottery revenue to establish special college tutoring
programs for students who may have the potential for college success,
but not necessarily the educational background.
The overall research on state lotteries show that it is a
regressive, inefficient way of raising funds that is popular mainly for
its political success rather than its success in reaching concrete results.
The burden of state lotteries is born disproportionately by the poor,
the uneducated, and minorities. The benefits of state lotteries are
disproportionately reaped by wealthy, educated whites. The net result
of state lotteries is a significant exacerbation of social inequality, and
the problem is spread to more and more states. The only solution
seems to be to educate people on the real economic consequences of
the lottery, and perhaps then citizens will stand up against what amounts
to an unfair system of taxation.
Works Cited
Alongi, Paul. “LIFE Scholarships Hard to Hold,” The Greenville
News (20 September 2002), p. 15A.
Averill, David. “Lottery Not a Good Bet,” Tulsa World (14 April
2002), Opinion.
Bobilin, Robert T. “Education and Lotteries,” Hawai’I Coalition
Against Legalized Gambling Website (2003). <www.hcalg.org/
ResearchBrief-0003.htm>
Clotfelter, Charles T. and Cook, Philip J. Selling Hope: State Lotteries
in America (Harvard University Press, 1989).
Delcour, Julie. “Bad Bet Lottery Proposal,” Tulsa World (25
February 2001).
Gearey, Robyn. “Game of Chance,” The New Republic (19 May
1997).
Geddings, Kevin. “How South Carolina Passed a Lottery,”
Campaigns and Elections (August 2001), p. 30.
Georgia Student Finance Commission. “Georgia’s HOPE
Scholarship Program” (2003). <www.gsfc.org/HOPE/index.cfm>
Tomlinson: Economic Inequalities of State Lotteries 283
Grun, Lucia and McKeigue, Paul. “Prevalence of Excessive
Gambling Before and After Introduction of a National Lottery in the
U.K,” Addiction 95 (2000), pp. 959-966.
McCrary, Joseph and Pavlak, Thomas J. “Who Plays the Georgia
Lottery?: Results of a Statewide Survey,” Public Policy Research Series
(University of Georgia Press, 2002).
National Coalition Against Legalized Gambling. “Lottery Fact
Sheet” (2002). <www.ncalg.org/facts-lottery.htm>
Nelson, Michael. “The Lottery Gamble,” The American Spectator.
(4 June 2001), p. 19.
Rubenstein, Ross and Scafidi, Benjamin. “Who Pays and Who
Benefits? Examining the Distributional Consequences of the Georgia
Lottery for Education,” National Tax Journal 55 (2002), pp. 223-239.
Tanner, Gary. “Expert: Lotteries Have Pros and Cons,” Chattanooga
Times-Free Press (5 February 2002), p. A1.
Tanner, Gary. “A Lottery Vision to Fund Schools,” Chattanooga
Times-Free Press (5 February 2002), p. A5.
Walsh, James. “Why do People Play the Lottery?” Consumers’
Research Magazine 79 (1996), pp. 22-25.