The Not-So-Golden Ticket


Have you ever purchased a lottery ticket?  When?  Where?  Quite honestly, what were you thinking at that moment?

In my humble opinion, U.S. state lotteries are poisonous for peoples’ financial health.  The earliest lottery-like activities are traced back to the colonial Massachusetts-Bay Colony, where the tired and leisurely gambled their during down-time.  It apparently a harmless distraction.  Fast-forward to the 21st century and throwing wooden dice and dealing dusty cards has transformed into some of our most cruel vices: gambling in smokey casinos and buying cheap lottery tickets.

Here are some statistics to help carry my point with more weight.  In South Carolina, people in households earnings below $40,000 accounted for 28% of the population in 2009, but made up 54% of frequent lottery players.  In the same year, the highest concentration of lottery revenues in Connecticut came from the poorest cities, including new Haven, Hartford and Bridgeport.  Moreover, roughly 20% of callers to the 1-800-GAMBLER national hotline reportedly had trouble controlling spending on lottery tickets.  Most disheartening, a 1994 study from Indiana University found that from 1983 to 1991, lottery sales tended to rise with unemployment rates.  This trend occurs because recessionary economic conditions demand lower costs for companies, inducing a wave of layoffs for low-skilled, low-income workers.  These workers, many of whom file for unemployment insurance and some become discouraged workers,” tend to buy lottery tickets in desperation.

Today, 44 states operate lotteries responsible for luring low-income individuals to regularly spend considerable portions of their income on tickets.  The system is simply a regressive tax on poor people, because the cost of purchasing a lottery ticket consumes a much larger amount of their paycheck compared with a wealthier person.  In other words, they prey on those that can least afford them.  Most lottery ticket buyers are not one-time buyers either.  In a 2011 study conducted by the University of Houston analyzing the demographics of lottery ticket customers, over 60% of respondents that purchased Pick 3 Day tickets purchased them either weekly or monthly.  Thus, lottery ticket buying is a not a one-stop-shop situation, but a habitual process that plays on the psychology and wavering moods of individuals.

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Proponents for state lotteries, like legislators and small business owners who benefit from steady sales, advocate that the lottery revenues are used to build and improve public school systems.  However, recent studies suggest that only partial amounts of lottery revenues fix state budgets, but do not allocate any extra resources to education.  Even if we capitalized educational systems with lotteries, aren’t we just dismissing poor peoples’ need for more responsible living and hoping that future generations will be more educated?  Educated enough not to… well, you get my point.

Scratch-off tickets are shiny and elusive.  In the bland convenience stores that inundate blue-collar neighborhoods, the 7-Elevens and Wawas of America, lottery tickets are the holographic pieces of paper that dangle behind the clerk counters.  For the tired, poor, minimum-wage earner who drops by for a soda and butterscotch Krimpet cake, they sure hold a lot of mystique.

My proposal?  Abolish the lottery system.  Eliminate another economic black hole.

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3 thoughts on “The Not-So-Golden Ticket

  1. To me, state lotteries are taxes wrapped in a candy coating. I agree with you that they end up being a regressive tax- that is, one that hits those less well-off.

    If ANY politicians went to the kinds of demographics you discuss who buy more lottery tickets and suggested a $200 a year tax to improve education, they would be laughed at, at the best.

    But, once the faint glimmer of out-sized rewards shines in our eyes, that same tax now looks like a delicious irresistible opportunity.

    At the same time, some part of me feel like if people are given the information about lotteries and how crappy the pay off is, and they STILL choose to buy them, well, you can only do so much to protect people from their own mistakes.

    But overall, you are right, we are better off without them.

    I wonder if anyone has studied them from an efficiency view point. In other words, are the total costs fo running the lottery less or more than the costs of administering a normal tax.

  2. Ever since I heard a fact stating that you are more likely to be hit by lightening than win the lottery, I have not had much confidence in the lottery system. It is sad that most revenue going towards lottery tickets come from people who can’t really afford it (or their money would just be much better off being put to a different use). People hope that by spending a few dollars for a lottery ticket, they might win big–but the chances of this occurring are just so small. And you hear stories about people that have actually won the lottery not being able to adjust to the radical lifestyle change and how they blow through their money right away. I do think that people would be better off without the temptation to purchase these lottery tickets, but I also agree with Professor Comas–people know the statistics and choose to buy tickets anyways. It’s their choice, who are we to stop them?

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