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3 Reasons State Lotteries Are Fiscal Madness

3 Reasons State Lotteries Are Fiscal Madness
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Wednesday, 28 October 2015 10:24 AM Current | Bio | Archive

If we must pay taxes, they should at least be fair and not hurt people. State lotteries fail both tests. That makes them particularly evil.

Lotteries sound like an ideal tax — in theory. They are voluntary, they raise big bucks, and states don’t need a huge bureaucracy to administer them.

People have fun playing the lottery. Every once in a while, some lucky person strikes it rich. What’s not to like?

I’ll give you three reasons state-run lotteries are wrong … plus a bonus reason at the end.

Reason 1: State lotteries compete unfairly against private businesses. Gambling is a huge industry employing thousands of American workers. The casinos and their workers provide multiple gambling opportunities for those who wish to indulge.

Legal private casinos already have to comply with stringent regulations. Having done so, the least government could do is not compete against them for the public’s gambling dollars. This is unfair to both casino owners and their employees — particularly when state lotteries exempt themselves from the rules private casinos must follow.

Reason 2: State lotteries prey on the poor and uneducated. Multiple studies show the prime lottery customers are low-income, often minority and unemployed people. The people who can least afford to lose their money are those who lose the most.

Make no mistake: they do lose their money. Lottery officials trumpet their big winners, but don’t tell anyone about the untold millions who lost in the process. You are far more likely to be struck by lightning on your way to buy Powerball tickets than you are to win the jackpot.

Lotteries are essentially a tax on people with poor math skills. It is a mathematical fact that the more you play, the more money you will lose. Lottery players don’t know this because the public schools failed to teach them. The money they lose pays those same schools to produce a new generation of lottery players.

In Illinois, the state is plumbing new lows by stiffing the randomly lucky people who do win the jackpot. Yet people are still playing. What does this tell you about their mental condition?

Reason 3: Lotteries promote shortsighted, get-rich-quick thinking. Many players are desperate for money and grasping at faint hopes. A recent Maine study found a direct correlation between rising unemployment and higher lottery sales. Scratch-off ticket sales jumped 10 percent for every percentage point increase in joblessness in a given ZIP code.

The lottery takes people who are already poor and dependent, and makes them poorer and even more dependent. Other taxpayers end up paying for their lottery losses via higher welfare spending.

If we want public policy that encourages people to get off welfare, the lottery is not helpful. It is counterproductive. People convince themselves the lottery will save them when they should be getting more education and better jobs.

(Bonus) Reason 4: Lotteries are very effective revenue generators for state governments. What do states do with their lottery revenue? Nothing good. That’s in part because lottery losers do not demand that the loss be spent wisely.

Giving more money to the government with no accountability to voters or taxpayers is foolish. Bureaucrats will blow it on boondoggles, pay off their friends or use it to oppress people.

This is madness. Giving the government more money to play with makes no sense. We should be starving the beast, not feeding it extra calories.

Stop the lottery. If you can’t stop it, at least don’t play. You can find cheaper entertainment and better odds — elsewhere. 

Patrick Watson is an Austin-based financial writer. Follow him on Twitter @PatrickW

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Giving the government more money to play with makes no sense. We should be starving the beast, not feeding it extra calories.
lotteries, state, government, money
Wednesday, 28 October 2015 10:24 AM
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