Lotteries: The Regressive, Oppressive Tax

August 20, 2012 § 8 Comments

One of the top stories in the US this week was the Mega Millions Lottery.  This state sponsored lottery is the largest of its kind in the US.  It spans a collection of states and its jackpot increases with each week that yields no winner.  So, this week the jackpot exceeded $300 Million and every major media outlet picked this up as a major news Imagestory, showing the frenzy of ticket buying while publicizing this jackpot as an exciting chance for some lucky future winner(s).  Just two months ago the media frenzy was even more frenetic as the jackpot exceeded ½ $Billion.

Heart Breaking News

This phenomenon of government sponsored gambling is troubling for the future prospects of general societal health and overall economic conditions.  While defenders of the lottery will argue that it’s a voluntary tax, the real wealth redistribution that occurs with lotteries is regressive.  What this means is that lower economic classes pay a higher proportion into the tax and yield a lesser benefit.  So, while the state may yield significant revenues from their lottery systems, the net impact on the general population is detrimental.  The working poor, lower middle class, middle class and senior citizens make up the vast majority of ticket buyers; some spending more on lottery tickets than on essentials.  The impact is not just on the individuals who buy the tickets, but on the families they support.  Children go without enough food while a parent continues to hinge future dreams on a lottery jackpot.  ImageWhat’s most egregious is that the lotteries are state government sponsored institutions and media outlets fuel demand through coverage.  Every major network morning show including ABC, NBC, CBS, FOX, and CNN recently aired this story with anchors saying they got their ticket and how exciting this all is.  Really?!  Is that what our news outlets have been reduced to?!  They are clearly acting as a platform for hawking worthless paper that effectively serves to bilk the lower economic classes of our society.  This practice is not unlike other legal practices such as predatory lenders (payday loans, auto title loans), pawn brokers, and not so legal enterprises such as loan sharking. 

 

Special Interests Trumping Public Good

I recently met with a public administration consultant who has worked nearly 40 years as town manager for several towns in New England, in municipal banking; consulting municipalities on business operations, financial management and negotiations.  His stories are incredible – anecdotes of collective bargaining agreements with labor unions, political arm wrestling with councilmen (board selectmen) and outright corruption on permitting and development contracts.  In an effort to protect the innocent, I won’t mention any names or exact places.  One such story of corruption he recently shared with me involved the development of a Massachusetts casino on non-native American land.  Powerful developer interests and local government tax interests push new laws that reject previous statues to keep gambling only on Native American lands. 

 ImageThe motivation for political leadership to support casinos is perhaps obvious as it can lead to new net jobs and increased tax revenues.  As the US becomes increasingly tolerant of gambling and casino activities, it is now tolerating exceptions to previously established boundaries that had kept gambling establishments on the periphery of large population centers.  To see how accepted gambling has become, one needs only to turn on any of a number of cable networks to see televised gambling such as World of Poker televised as a sport on ESPN, replete with “stars”; or visit casinos on Native American land in or near most every metropolitan area.  In Arizona, the pitchman for a local Indian Casio is the broadcast announcer for the Arizona Diamondbacks. 

 

A Public Gambling Addiction

The damage that gambling causes to the economically weak in American society is growing.  Local and state governments with large budget shortfalls become increasingly desperate to find alternative revenue sources.  Not only have state governments created policy that encourages gambling and sponsored lotteries, but also has managed to influence our news outlets.  The result is an entire generation of citizens sees gambling and lottery dreams as part of the American dream.  Shots in the dark, needles in haystacks, pies in the sky fantasies have replaced messages to young citizens that education, hard work, ingenuity, and family commitments are values to pursue.

 It appears that other states are likely to copy the acts of Massachusetts and allow greater integration of gambling activities in common public places.  With greater access, public promotion and celebrity endorsements, the great division of wealth that already plagues US society will only increase.  The most vulnerable are children who are dependent on parents or other caretakers who indulge in lotteries and gambling.  Their suffering is real.  One in five American’s are impoverished.  State sponsored lotteries and gambling is an epidemic in the US and leadership continues to take the easy political path rather than deal with the harsh realities that such policies are having on future generations.

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§ 8 Responses to Lotteries: The Regressive, Oppressive Tax

  • mike says:

    I would be interested to see the trail of money as it travels from the hand of the ticket buyer and is divided in to its various destinations.

    • rspeck65 says:

      Now that WOULD be something. Unfortunately, these revenues become general fund monies in nearly all cases without commitments to fund social programs.

  • fake1 says:

    What’s the price of hope?

    I doubt many families put lottery tickets in front of family needs, Any extreme behavior will be destructive to a family, but moderate playing of the lottery could give a sense of hope in the same way a young healthy man buying life insurance gives a family a sense of security.

    Do you have any numbers on percent of family income middle and lower class spend on lottery and gambling?

  • David says:

    Rob
    I like the article, but how is the lottery system different than alcohol?
    We don’t ban liquor because some people are addicts (tried it once and I was a complete failure),so isn’t gambling the same?
    We allow people the freedom to participate at will. Are you suggesting a “prohibition” on gambling?

    • rspeck65 says:

      Thanks for the note, Dave. To be clear, I’m not suggesting a prohibition on gambling; rather a prohibition on state sponsorship and public promotion of gambling including the lottery system. As a soiciety we have many substances and vices that are legal, but we know they are not good for us, such as alchohol and tobacco. The objection I have is with news outlets promoting the lottery system and the illegal, corrupt proliferation of casinos and other gambling devices (slot machines) into public spaces. We keep tabacco companies from promoting cigarettes to children or on television. We used to keep alchohol from being advertised on television until recently. It’s not without precedent that we restrict and regulate how vices are promoted in our society, so why do we see no harm in allowing our government to promote and sponsor activities that make our poorest even poorer?

  • Just to add: I was poor and we won. I don’t believe you expect to win the lottery when you buy the ticket but people do win and often they are poor. The fact this is changing one person’s life, and their family’s, is something that should be considered. I’m just adding this to let you know that poor people actually do win the lottery every day. Put yourself in their shoes or mine, if you like.

    • rspeck65 says:

      Gaston… thanks for the comment. Yes, it’s wonderful for the few winners; that cannot be denied. The issue I have is the false hopes that are spread by public institutions (including the media) and the damage it causes the millions who never win. For every one of you (a winner) there are millions who didn’t win and will never win.

      I’m curious to know: how long had you been playing the lottery (ie: number of years)? How much did you spend on lottery tickets per week and how much did you earn per week? Also, if you really didn’t expect to win, why did you keep playing?

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