Posts tagged with: lotteries

Blog author: jballor
posted by on Tuesday, July 3, 2007

The National Center for Policy Analysis (NCPA) has published a paper titled, “Taxing the Poor: A Report on Tobacco, Alcohol, Gambling, and Other Taxes and Fees That Disproportionately Burden Lower-Income Families” (PDF).

The paper highlights state lotteries as particularly regressive taxes: “The dollar amount spent on the lottery by the lowest-income individuals (earning less than $10,000 annually) is twice as much as the highest earners (earning more than $100,000 annually).” I wrote a piece reacting to a poll with a similar finding awhile back.

The NCPA study also points out that “lotteries have worse odds than other forms of gambling; in fact, states retain some 33 cents of each dollar of lottery revenue — whereas privately owned casinos keep just 4.4 percent of the take.” And of course that casino take depends on the type of game played. Keno has the worst odds, with roughly 1/4 of the take going to the house, while games like roulette, slots, or blackjack have less than 5% house takes.

The paper also studies other popular sin taxes, like tobacco and alcohol, and one of the newest potential additions to the sin tax category: gasoline.

Blog author: jballor
posted by on Wednesday, February 14, 2007

In this week’s Acton Commentary, I examine the most recent buzz-worthy trend in the lottery industry: privatization.

While most critics of these moves have pointed to the foolhardiness of selling off a long-term income stream for a lump sum jackpot, I argue that privatization by itself does nothing to address the underlying problems afflicting the lottery business. I conclude, “A government-run monopoly would merely be replaced by a government-enforced monopoly.”

And as I’ve claimed previously, government reliance on lotteries as a morally praiseworthy generator of income is illusory. UPDATE (HT: Mere Comments): Here’s a bit from the abstract from a recent article examining lottery trends from 1976-1996: “One of the most important policy-oriented determinants of income inequality is the lottery and a significant portion of the increase in income inequality over our two-decade time period is attributable to the increasing prevalence and popularity of state lotteries” (Elizabeth A. Freund and Irwin L. Morris, “The Lottery and Income Inequality in the States,” Social Science Quarterly 86 [December 2005 Supplement]: 996-1012).

The newest incarnation of the Michigan Lottery’s attempt to sell the industry as contributing to the common good describes the lottery as a thread running through all sectors of society, connecting everyone in a single bond of community. Is it really true that under a state-run lottery system that “we all win,” or all we all simply trapped in the same web?

Earlier this year the New York Post reported that the expansion of legalized gambling is having a deleterious effect on the ability of non-profits to raise funds through gambling fundraising events (HT: Don’t Tell the Donor).

And now there are some plans in the works to expand lotteries to a whole new level. The UK Telegraph reports that within five years a multi-million dollar worldwide lottery could be put in place.

I actually am quite (pleasantly) surprised that some enterprising young congressperson hasn’t yet been successful in putting forward the idea of a national lottery. Surely the Commerce Clause could be invoked to regulate and nationalize the regional interstate lottery games that are currently underway. The talk about something like No Child Left Behind being an unfunded mandate could be cut off in one fell swoop.

Read the entirety of this week’s commentary here.

Blog author: jballor
posted by on Monday, January 29, 2007

Let’s engage in a little thought experiment. How would you feel about the following scenario?

1) The government bans all activities associated with Industry X because it judges that this industry damages the common good. Industry X is under government prohibition.

2) After enough time has passed and a new generation of bureaucrats has arisen, one of them has the idea of resurrecting Industry X because it has the potential to create new streams of revenue for the government.

3) The government then legalizes Industry X but imposes strict controls, such that the government itself is deemed the only institution responsible enough to administer these activities. We now have a government-run monopoly on Industry X.

4) After initial success, the income from Industry X suffers for a variety of reasons, including competition from private enterprises in competing industries. The government realizes that it cannot run Industry X effectively, and so decides that it must privatize the industry.

5) The government doesn’t want to lose all control of the industry, however. It just wants it to be run more like an effective private-sector business. The government decides to take bids to sell of its interests in Industry X. The winner gets the exclusive right to run Industry X and is protected by a government-enforced monopoly.

At the end of this chain of events, the government has cashed in on years of running its own monopoly on Industry X, and has also gotten a huge windfall in the sale of its monopoly to a private firm.

That industry hasn’t become a real competitive market, however, because the private firm has a government-enforced monopoly on Industry X. It is still illegal for anyone other than that private firm to create a directly competitive business in that industry.

That sounds pretty bad to me. But the reality is that we are between stages 4 and 5 in the lottery industry in America today. States like Illinois and Indiana are considering selling off their interests in running a statewide lottery.

In Illinois, for instance, state officials have seen lottery revenues fall due to competition from other forms of gambling, including casinos and Internet poker.

This has led John Filan, the chief operating officer of the state of Illinois, to come to the following epiphany: “This is fundamentally a retail business, and governments are not equipped to manage retail businesses. Gaming is getting so competitive around the world that we’re worried our revenues could go down unless there is retail expertise.”

Governments are not equipped to manage retail business. What a revelation!

Rather incredibly, however, the criticism of these moves has not come from those worried about the vitality of the market and its advantages. Instead, economists are concerned that states are being short-sighted in selling off long-term income streams for a single short-term payday.

Melissa Kearney, an assistant professor of economics at the University of Maryland says, “It’s unclear exactly what is gained by selling a lottery, except for a huge pot of money that legislators can start spending right away.”

Charles Clotfelter, who teaches economics at Duke University, agrees. And Edward Ugel, author of the forthcoming Money for Nothing: One Man’s Journey Through the Dark Side of America’s Lottery Millions, writes that “Illinois is selling its future in order to fortify its present.”

Nowhere is any concern expressed over the impropriety of a government-enforced monopoly (even less one that is government-run).

If it is true that lotteries are “retail enterprises” that are inherently risky, and that government is ill-prepared to run them and that they should be turned over to those who are “in the risk-taking business,” then the government should legalize lotteries and open up the industry to real competition. A government enforced monopoly of a privately-run lottery system is no solution.

Blog author: jballor
posted by on Friday, August 4, 2006

I just completed an interview that will air this Sunday on the Michigan Talk Network about state-run lotteries and Christian views on gambling for the “Michigan Gaming and Casino Show,” hosted by Ron Pritchard.

The occasion was this piece I wrote awhile back, “Perpetuating Poverty: Lotteries Prey on the Poor.” For more, see also “Betting on Gambling is a Risky Wager” and “Gambling Hypocrisy.”

You can check out the show live on the MLive talk radio feed here (click on “News radio”) at 3 pm on Sunday, August 6. The show will also re-air at 7 pm that same day, and we’ll try to post audio of the interview when it becomes available.

Update: Audio is available here.

Blog author: jballor
posted by on Thursday, July 27, 2006

“All forms of gambling are predatory and immoral in their very essence,” says Rev. Albert Mohler.

I don’t agree, at least insofar as his identification of what makes gambling essentially immoral is not necessarily unique to games of chance: the enticement for people to “risk their money for the vain hope of financial gain.” Stock markets come to mind.

Indeed, as I’ve pointed out before, there is no single coherent Christian position regarding gambling per se. For example, the Catechism of the Roman Catholic Church states, “Games of chance (card games, etc.) or wagers are not in themselves contrary to justice. They become morally unacceptable when they deprive someone of what is necessary to provide for his needs and those of others.” It further elucidates the complications by stating that “the passion for gambling risks becoming an enslavement. Unfair wagers and cheating at games constitute grave matter, unless the damage inflicted is so slight that the one who suffers it cannot reasonably consider it significant.”

I find this to be a rather more nuanced and accurate reflection of the reality of gambling when compared to Dr. Mohler’s blanket condemnation. I’m not convinced, for instance, that weekend poker games are “predatory and immoral in their very essence.” (Well, when I’m involved perhaps they are a bit predatory, but maybe not immoral!)

Even so, we can agree about the basic hypocrisy that comes from the current political state of gambling in America, in which institutional structures are put in place to benefit the government and particular special interests, against the interests of the most vulnerable and potential competitors. The stakes are so high, in fact, that the temptations and possibilities for corruption are staggering (see, for example, the Abramoff scandal).

Responding to a piece on Slate by Jacob Weisberg, Mohler acknowledges that it “is a helpful reminder of the hypocrisy at the heart of the entire gambling issue as handled in our society.”

More here at TCS Daily.

In addition, here is the CRC denominational statement on gambling:

Pastors and church councils are urged to expose all destructive influences on people’s lives that seek to trivialize or render irrelevant the providence of God. They must also caution against the impact of materialism, take decisive action to combat the evil of gambling, and minister compassionately to those addicted to or victimized by lotteries.

And check out this piece from The Banner, “Texas Hold ‘Em – Finding God in Poker,” as well as the responses here under the section, “Gambling and Grace.”

Radley Balko, blogging at Cato@Liberty (he also blogs at The Agitator), writes about the creeping campaign in Washington state to crack down on internet gambling. A new law would impose “up to a five-year prison term for people who gamble online,” but since passage has also been used to “to go after people who merely write about gambling.” Citing an editorial in the Seattle Times, the law prohibits not only online betting but also transmitting “gambling information.”

The legitimacy of the state government’s efforts against gambling are undermined by the fact that Washington state itself runs and promotes a lottery: “It’s good to play.” The motives of the government are clearly mixed…gambling is acceptable but only if sanctioned and promoted by and enriching to the state. It’s when gambling dollars flow out of the state’s borders, or anywhere other than the state’s coffers, that the activity becomes truly troublesome to the politicians.

I’ve written more about the hypocrisy of state-run lotteries and casinos, now combined with other anti-gambling measures, here, here, and here.