Gambling - to whom does a lottery pay?

Gambling – to whom does a lottery pay?

June 20th 2005

The state-sponsored lottery probably is not at the top of my list of moral issues. Like many other moral concerns: alcohol, tobacco, sex, food (yes food), you name them, for most people their use in moderation is a desirable virtue. However, truthfully, tobacco could not qualify for the temperance rule. Usually, when a problem develops, that is an addiction, it’s because of entrenched psychological problems and not the product itself. But to be perfectly honest, it is the addictive chemical content that hooks some on the first few times of use in an abusive entrapment. Maybe that’s more the reason some of our parents taught us that teetotalism was the best rule. But then to be a teetotaler might not be advisable in the case of food and sex. Beside the ethical issues of a lottery, not setting a honest example in government, my concerns go even greater to what I believe is an inefficient and nonproductive way to raise money for education. My late friend Evander Simpson who was a Democrat, a staunch supporter of public education and a supporter of Governor Easley, said the Governor was wrong on the lottery issue.

Our two Johnston County State Representatives, Daughtry and Langdon, voted against the lottery bill that has been forwarded to State Senate. Now it’s your opportunity to inform our Senator Fred Smith (Johnston and Wayne Counties) of your wishes: http://www.ncga.state.nc.us/gascripts/members/viewMember.pl?sChamber=Senate&nUserID=109 If you reside in another county just click on the following link to get your county and senator’s e-mail address: http://www.ncga.state.nc.us/gascripts/members/memberList.pl?sChamber=Senate


A message from The United Methodist Church:Subject: Request from Bishop
Pastors are being asked to encourage congregation members to be in contact with senators and voice opposition to the lottery in North Carolina. Bishop Alfred Gwinn asked that this request be sent in hopes pastors will share it with churches this weekend. The NC House, by a 61-59 vote, approved a lottery bill this week. It is now in the hands of the Senate for action. Senators should know that United Methodists oppose the lottery.

The United Methodist Church has a long history of opposition to gambling. Our Discipline says "gambling is a menace to society, deadly to the best interests of morals, social, economic, and spiritual life, and destructive of good government." A lottery will prey on the poor and is an unfair tax. Please voice your concern and ask your members to do the same. To find out how to contact your senator, click on Senate and then click on the individual’s name for address, phone number, e-mail. (If you have a problem with the links, go to http://www.ncleg.net/.)

Following is an excerpt from the full article from NC Council of Churches: http://www.nccouncilofchurches.org/

Reasons for Opposition

There are a host of reasons for opposing a state lottery. The reasons are not new, though some of the supporting evidence is. The following is a “cafeteria line” of reasons. Some may be more important to you than others; you may not even agree with all of them. But the diversity of reasons grows out of the diversity of lottery opposition.

Gambling is wrong, and the lottery is one form of gambling. This is actually the position of the state of North Carolina right now. Gambling is illegal, and there are criminal penalties for engaging in gambling activities, including numbers games that are really privately-operated lotteries. (A small exception has been carved out for non-profit bingo and raffles and for small-prize beach bingo.) If a lottery were to be adopted, the General Assembly would have to exempt the state lottery from existing criminal laws regarding gambling, but those laws would still remain on the books. In fact, H 493 contains just such a provision.

Regardless of what is said, lottery revenues don’t necessarily help education. The pattern in other states has been that funding from the state’s budget drops about as much as lottery revenues provide to a dedicated purpose. In other words, if lottery revenues are dedicated to education, the legislature then fails to increase budgeted spending for education. The result is that, a few years later, education is no better off financially than it was to begin with. This frees up money in the state’s budget for other uses, which may or may not be worthwhile, but are almost certainly not as popular as education.

A complex mathematical analysis reported in the Winter 1997 issue of State and Local Government Review (published at the University of Georgia) concluded:
In the years following the initial use of the lottery, the rate of growth in education spending declines. . . . This study indicates that states without lotteries actually maintain and increase their education spending more so than states with lotteries. . [C]itizens should recognize that claims that lotteries will improve education funding are likely to be as misleading as their odds of winning those lotteries are meager.

Lottery income also can erode public support for school funding. Before there was a lottery in Florida, voters approved 21 of 22 bond issues. Afterwards, only 3 of 15 bond issues and tax increases for education have been approved. One study of Florida voters who voted against a local sales tax increase for schools found that 80% gave the same reason for being opposed: the availability of the lottery. The St. Petersburg Times noted in 2003, “The lottery provided the Legislature an excuse to take away from education. While lottery dollars came in the front door, the Legislature took away dollars out the back door. Besides the loss of budget share, the Florida Lottery has a secondary bad effect – it has added to voter reluctance to support other ways of increasing school funding.”

Lotteries prey on poor people. People in poverty are perhaps most vulnerable to the appeal of a lucky payoff; they are also those who can least afford the 50% loss which is suffered by players taken as a whole. (Remember, only 50% is paid back as prizes.)

The evidence on this point is incontrovertible. It is consistent over time and in various states. Early research showed that there were many more lottery outlets in poor neighborhoods, with a decreasing number of outlets as the economic status of the neighborhood rose. Later research showed that poor people spend a greater percentage of their incomes on lottery tickets than do those in higher brackets. Additional research now indicates that poor people are spending more per person in absolute dollars (not just as a percentage of income).

For example, Michigan’s Booth Newspapers found that per person sales in inner city Detroit were three times higher than per person sales in the suburbs. The Atlanta Constitution, reporting on the Georgia lottery when it was relatively new, found similar results: In ZIP Codes with average household incomes over $40,000, average annual per person sales were $97. In ZIP Codes where the average income was under $20,000, average per person sales were $249.

More recent data are consistent with these earlier findings. In Lexington, Kentucky, 79% of the money spent on lottery tickets in 1997 was spent in ZIP Codes where per person incomes were below the county average. Similarly, 47% of Maryland’s most frequent lottery players come from households earning less than $20,000 a year.

The National Gambling Impact Study Commission, set up by Congress during the Clinton administration, found that the poorest lottery players not only spent a larger percentage of their incomes, they spent more in actual dollars. Those with household incomes under $10,000 spent more per person ($597) than those with incomes from $10,000 to $24,999 ($569) and considerably more than those with incomes of $25,000 to $49,999 ($382), $50,000 to $99,999 ($225) and over $100,000 ($196).

Lottery proponents say “So what?” Some even go so far as to say that concern for the impact of the lottery on poor people is paternalistic. (“Poor people are capable of making their own decisions. If they choose to waste their money on lottery tickets, that’s their right.”) This argument ignores at least three factors: 1) The state has already made the determination that gambling is a bad thing for everybody. That’s why it is against the law. 2) The role of the state vis-à-vis its poorer citizens has historically been to lend a helping hand, through education, cash assistance, food stamps, housing assistance, and other programs. The role has not been to sucker them into wasting their money on foolish spending. 3) The impact of advertising changes the role of the state from one of neutrality to one of manipulation.

Millions of dollars of advertising will be used to convince all citizens that a lottery ticket could be their ticket to Easy Street. Earlier lottery bills would have permitted advertising costs up to 4% of total revenues. Thus, if the lottery were to take in $1 billion annually, which proponents claim, the state could spend $40 million in advertising. To put that in perspective, spending by the Burr and Bowles Senate campaigns last year totaled $26 million. That’s for entire campaigns, including staff salaries, consultants, etc., not just for advertising.

And what is the content of these ads? A lottery billboard in a Chicago ghetto proclaimed, “This Could Be Your Way Out.” A TV ad in Connecticut included someone saying, “When I was younger, I suppose I could have done more to plan my future. But I didn’t. I guess I could have put some money aside. 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 for twenty years. And I did! I won!” An announcer intones, “Overall chance of winning is one in thirty.”

States are not subject to federal truth-in-advertising laws and regulations. They are free to deceive and mislead in a way that businesses could not.

Look, too, at the timing of these ads. An advertising plan for the Ohio SuperLotto advised: “Schedule heavier media weight during those times of the month where consumer disposable income peaks. . . Government benefits, payroll and Social Security payments are released on the first Tuesday of each calendar month.”

Lotteries unfairly benefit the not-poor. As if it weren’t bad enough that the state would be using misleading and dishonest advertising to convince poor people to waste their scarce financial resources on lottery tickets, research indicates that those benefiting from lottery revenues are disproportionately not poor. For example, Booth Newspapers found that Detroit residents contributed $104 million to Michigan’s school aid fund through their lottery purchases. But the Detroit public schools received back only $80 million from that fund. The remaining $24 million ended up with other, wealthier school districts.

The New York Times noted in 2001 that “[Georgia’s HOPE] scholarships represent an enormous transfer of money–$1.2 billion since 1993–from lottery players, who tend to live in the poorest counties of the state, to 504,000 college students, who come from the wealthiest counties.”

Lotteries give compulsive gamblers easy access to the object of their compulsion. A 1999 study by the National Opinion Research Center at the University of Chicago concluded that that there are 5½ million pathological or problem gamblers in our country, with another 15 million at risk. A companion report by the National Research Council estimated that 1.8 million American adults and up to 1.1 million adolescents age 12 through 17 engage in severe pathological gambling each year. While this addiction may not be as visible as that of alcoholics or drug addicts, it can be just as devastating.

A 1995 study of compulsive gamblers found that:
  34% had lost or quit a job because of gambling.
  76% had missed time from work.
  44% had stolen from work to pay gambling debts.
  21% had filed for bankruptcy.
  18% had had gambling-related arrests.
  16% said they had divorced because of gambling.
  16% had attempted suicide.
  66% had contemplated suicide.
  79% said they wanted to die.

For compulsive gamblers, nothing could be worse than making the object of their addiction as convenient as the check-out line at the grocery store and then bombarding them with millions of dollars of slick ads.

As suggested by the National Research Council study mentioned above, the problem of gambling and gambling addiction is creeping into younger age brackets. Studies now indicate that the rate of compulsive gambling among teens is two to four times higher than the rate for adults.

A lottery sends mixed messages about how people should get ahead in life. Our society, using ideas as old as the Bible, has taught the importance of hard work, education, frugality, and saving as the avenues to a “good life.” The lottery says, “Forget about all that, and buy a lottery ticket.” How ironic that the benefits of a lottery are supposed to be for education!

A lottery reduces consumer spending on other goods and services. The lottery doesn’t create any new money. It merely reallocates how money is spent. A dollar spent on a lottery ticket is a dollar that can’t be spent on new shoes, groceries, restaurant meals, movie tickets, charitable contributions, or any other discretionary spending. A study in the Tidewater area of Virginia proved what would seem to be self-evident: consumer spending dropped by an amount roughly equal to lottery ticket sales.

The lottery creates a new tax, with a very high tax rate. It is ironic that legislators tout the lottery as an alternative to raising taxes and that many in the public are gullible enough to buy that argument. Supporters say that the lottery is not a tax because paying it is not mandatory. But the lottery tax is like the excise tax on cigarettes or beer. You can choose not to buy those products, but once you have chosen to make the purchase, you have no choice about paying the tax. The rate of taxation would be set by the General Assembly and would be that part of lottery revenues which go for state purposes (such as education). In most NC lottery bills, this rate of taxation is 34%.

How sad that legislators (and the public at large) are not willing to pay for needed programs through a fair and equitable tax structure but prefer to impose a regressive tax that falls most heavily on those who are poor and those who are addicted!

Local option is just another gimmick in the ongoing search for legislative approval. Because a county’s take from the lottery would be based on sales in that county, the local option lottery would pit counties against each other. In the end, the largest counties would end up with most of the counties’ share, even though local-option supporters are currently targeting small counties. In addition, as local governments have learned in recent years, their share of lottery money could be taken away in future years if the General Assembly and the Governor wanted it for something else. Finally, counties, which together would get less than $100 million, would suffer a loss of local sales tax income because of money diverted from other purchases to lottery tickets. The NC Budget and Tax Center has estimated that local governments could lose about $13 million in annual revenues.

Some will argue that a local option lottery would be like local option alcohol sales. However, it is important to note that the state doesn’t advertise alcohol sales or encourage people to “buy a fifth to help the schools.” In addition, as long-time followers of local option alcohol laws know, there will end up being a host of “creative” ways around counties which don’t want to play. ABC laws now include special provisions for tour boats, recreation districts, residential private clubs, interstate interchange economic development zones, national historic landmark districts, small cities, small towns, ski resorts, small resort towns, townships, beautification districts. . . Well, you get the picture.

Supporters’ Arguments

Lottery supporters make only two arguments:

1. The lottery would provide needed money for the state. Proponents claim that the state would net at least $340 million in the first year of operation. While $340 million is not to be sneezed at, it should be remembered that the state’s General Fund budget for FY ’05-’06 will be about $17 billion.

2. We’re losing too much money to adjacent states with lotteries. Proponents claim that North Carolinians spend $300 million annually on lotteries in the border states.

But, keep in mind three things. First, assuming that North Carolinians win lotteries as frequently as residents of the other states, $150 million of that money is coming back to our state as winnings.

Second, if North Carolina starts a lottery, it will contract with some corporation to handle the operation of the lottery. In other states, these contracts have been for tens of millions of dollars. The Las Vegas Review-Journal reported in 2003 that a Nevada corporation hoped to contract with Tennessee for “$200 million or more” to set up and run that state’s new lottery. None of the companies running lotteries is located in North Carolina, so that money would go out of state just as surely as the money lost to the Virginia lottery.

Third, the argument about neighboring states is a two-edged sword. If North Carolina gets into the lottery game, it will still have to compete with those states for players, competition that would require more advertising and larger prizes, both of which could reduce the state’s anticipated lottery revenue. Residents of Charlotte will still go to South Carolina for lottery tickets if they think the SC lottery is a better deal or more fun to play. South Carolina bought into the lottery because of concern about lost sales to Georgia, only to see people on the border continue to play the Georgia lottery for its higher jackpots.

The Lottery and the Bible

There is no verse in the Bible that says, “Thou shalt not have a lottery.” But this is not to say that the Bible lacks guidance on the question of state-sponsored gambling. Consider the following Biblical teachings:
  ultimate and complete trust in God, not in anyone or anything else, including Lady Luck.
  concern for the poor and condemnation of the rich who take advantage of the poor.
  protection of vulnerable people. In biblical times, that meant especially widows, children, and immigrants.
  condemnation of greed and materialism.
  concern for healthy families, strong marriages, and well-nurtured children.

Even without a “Thou shalt not gamble” verse, there is ample reason for people of faith to oppose a state-sponsored, state-advertised, state-benefiting lottery.