Lottery
Observe the cash register line at any state lottery agent the days before an unusually large jackpot, and you will get some idea of the popularity of this form of government fundraising. Some call it a state-sponsored vice, and others believe it is a regressive and voluntary tax on the poor. Still millions of people across the United States and around the world line up to play Lotto, Quik-pick, Power Ball, Keno, Quinto, and Pick 3, 4, or 5 and purchase a chance to change their lives.
Though the current wave of lotteries began in the 1960s, the lottery is not a new method for governments to raise money. In the late eighteenth and early nineteenth centuries, it was common for government and other institutions to sell chances to win prize money in order to fund specific civic projects. In the early 1800s, Boston's Faneuil Hall was refurbished with funds raised by a lottery.
When state governments began to hire private companies to administrate their lotteries, the door opened to fraud. It was not long before the lottery seemed to be irretrievably corrupt, and by the late 1800s it was illegal in every state in the union.
Outlawing lotteries did not make them disappear, however, but sent them underground, where organized crime took over. Numbers games—high-odds betting on an unpredictable series of numbers, such as sports scores—became a regular form of entertainment, especially among the urban poor. It was an effort on the part of the state to reclaim some of the income going to the mob that prompted the states of New York and New Hampshire to start their own lotteries in the 1960s. Excited by the idea of millions of dollars in new income, voluntarily supplied by citizens to the state's budget, 11 states started their own lotteries by 1975. By the late 1990s, there were 38 state lotteries in the United States and 68 international lotteries. In the United States alone, the total lottery earnings for 1996 was 35 billion dollars.
The justification for holding state lotteries is that lottery profits are intended to be spent on education and other underfunded public entities such as parks. However, schools have not seen the windfalls that lottery proponents promised. Indeed, most states with lotteries have reduced school budgets to account for the extra income that the lottery is intended to provide, and some school districts report that education bonds became harder to pass because of the public perception that the schools are getting rich from the lottery. Only 34 cents of each dollar spent on a lottery ticket actually goes into the state budget.
One reason for this is lottery advertising. Since the federal ban on advertising state lotteries was lifted in 1975, many states have huge lottery advertising budgets and run aggressive campaigns to sell their lotteries to the public. Since these ads are run by government agencies, they are not bound by truth in advertising regulations that bind commercial businesses. A few states, such as Virginia, require that the actual astronomical odds be stated clearly in each ad. Many, however, are free to state odds for the smallest prize, such as a free ticket, while advertising the multimillion dollar jackpot. Though lottery officials like to promote the lottery as entertainment, not gambling, many of their ads are directed to the poor. The Illinois lottery put an ad on a billboard above a poor Chicago neighborhood with the slogan, "This could be your way out." What they did not say is that the odds of winning the lottery can be as much as 20 million to one, ridiculously higher than the casino slot machine odds of 20 to one.
Adding to the problems of the state lottery is the fact that, once again, most lotteries are being contracted to private companies to run. There are several companies that run the U.S. lotteries, including Gtech, Scientific Games, Automated Wagering International (AWL), and Video Lottery Technologies. Of these, Gtech is by far the most powerful, with contracts for 26 U.S. lotteries and 41 international lotteries. Like the private lottery companies of the nineteenth century, Gtech has a reputation for ruthless and corrupt business practices and is constantly the subject of rumors that it uses illegal means to obtain its lottery contracts and break its competition. In 1996, Gtech executive J. David Smith was convicted of fraud, bribery, conspiracy, and money laundering in a New Jersey lottery kickback scheme.
There is, perhaps, nothing more American than the desire to get rich, and the many state lotteries.gamblingm to offer a chance at this most material pursuit that is inherent in the American dream. However, many view the lottery as no more than state-sponsored gambling. The profits invite corruption, and the misleading advertisements invite a disproportionate number of poor people to trade their money for a long shot at becoming one of the privileged few. Even lottery winners have their complaints. Lottery winners often lack experience in dealing with large sums of money, and they encounter envy and hostility from friends and coworkers and are preyed on by swindlers. Many lottery winners, interviewed years later, report of having lost friends, having become estranged from family, and having spent the money too quickly.
Further Reading:
Clotfelter, Charles T., and Phillip J. Cook. Selling Hope: State Lotteries in America. Cambridge, Massachusetts, Harvard University Press, 1989.
Elkind, Peter. "The Numbers Crunchers." Fortune. Vol. 134,No. 9, 184.
Geary, Robyn. "The Number Game—State Lotteries: A Ticket to Poverty." The New Republic. Vol. 216, No. 20, 19.
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