Lotteries are Losers

PUBLISHED: October 12, 2012

The precocious talking baby in E-Trade commercials offers sage advice about state-run lotteries: "Your chances of winning,” he tells a delusional adult friend, “are the same as the odds of you being mauled by a polar bear and a regular bear on the same day."

I thought of that on a recent evening as I watched the long line of sad souls at a 7-Eleven store in the older, less affluent West Side of Alexandria, Va., waiting patiently to kiss their money goodbye on the lottery. It stuck in my mind because the previous day I saw an almost identical scene at a variety store on a rundown stretch of Route 59 in Nanuet, N.Y.

In Maryland, the newspaper I picked up said the state is about to begin selling lottery tickets on the Internet. Driving up and down the Northeast corridor, I heard incessant lottery commercials like the one in New York that promised “Tahitian sunsets,” and another that claimed with a big win you could finally “be your own boss.”

There's nothing new – or, in my opinion, good – about lotteries. But these days, with many state governments strapped, and so many of their residents hurting, it's a perfect storm.

The arguments haven’t changed much since New Hampshire became the first state to run a lottery back in 1964. The view among supporters is that people will gamble if they want, so government might as well reap the profits. Besides, the money goes to good causes, usually education, which would otherwise require funding through higher taxes.

Currently, 43 states run lotteries, with annual wagers totaling about $55 billion.

I’ve never been keen on lotteries. The odds of winning are worse than virtually any bet you could make in a casino. But on a more fundamental basis, I don’t think government should be in the gambling business. Moreover, state-created advertising for lotteries is shameful – preying on the vulnerabilities of those desperate for a financial fix. New York State spends roughly $50 million every year on ads to lure people into the game.

Online lottery sales, launched this year in Illinois, raise the stakes on this dubious government gambit. Interestingly, the primary opposition to Internet lottery sales comes not from concerned citizens, but from retailers who fear that electronic marketing will cut into in-store business.

After Illinois, Georgia approved online sales, and several more states are rushing to embrace it with the fervor of addicted gamblers. It's possible because the U.S. Justice Department last year reversed itself, saying the national Wire Act of 1961 applies only to sports betting.

Georgia is the worst “sucker state” for lottery players, according to Bloomberg News, which weighed pay-offs against odds as well as average state income. Georgia even has its own debit card cunningly named iHope, which can be used for both in-store and online lottery purchases.

Several studies confirm that state lottery revenue comes disproportionately from lower-income residents. Lotteries allow governments to take advantage of the very citizens they should be striving to protect.

It’s too late to put this genie back in the bottle. States will never give up lottery revenue – certainly not in these crushing economic times. But responsible legislators should proceed with caution when it comes to online sales.

Over the summer, Delaware became the first state to authorize online casino-style gambling. “If you stand still, you’ll lose ground,” Delaware’s lottery director, Vernon Kirk, told the Wall Street Journal. He’s referring to the fact that although lottery revenue is growing in most states, the number of new players is not. Kirk and other bureaucrats see the Internet as a tool for attracting customers who have never purchased a lottery ticket in a store.

Lottery commercials all end with a wink and the throwaway line: “Play responsibly.” State legislators probably don’t listen to their own ads, and they’re hoping their customers don’t either.

(c) Peter Funt. This column was originally distributed by the Cagle Syndicate.

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