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The lottery is a big business, and states have every incentive to promote it. The problem is that they also have a lot of bad habits to get out of, like telling voters it does so much good. This is what makes the lottery so dangerous, and why it’s time to change things.
Across America, state governments are facing budgetary crises that threaten their ability to deliver basic services without enraging an anti-tax electorate. It’s not surprising, then, that more and more are turning to the lottery to raise money. But that approach is a mistake, as Andrew Cohen writes in his new book, “Official Lottery.” In fact, it’s one of the most dangerous public policy ideas of our time.
In the earliest days of the American lottery, states saw it as a budgetary miracle, the chance to make revenue appear seemingly out of thin air. The founding fathers were fans, too: Benjamin Franklin ran a lottery to help build Boston’s Faneuil Hall; John Hancock used one to help fund his militia; George Washington’s lottery was meant to fund a road over Virginia’s mountain pass, but that project didn’t work out.
But as the lottery’s popularity grew, problems began to creep in, including corruption and bad management. In the 1800s, for example, Denmark Vesey won a Charleston lottery and used the proceeds to buy his freedom, a move that triggered the same moral and religious sensibilities that led to prohibition of gambling.
These concerns were compounded when the wildly successful Louisiana State Lottery Company—whose corrupt practices and advertising campaigns were so widespread that they threatened national security—was allowed to operate nationwide, sending advertisements by mail and selling tickets by phone. Ultimately, these sleazy tactics would bring about the first federal ban on the interstate promotion of state lotteries.
In recent years, lottery campaigns have gotten more sophisticated, but they’re still fundamentally misleading. For starters, they wildly inflate the impact of lottery funds on state finances. In California, for instance, a high-profile campaign promised that lottery revenues would cover five per cent of K-12 education spending—but they only provide about one per cent.
It’s true that lottery proceeds are used to support various government programs, but these benefits are a drop in the bucket in terms of overall state revenue. When you consider that the average ticket costs $1, it’s hard to argue that the lottery is helping the poor. Instead, it’s merely distracting people from more important needs. And it’s masking an even more damaging truth: the lottery is a regressive tax on those who can least afford to pay it. And that is a shame, because the only way to break this pattern is to stop treating it as a civic duty and start treating it as a commercial enterprise. By doing so, we can change the way we think about and use our taxes.