I liked this analogy offered in a book review in The Wall Street Journal Thursday about why we so often call lotteries a "tax on stupidity:"
'Imagine a standard NFL football field. Somewhere in the field, a student has placed a single, small, common variety of ant that she has marked with a spot of yellow paint. You walk onto the field, blindfolded, and push a pin into the ground. If your pin pierces the marked ant, you win. Otherwise you lose. Want to give it a go?"
Thus did one mathematician describe the odds of winning a Powerball lottery. Is it any wonder that economists deride state-run lotteries as a tax on stupidity? Bad enough that the government is encouraging gambling; all the worse that it is encouraging such a bad bet.
Thus did one mathematician describe the odds of winning a Powerball lottery. Is it any wonder that economists deride state-run lotteries as a tax on stupidity? Bad enough that the government is encouraging gambling; all the worse that it is encouraging such a bad bet.
You betcha.
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Actually it’s a tax on the arithmetically challenged, and the absolutely quashed and desperate. And don’tcha just love the way state government had ‘reduced’ educational spending to match any state income from the lottery. That analogy, Brad, should be writ large over every outlet for lottery tickets. It’s only when those who regularly buy lottery tickets realize how badly they’ve been had and respond intelligently with their vote that I’ll consider it an “Education Lottery.”
Our state has to know where the money is coming from to fund education through the lottery. I have no idea how they could possibly support it with any kind of conscious.
And if Karen’s comment that the “state government had ‘reduced’ educational spending to match any state income from the lottery” is true (and it wouldn’t surprise me if it was) then I am downright upset at the lack of outrage over the lottery.
I feel that any individual should be able to do as he or she wishes with their hard earned gains. However, it upsets me that the 170 shut down the private sectors purveyors of gambling and almost immediately co-opted the field for themselves.
As long as the terms of the transaction (potential costs, likelihood of success) are made clear to every participant activities such as gambling and “payday” lending as they provide a sought after service
If we must have gambling in any form other than office pools or a friendly game of poker, by all means let it be run by the private sector. The government can then tax the hang out of it. The current lottery makes one long for video poker.
Ah, but see, that was the problem. Video poker had all the best lobbyists and most persistent lawyers in the state, which was why it paid minimal taxes. It was bringing in about $3 billion a year, which was a lot of money in those days. It was well on its way to completely controlling “the 170,” as Greg so poetically refers to them. That’s why the industry had to go.
But yeah, in its way, state-run gambling is even worse. What a sad day when our own government went into the business of luring the unwary into throwing away their limited funds…
Video poker had all the best lobbyists and most persistent lawyers in the state, which was why it paid minimal taxes.
-Brad
So what. That is NOT, repeat NOT an argument for making it illegal. The ONLY, I repeat ONLY relevant argument for making keeping it legal concerns the rights of the individual. If there are hundreds of lobbyists who want to make movies more profitable for the movie studios would that be an argument for making movies illegal? Of course it wouldn’t. If there were lobbyists who want to make the sale of Harry Potter books more profitable for J.K. Rawlings would that be an argument for banning those books? Of course it wouldn’t. This nonsense about lobbyist control of the legislature is just a ridiculous, irrelevant, red-herring, non-sequiter, strawman. (How’s that for redundent).
Until the anti-freedom crowd can understand how valuable our freedoms are we will be stuck with absurdities like the Michael Phelps bong fiasco, the persecution of citizens for playing poker in their homes and the crazy blue laws. This nonsense has nothing to do with lobbyists and everything to do with common sense, freedom and the American way.
Is there any evidence that the lottery has resulted in any increase in gambling addiction?
If I spend $1 on a Powerball ticket instead of $4 on a coffee at Starbucks, does that make me a bad person? In both cases, the money ends up in the toilet.
I’m probably break even or better on my lottery spending over the years. A couple $500 scratch ticket winners in the past year pretty much guarantee that I will be ahead of the game for the next couple years even if I don’t win again.
For $1, I get more enjoyment in terms of fantasizing how I would spend the millions than I do from a copy of the Sunday edition of The State.
Where’s the harm? As long as the government taxes liquor and tobacco, taxing gambling doesn’t bother me.
Is there any evidence that the lottery has resulted in any increase in gambling addiction?
If I spend $1 on a Powerball ticket instead of $4 on a coffee at Starbucks, does that make me a bad person? In both cases, the money ends up in the toilet.
I’m probably break even or better on my lottery spending over the years. A couple $500 scratch ticket winners in the past year pretty much guarantee that I will be ahead of the game for the next couple years even if I don’t win again.
For $1, I get more enjoyment in terms of fantasizing how I would spend the millions than I do from a copy of the Sunday edition of The State.
Where’s the harm? As long as the government taxes liquor and tobacco, taxing gambling doesn’t bother me.
Doug, from first article I read The increase in average gambling expenditure associated with the introduction of a national lottery in the United Kingdom has led to a pronounced increase in the prevalence of excessive gambling, especially in low-income households.
– Grun, L. & McKeigue, P. (2000) Prevalence of excessive gambling before and after introduction of a national lottery in the
United Kingdom: another example of the single distribution theory. Addiction, 95, 959–966.
Bud, we have government regulation for various social activities such as smoking, drinking, and wearing seat belts because society at large is impacted by poor individual choices in these arenas. Clearly gambling addiction, especially at lower economic levels, will affect society. Despite the efforts of people like Reagan, America does make an effort to care for the downtrodden.
I concur with Birch whole-heartedly. It is unconscionable that the most regressive tax possible is used to fund education.
By the way Karen, half the state budget is directed towards education (billions) but the lottery netted only 277 million in 2004.
Depriving people of the right to make choices because of their current economic situation is a major step towards statism. What invigorates this nation is the idea that individuals makes decisions for themselves and are then rewarded or punished for the outcomes.
A member of the Welfare Class is stupid to waste money on the government gambling games.
A member of the Productive Class at least has some chance of getting something in return for his wager, which is better than he gets on his property taxes and income taxes.
Greg, I absolutely agree that people should have the right to make their own irresponsible choices.
But I make a distinction here. I have a serious problem with our state government being in a position where it stands to gain from irresponsible behavior. It’s a conflict of interest. Simply put, when SC depends on people’s irresponsibility with their money (especially those who cannot afford it) it only stands to reason that our state is going to encourage more of such behavior.
Heck, I think smoking is another irresponsible choice people should be allowed to make. But if one day I saw an ad on TV encouraging people to smoke SC Education Cigarettes, then I would be disgusted as well.
The state government makes more money off a pack of cigarettes than the cigarette manufacturer, advertising agencies, farmers, chemical companies, and farm equipment dealers combined.
Education receiving funds from gambling is inherently within the government’s domain of responsibility. Limiting gambling in general is more complex.
I agree that people have a right to make bad choices – voting for W, buying season tickets to Gamecock basketball games – but when these choices result in consequences that affect the community at large, it’s a different issue. We limit smoking and drinking, we require seat belts, and we have mandatory education because of communal concerns.
There is evidence that gambling addiction of many people results from the lottery. Does this affect the community at large? I contend that it does for two reasons. Addiction is a disease and we certainly work as a community to fight disease. Also, when people are undermined financially, taxpayers pick up the tab in various ways; emergency room care for those without health insurance, welfare, unemployment etc.
We’ll deal with these individuals either proactively or reactively.
Government schools doesn’t seem to be doing a good job of character education. The prison system is full of the failures of government schools and other liberalism.
But what can you expect, when liberal teachers believe that blacks are helpless little children who have to be protected by altruistic white liberals from being victimized by evil merchants (read, “the Jews”).
The solution of taxpayers “picking up the tab” for the unlucky and the lazy is reduce government and expand private enterprise, and to end programs which support sloth and mooching.
Birch, I am in agreement that this is not a business the government should be in. I know video poker had the top hired guns (can’t fault them for that) but it seems (and I admit to not knowing all of the ends and outs) that it would have been better to have taxed the industry rather than killing and replacing. How can hired guns prevent taxation but not death.
Some things (most things actually) government should not be involved in. Columbia’s idea for a City owned convention center hotel has cost millions and will cost more even though a private developer came in and built the thing with his own money (plus the $3,000,000,000 the city paid him to have it branded a Hilton. The City has already spent in excess of $1,000,000 in legal fees to fight suits from concerns which maintain they were promised work in the City owned deal.
How much did the City spend on a master plan for the State Hospital which seems to do nothing but deter the involvement of private sector developers?
Government-get out of the way, let the markets work.
Randy,
Would you be willing to make an educated guess as to the number of citizens who have become gambling addicts as a result of the lottery? Don’t include those who would be addicted to illegal gambling.
As long as the state profits off alcohol and cigarettes (both of which cause far more societal harm than lottery tickets), I’ll continue to think the lottery is ot a big deal. Better for the money to flow into some good purpose like Life scholarships than into the hands of criminals.
above I should have said “ins & outs” rather than “ends & outs”
Doug, I cited a source that concluded that a LOTTERY led to gambling problems. I backed my argument against the lottery with evidence. Feel free to do the same in lieu of hypothesizing.
A lottery is a regressive tax. This was known by the state from the beginning. It was common knowledge that a substantial amount of the proceeds would come from the lower socio-economic populace. Doug, your tax dollars are and will be used to help many of these people who don’t have money to pay for health care etc. I take it you are ok with this.
Randy,
Your “source” was a single study from 2000 covering a lottery in the U.K. in 1995-1996. Hardly definitive. The problem with the study is that it attempted to measure how much additional money was gambled by lower income families. How exactly did they measure expenditures on illegal gambling prior to the lottery? Especially illegal gambling that took place five years prior? Do you think participants are going to be open about how much money they lost on illegal gambling? Also, the study itself can only hypothesize about the impact of increased gambling — it says “This is likely to increase the prevalence of gambling disorders”.
So, I’ll ask again – is there any EVIDENCE of residents of South Carolina being impacted by the lottery any more than they were by illegal gambling?
I am okay with anyone spending their own money in any way they choose. My tax dollars have been and will be used to help the same people regardless of whether there is a lottery or not. The problem isn’t the lottery, or alcohol, or drugs. It’s a demand problem, not a supply problem.
Doug, I provided evidence from the FIRST article I read. Here’s a reference to another that indicates that there is a reduction in non-gambling expenditures as money is apparently channeled to lottery tickets – in the US. There is also evidence that the bread winner in the family spending money on a lottery can adversely affect the family as a whole.
http://www.brookings.edu/views/papers/200502kearney.pdf
It’s simplistic to conclude that your tax dollars will be used to the same end regardless of the gambling impact. If a head of household spends his or her money on instant game lottery tickets (cited as more prevalent among lower SES) and not health care or mortgage payments, tax payers may very well carry a bigger load.
I have provided evidence from two sources and have first hand experience. Gambling addiction is perhaps the most insidious because it hits the pocket book directly. Constrast that with some abstract, the community be damned perspective that we will not suffer consequences from the “individual” choices of others.
Randy,
Whose pocketbook is hit? It’s a net zero situation.
Gambling addiction will exist whether the lottery exists or not. There is no proof that the lottery creates addicts. Addictive personalities create addicts.
A breadwinner who spends his money on lottery tickets is no worse/better than one who spends his money on porn, drugs, comic books, rims for his car, Krispy Kreme donuts, whatever. Spending the money on lottery tickets might be the best thing some people SHOULD do with their money.
All the lottery does is transfer money from one pocket to another. Just like any other tax does.
Hope you don’t plan to fill out an NCAA bracket for a pool. Wouldn’t want to see you start down that path to ruin…
When the state runs gambling, liquor stores, cigarette shops, and houses of prostitution, it is endorsing the vices, and has a vested financial interest in promoting bad behavior.
Doug, you oversimplify dramatically.
Addictions have various levels of opportunity which provoke different results. Betting on games does not allow for immediate, on demand consequences as the instant lottery tickets do. That was a large part of the allure of poker machines.
I most certainly cited evidence for lotteries and addiction. You have yet to post any supporting evidence.
There is a profound difference between the addictions. Your suggestion that there isn’t is the greatest flaw in your position. A porn addict can spend $50 to join an Internet porn site then spend hours pursuing his addiction. Similarly, an alcoholic will likely spend only $20 on a case of beer or a bottle of Jack. A gambling addict inherently must continue spending money.
All a robber does is take money from pocket as well so it’s all the same?
I guess, the government still benefit from those taxes who paid by the gambling operators. So, whats the problem as long as they don’t do any harm with people i think its okay.
more tax is so sad to us
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Christena
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Hi,
Interesting article. I don’t think playing the lottery has to be stupid. This view leaves out the value we get from the benefit of anticipation, which can be real pleasure as well. The question is: is the value of anticipation greater than the “cost of disappointment” (from not winning) and the “value of money to play in lottery” combined?
I recently had a more detailed look at it: http://www.spreadinghappiness.org/2009/09/lottery-and-happiness-or-“are-lottery-players-stupid”/
who run the first in high speed ? BMW ? LEG ? funy !