I'm old enough to remember when the lottery first came to Arizona. In November 1980, the lottery initiative was approved and the Grand Canyon State became the first state west of the Mississippi to have a state-sponsored lottery. I remember watching my grandparents and other family members buy scratch-off lottery tickets, pick up their lucky penny and start scratching. It was new and it was exciting and even though I wasn’t even 10 years old yet, I couldn’t wait until I was old enough to buy a lottery ticket of my own.
That excitement has long since passed. I didn’t even bother buying a ticket for the $500 million Powerball drawing. Sure, I could afford to spend a few dollars on a ticket, but after learning more about how the lottery system works, I’ve decided to vote with my dollars, and my personal vote on the state lottery is a big, fat NO.
Tax on the poor
Over the years, I’ve heard that the lottery is a regressive tax on the poor; in other words, a $1 ticket costs proportionately more for a poor person than a rich person. Poor people are also the lottery’s biggest customers. According to a 2011 Wired article by Jonah Lehrer, Cracking the Scratch Lottery Code, “These high-frequency players tend to be poor and uneducated, which is why critics refer to lotteries as a regressive tax. (In a 2006 survey, 30 percent of people without a high school degree said that playing the lottery was a wealth-building strategy.) On average, households that make less than $12,400 a year spend 5 percent of their income on lotteries — a source of hope for just a few bucks a throw.”
For comparison’s sake, if my husband and I were to spend 5 percent of our annual income on lotteries, it would equal about six months of mortgage payments. When you look at what the 5 percent can buy, the picture becomes clearer: 5 percent of $12,400 is just over $50 per month. For $50, you can buy a monthly bus or public transportation pass.
Of course, lottery and gaming supporters say that this is all just media hype. The lottery is not a tax on the poor, according to the Public Gaming Research Institute’s (PGRI) list of the Top Ten Myths. Part of PGRI’s mission is "the support and growth of lottery organizations all around the world, Government Sponsored Gaming of all varieties…” so it isn’t surprising that the organization wants to debunk the concept that lotteries are a tax on the poor.
Lotteries don’t boost education budgets
Once I was old enough to buy a lottery ticket, I was also old enough to vote. I remember voting for state lottery initiatives because they supported Arizona education initiatives. I didn’t do much in the way of research on this statement, though; I simply took it at face value. In Arizona, lottery funds are earmarked for four categories: economic and business development, education, environmental issues and health and public welfare.
This sounds good, right? But the fact that lottery funds are going into education and other socially beneficial programs doesn’t tell the whole story. In his book, "Money for Nothing," author Edward Ugel explains that these lottery funds aren’t necessarily padding education budgets.
For example, a state sets aside $50 million from lottery proceeds to fund education projects. This $50 million isn’t always above and beyond the original education budget, it is often in lieu of it. If a state expects $50 million from the lottery, lawmakers often reduce the original education budget by that amount. In essence, the state education budget stays at the level that lawmakers set, regardless of how much money the lottery brings in.
Next time the Powerball or Mega Millions jackpot jumps up into the hundreds of millions of dollars, I’ll skip the hype again. After learning more about the state lottery system, I can’t consciously support it by buying a ticket. I don’t begrudge those who do, though. Instead, I’d encourage them to do some research of their own and make an educated decision.
This story was originally written in 2013 and has been updated to reflect more recent information.