Lotteries suck tax money from the poor

By now it should be well known that lotteries primarily take money from low-income people, making lotteries among the most regressive of taxes. But this compilation of scholarly research on lotteries adds some interesting perspectives to the issue.

The last study in the compilation, one conducted this year at the University of Buffalo, found that the lowest fifth of people on the economic status scale had the “highest rate of lottery gambling (61 percent) and the highest mean level of days gambled in the past year (26.1 days).”

Young people, 30 and under, tend to play more than older people. Seventy percent of them play the lottery, compared with 45 percent of those 70 and older.

A 2008 study in the Journal of Behavioral Decision Making looked at the reasons people willingly give up their hard-earned cash in exchange for odds that are just this side of hopeless. Low-income people aren’t stupid. They likely play out of a sense that they have the same chance of winning as everyone else, rich or poor. Life doesn’t often hand them a deal like that.

Then again, it’s probably more accurate to say they have the same chance of losing as everyone else.

A 2010 study in the Journal of Community Psychology found that neighborhoods with high concentrations of minorities tend to have the most lottery outlets, and those people tend to be most likely to develop gambling addictions.

You can read the research yourself. When you do, it would be well to ask yourself why state and local governments think it is healthy to rely on money obtained this way. You might also ask why a nation that believes it’s best to tax rich people more would accept a tax that not only takes the most money from the poor, it also can cause other problems in their lives.

I know the answer has something to do with that one tiny chance that a lottery ticket can pay off. But really, isn’t that the cruelest joke of all?

Categories: Uncategorized

About the Author

Jay Evensen

Jay Evensen is the Senior Editorial Columnist for the Deseret News. He has 32 years of journalism experience covering politics and a variety of other assignments at news organizations ranging from United Press International in New York City to the Las Vegas Review-Journal and the Deseret News, where he has worked since 1986. During that time, he has won numerous local, regional and national awards. Most recently, he was given the Cameron Duncan Media Award, given annually in Washington, D.C., by the advocacy group RESULTS, to the journalist judged to have done the most to further the cause of the world's poorest people.

15 comments

  1. Mukkake

    [Low-income people aren’t stupid. They likely play out of a sense that they have the same chance of winning as everyone else, rich or poor.]

    I don’t know… that sounds pretty “stupid” to me.

    [You might also ask why a nation that believes it’s best to tax rich people more would accept a tax that not only takes the most money from the poor, it also can cause other problems in their lives.]

    Because its voluntary and, therefore, not really a tax. You can’t be fined or jailed for not buying a lottery ticket.

    So the poor aren’t “stupid”, but they can’t be trusted to spend their own money? If its used to improves public education, then isn’t it the poor that benefit the most?

    Such a disingenuous and fallacious argument. Especially from a guy who usually champions all sorts of “free market” solutions. Well, there is a demand for lotteries, isn’t there? Show me how they’re anymore deceptive than Mary Kay and Avon.

    • Not sure I understand your logic in that comment, Mukkake. This isn’t a free-market issue. It’s governments trying to find ways to suck money from the economy without having to impose legitimate taxes. Regardless, you may be interested in this NBC report on where lottery money is going: http://www.nbcnews.com/business/economywatch/powerball-profits-dont-all-go-where-you-think-they-do-1C7324290

      Turns out very little of it actually goes to education.

      • Mukkake

        So would you favor lotteries more if a greater portion was returned to public welfare spending?

        Or would you be in favor of privatizing the lottery, removing the deception of public welfare and instead openly admitting it was a for-profit enterprise, with stock holders, year-end bonuses for executives, and corporate taxes?

        Or do we put in place income restrictions, preventing “at-risk” income brackets from participation?

        There is a public demand for this sort of enterprise, and the odds are freely available to all participants. If the poor aren’t “stupid” and are capable of managing their own finances, then we can’t claim they are victims.

        Regardless, participants enter of their own free will and are not punished legally for not paying, so it isn’t a tax.

        Is there a scenario in which you would support competent adults participating freely in a lottery with their own funds?

        It is a free-market issue.

      • Mukkake,

        Governments have legitimate functions to perform and ought to be able to raise revenue to fund those functions. I believe there is a social contract, of sorts, between the people and their government. People ought to pay taxes to fund programs from which they and all of society benefit. There is a sense of civic duty, community interest and purpose involved in that give-and-take, and it also enhances the sense of accountability among those in government. I oppose public lotteries in all forms because they distort this relationship, injecting the idea that you fund programs in exchange for the chance to become rich. The benefit should come from the government programs, not from a hope of gaining something for nothing.
        Governments have become too skittish about raising taxes for legitimate needs. Lotteries also are not nearly as enriching as many believe they are. Yes, private companies would run them better, provided they were chosen by competitive bid and had to rebid frequently to renew their contracts. These generally would not be publicly traded companies with stockholders, but I’m not sure why that should be a concern. Competitive pressures would hold down costs. I still would oppose lotteries in lieu of taxes. They aren’t good public policy.
        If, as you say, there is demand for that sort of thing, there are plenty of gambling options available outside of government lotteries. As a former long-time resident of Las Vegas, I can tell you the odds down there are a lot better than Powerball, even though the payouts aren’t as large.

  2. LDS Liberal

    Jay,

    Did you stop to think that maybe, just Maybe, that Americans are losing hope?

    It used to be someone with a High School degree could get a “decent” job, buy a small house, a car or 2, and raise a family.

    Today – A College degree will not buy a house, won’t but a car or be nearly enough to raise even a SMALL family because even those jobs make dirt wages compared to yesterday.

    The rich get richer, the poor get poorer.
    The Middle-class is GONE.

    Hard work and a good education doesn’t pay off anymore.
    If you have money, you most likely inherited it or your family has always had it.

    So then,

    Where can I buy my tickets?

    • Greg

      College degree? As in satisfying government requirements to babysit (day care) — Masters degrees to teach or be a welfare worker — filling the “shortage” claims made by school recruiters?

      The good educations are still out there to be had. You just need to do a reality check on your school / major/ employment possibilities. You also might consider becoming part of the revolution thumping on your assorted politicos desks regarding their own connections to reality. And be willing to back that up by making your own business connections more personal (i.e. babysitter/coop/ vs daycare campus)

      • LDS Liberal

        Greg

        I’m an Aerospace Engineer.

        I’ve finally doubled my college level entry salary, but it took 26 years to do so.

        I also lost $300K and my life’s savings during the Bush Depression.
        So much for paying a Full tithe for 45 years.

        Hard work DOESN’T pay off.

        My 4 adult kids have all watched as Daddy killed himself for nothing ro show for it.

        My chances of winning it big in a lottery are much better than me ever working hard enoough long enough to earn back my Bush losses in time to retire.

        At least with a Lottery – the odds are the same, rich or poor.

        Bitter?

        And everytime I listen to a Republican, all I can do it think of Pres. Hinckley’s story about the man and his piece of String Story.

        I look forward to my interview with God.

    • Truth

      “The rich get richer, the poor get poorer.
      The Middle-class is GONE.”

      Repeating a falsehood often enough doesn’t make it true. The rich are richer. So too are the poor.

      My father came up from WWII and installed the first toilet in his parents’ home in a rural Utah community. They were pretty solidly “middle class” but did not have an indoor, flush toilet until 1945. In the mid-70s, my parents moved to southern Utah and we were very fortunate that they were able to afford what was then a luxury item generally reserved for the wealthy: central refrigeration, or “air conditioning.” At the same time, AC as well as seat belts and many other safety features were either optional or not available on cars. Any TV larger than about 24″ was an expensive luxury. Car phones were unheard of except for the ultra wealthy. Computers were expensive and rare. Long distance phone calls cost upwards of $0.25 a minute (nearly $1 per minute in 2012 dollars) even if the call was made in the late night or early morning. I remember waking up early to make short telephone calls to relatives on special occasions.

      Today, you’d be hard pressed to find any primary residency anywhere in this State or even nation that does not have indoor plumbing with hot and cold running water and flush toilets. Central air is common in homes even in the relatively mild SLC area. Indeed, the prevalence of AC is largely responsible for the population shift from the rust belt to the sun belt. Seat belts, air bags, safety glass, and a host of other safety features are mandatory in cars, while AC is common. It is rare to find any family, no matter how poor, that doesn’t have a large screen TV with cable or satellite service. Cell phones and even web capable smart phones are ubiquitous. Most phone plans (cell or land line) now include unlimited domestic long distance, and if not, one can easily find rates of 1 penny a minute (a 99% decrease in real cost over the last 35 years) using dial around or other prepaid services.

      Average life span has risen from 50 years for someone born in 1900, to 71 years for someone born in 1970, to 77 for someone born in 2003.

      The poor enjoy greater access to our legal system, and greater protection of their rights than at any point in our history and probably more so than in any other time or place in history. Voting rights are universal without regard to payment of taxes, literacy, nor property ownership.

      The poor enjoy greater access to both formal education through free universal public education and easy access to need based funding for college, as well as to self-guided study through libraries, the internet, etc. Top tier universities have started making their course material available online, for free. Sure, they’ll charge you for a degree. But if a man simply wants to gain education and skills, the information and data are more readily, freely available than at any point in the history of humankind.

      The poor have not gotten poorer by any metric of interest except perhaps by comparison to the rich. Yes, the gap between rich and poor is wider. The rising tide has lifted some higher than others.

      But today’s poor are living a higher standard of living than many of the middle class of just 40 years ago. And today’s poor live better than many of the moderately wealthy of only a century or two ago.

      To quote Elder Holland, pride takes no joy in having something, only in having more than someone else.

      Pride, including in the form of covetousness, is the only way anyone can claim that “the poor have gotten poorer.”

      The poor have gotten richer. The rich have gotten even more richer, which does not hurt the poor. And the middle class is doing quite well among those prudent enough to live within their means rather than trying to buy too much home, too many cars and ATVs, and otherwise spend more than they make trying to have everything they see on TV.

  3. Lowonoil

    What really makes me wonder is why Las Vegans living in the land of 100+% return video poker would drive forty miles to the California border to make lottery bets with an average return of less than 40 cents on the dollar.

  4. Clarissa

    I have never bought a lottery ticket. After studying stats in college, I learned my lesson. Maybe they should teach these lessons in high school. Also, I don’t believe that going to college or getting extra education after high school is useless. You just need to get a degree in an area that needs jobs. I would have loved to have gotten a degree in geology, but there isn’t much I could have done with it. I especially love volcanoes. Just aren’t that many jobs out there for that. Bummer, but I live a world that is realistic.

  5. John Clark

    Why not use legal gunfights as spectator sport to raise money as long as the participants are consenting adults? Why restrict alcohol use? Because we do believe in protecting people from themselves.

    More than that, we have a duty to protect innocent children from the irresponsible behavior of their parents.

    It doesn’t hurt that it also protects society at large to keep people away from destructive habits that some have no ability to resist. An addict does not choose to gamble each payday, and we all suffer if we condone such behavior. It’s simply civic responsibility.

  6. Hutterite

    You let them smoke. You freedom preaching, yet hyprcritical ‘we must protect them from themselves’ zealots, let them smoke. Everyone waxed pontifically about the vices they are forbidden to engate in but yet ignored the one that does the most damage. Cigarettes. So yarble on about protecting the children or keeping people from bad habits. But if you are worried about lotteries before smoking, well, you’re blowing smoke, or massaging your own self righteousness. Neither of which I want second hand. If you don’t want to play the lottery then don’t. If you want to have a say as to whether or not you want me to then blow smoke. I’m an adult. Go play with the hypocrites.

  7. Big Dave

    lotteries are voluntary…no one is forced to buy a lottery ticket. This is NOT a mandatory tax – it is voluntary. Poor folks can waste their money in other ways besides lotteries. Utah is in terrible shape with education and Idaho has solved that by using a state lottery. Utah should do the same thing. I would say that putting money into the stock market is a pretty big gamble these days too!!

  8. OpenMinded Mormon

    Jay Evensen

    I oppose public lotteries in all forms because they distort this relationship, injecting the idea that you fund programs in exchange for the chance to become rich.

    =========

    I find this comment you made silly coming from someone as Conservative as you are.

    For instance —
    1. A Lottery is a 100% pure “Voluntary” tax. No coersion, No Force. Like Tithing. You either play or your don’t. A vitual Conservative dream come true.

    but this is the part of your comment really made me LOL —
    “…injecting the idea that you fund programs in exchange for the chance to become rich.”

    2. So, you seriously don’t think, believe or even consider that Lobbyists, Businesses, or Corporations – bribing, kicking-back, or sweetening up the deal and somehow “WINNING” a very lucritive Government Contract is ANY different than playing a government sponsored lottery?

    I only have these words for you —

    Open your mind
    and
    Get Real!

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