The state lottery is a great way to fund public works projects without raising taxes. But it is a lousy way to raise money for schools, and it takes a disproportionate toll on poor people. That is the message of a new report by the Howard Center and several other groups.
It is the first major study to take a close look at the lottery in all its forms and its consequences. It is a must-read for anyone who cares about the future of American government.
State governments were desperate for revenue in the late twentieth century, and they searched for ways to raise it that wouldn’t enrage an anti-tax electorate. That led to a boom in lotteries, which became increasingly popular and profitable for their private promoters. In the era of the Great Recession, however, those gains slowed and public concern about them began to grow.
In the end, it was not political will or voter outrage that killed the lotteries, but the growing belief that they were regressive and that there were better ways to raise needed revenue. Lotteries raised about $502 billion between 1964 and 2019, which sounds like a lot, but is a drop in the bucket relative to total state revenues.
Besides a small percentage going to prizes, most of the money ended up in the pockets of the private promoters and, often, in bribes to government officials. Lottery profits were a significant factor in the corruption scandals that rocked Louisiana and, later, other states.
Advocates of lotteries responded by narrowing their pitch. Instead of arguing that the lottery would float all of a state’s budget, they began to claim it could fund a specific line item—usually education but sometimes elder care or public parks or aid for veterans. This strategy allowed them to appeal to voters who might not otherwise support legalized gambling.
But the underlying argument remains the same: People are going to gamble anyway, so why not capture some of that money for a good cause? This is a dangerous narrative, and it obscures the true impact of the lottery. It sucks money out of low-income neighborhoods and, as the Howard Center report shows, makes it available to middle-class and upper-class students in school districts far from those neighborhoods. It is the kind of false promise that can backfire, and it is why a lot of people should be very worried about where their state lottery dollars are going.