The chance to win over a half billion dollars in this week’s Powerball drawing brought millions of Americans out to buy lottery tickets. (I was one of them.) Now, with the big drawing over and a few people much, much richer than they were on November 27th, it’s a good time to look at America’s lotteries. And an objective look at them reveals a simple truth: they’re a bad idea. The problem isn’t with gambling itself, but rather with lotteries themselves.
Gambling itself isn’t bad. In fact, it’s a lot like consuming alcohol: while too much of it can ruin ones’ life, overwhelming majority of adults do it, enjoy it, and arguably even gain from it. Insofar as it increases overall economic activity, meets a popular demand, and provides a recreational outlet, indeed, gaming is a positive social force. Contrary to the claims of gambling prohibitionists, increasing the availability of gambling doesn’t seem to increase the number of people with gambling problems. As casinos, over the past 35 years, have expanded from a Nevada-only attraction to a presence in 8 of the 10 largest states, indeed, problem gambling rates have remained essentially flat. Thus, the expansion of commercial and Indian gaming is — and ought to — continue.
But while gambling itself might be considered a good thing, lotteries aren’t good for anything. For starters, they’re not a very good way to accomplish their stated social goal of raising money for schools. Very little of what they raise (less than 20 cents on the dollar in some cases) actually reaches classrooms and net spending rarely increases as a result of lotteries. (Whether net spending on schools ought to be higher is another story altogether.)
Unlike casinos, horse tracks and other gambling venues, furthermore, they don’t produce any significant amount of spin-off economic activity: restaurants, shows, and hotels obviously don’t open near lottery outlets. If states need more revenues, they are far more likely to get it from allowing casinos than they are from lotteries.
Lotteries also provide a product that almost nobody would buy themselves in a free market. Their “house advantage” (the percentage of each wager that the “house” takes) is typically around 50 percent. At casinos, on the other hand, slot machines average around 10 percent and any large casino has a few games with a house advantage of 1 percent or less. And lotteries offer little fun, excitement or glitz of slot machines or craps tables. They succeed as businesses only because of the monopoly they have on gambling in many areas.
Lotteries also seem likely to encourage problem gambling. All states with casino gambling have programs that allow problem gamblers to ban themselves from casinos. And this is reasonably easy to enforce: most large metropolitan areas have only a handful of casinos and even Las Vegas has only about 100. In places with lotteries, on the other hand, there’s no practical way that a person with a gambling-related pathology could stop him or herself from playing. Lottery marketing, even worse, seems to target those who can least afford to play: poor and heavily minority neighborhoods around the country have a higher-than-average concentration of lottery outlets.
And the potential moral objections to lotteries don’t end with the groups that lottery operators target. While most adults do approve of gambling, a significant minority of them think it is wrong or immoral. Having a government that not only allows but actually encourages a form of gambling is a slap in the face to many Americans’ sincerely held beliefs. Believing something should be legal is very different from thinking that the state should actively encourage it through advertising and promotion.
State lotteries are, quite simply, a bad idea.