Massachusetts Lottery Congratulates Itself for 40 Years of Failure

Here's an interesting article on the current situation with local aid and the lottery. Among the fascinating factoids it contains: "According to the Massachusetts Lottery, Bay Staters now spend about $700 per capita annually to chase their million-dollar dreams." Of course, that's an average, so for every Bay Stater who spends maybe 5 or 10 bucks a year on the lottery, there's another one spending a lot more than $700. Those numbers should be worrisome. - promoted by david

The Massachusetts Lottery is throwing itself a State House party to tout its 40th anniversary even though it has been a failed public policy by nearly every measure.

How has the Massachusetts Lottery failed over the past four decades?

  • It has transformed gambling from a private and local activity into the public voice of state government, such that ever-increasing appeals to gamble, and ever-expanding opportunities to gamble, now constitute the main ways that state government communicates with us on a daily basis.
  • It has promoted the very economic attitudes and practices  – short-term is more important than sustainable, wealth can come from ever-growing debt, something can come from nothing, slickness trumps honesty–that helped lead us to the severe income inequality that plagues our state and our nation today.
  • It has become THE MOST PREDATORY BUSINESS IN THE STATE.
  • It has eroded our capacity as a people to honestly confront our reluctance to pay taxes for the public services we desire.
  • It has taken dollars from the poor to fund programs for the better-off.
  • It has spread addiction among our citizens.
  • It has helped shrink the state’s middle class by luring people to lose their money instead of promoting savings and asset-building.

According to the Lottery’s own 2010 marketing research, only 9% of the public agrees with the statement that the Lottery improves the quality of life for the state’s citizens.

The Lottery is a failed policy. It’s time we phased it out.

Les Bernal



Discuss

26 Comments . Leave a comment below.
  1. Reverse Robin Hood?

    Fall River, a seemingly poor community spent $62 MILLION on lottery products in 2009 (the year for which I requested the report).

    The statistics that reveal this failed policy are horrifying in poor community after poor community.

    Great post and solid points! Thank you.

  2. Just as I ask...

    …those who propose tax cuts what they will cut and/or how to make up for lost revenue, I now ask you how you will make up (or do you propose to cut?) the aide that goes to our cities and towns that is funded by the Lottery. Please be politically realistic in your answer. I’ve been able to grasp more about how casinos can cause some of the problems you mention, but the Lottery is not the boogieman you make it out to be (and yes I looked at your links) and frankly you lose credibility when you go this route.

    • A few tidbits

      1. I suppose one could raise the tax rate to make the difference. I don’t know (a) total lottery money sent to munis or (b) total MA tax revenue, but those numbers are easily obtainable. I don’t think it would take much increase to absorb the delta.

      2. I agree that it’s a bit overstated when in list form [implying that all items have somewhat equal weight] but I used to live near a convenience store with Keno in a tough neighborhood — the amount of money that clearly poor men would piss away every five minutes was mind boggling. There was no question that these were gambling addicts who were spending their kids’ milk money on the dream, only to go home broke.

      3. One side effect of the lottery is that we have more convenience stores than we would otherwise — which is nice if you want a soda or magazine or candy bar or smokes or something. If lottery goes away, you can bet that some statistically significant percentage of these conveniences stores will go out of business.

      4. I wonder: what would the savings be in state-funded social programs if lotto junkies didn’t have the lotto? It wouldn’t be the entire dollar amount spent on lotto, but it wouldn’t be $0 either…

    • Raise the Income Tax

      And increase the personal deduction to minimize the impact: http://www.massbudget.org/report_window.php?loc=RatesandExemptionChange_Factsheet_05-27-2011.html

      This proposal would raise an estimated $1.3-$.14 billion annually (more than enough to offset 100% of Lottery proceeds – even the pre-casino $1 billion haul which seems very likely to drop soon). Those making under $100,000 (80% of us) would either see a tax cut or a less than $100 increase in our tax bill.

      Seems “realistic” to me.

      • Decent Proposal

        My only quibble is with the proposed capital gains tax rate. I don’t think capital gains should be taxed at a different rate than income, period. It’s ludicrous that currently on the federal level it should be treated so favorably; but it would be equally ludicrous (via this proposal) to penalize it (the proposal has income taxed at 5.95%, but cap gains and dividends at 8.95%).

        Income is income; we should treat it all equally.

  3. I also question a couple of your links.

    The link about 80% from 10% leads to an NYT article that does not appear to address that point and the link in the same item about non-college graduates goes to a record of a FOIA request you made, but again I saw nothing about this particular claim. Even so, there’s no way I can see that you can measure these. When I go to purchase a Lottery ticket, especially with cash, there’s no record aside from maybe the memory of the clerk. I certainly don’t say whether I’m college-educated or not, so again I see know way how it can be known what portion of Lottery players graduated from college. I stand by my position that I’ve previously stated that nobody has a gun to their head and thus cannot be exploited or otherwise forced to participate.

    • Helping you with the links

      From The NYT story:

      “States are also trying to bolster the number of “core” players, according to interviews with lottery officials in several states. Such players typically represent only 10 percent to 15 percent of all players but account for 80 percent of sales, according to Independent Lottery Research, which does research and marketing for state lotteries.”

      From Pg. 163 of the FOIA pdf: “67% of frequent Mass Lottery players did not graduate from college.”

      From Pg. 147 of the FOIA pdf: “Only 9% of the public agree with the statement that the Lottery improves the quality of life for the state’s citizens.”

      Les Bernal

    • Purposefully dense?

      I have a couple of questions about your reading comprehension skills. But let’s focus on your most ridiculous statement:

      When I go to purchase a Lottery ticket, especially with cash, there’s no record aside from maybe the memory of the clerk. I certainly don’t say whether I’m college-educated or not, so again I see know way how it can be known what portion of Lottery players graduated from college.

      Honestly, christopher, I’m pretty skeptical about your supposed confusion here. Aside from your failure to actually explore the provided links (see clarifications in the response below) It never even occurred to you that this was most likely survey data? The concept of contacting people at random, asking them some basic demographic data, and then asking whether or not they play the lottery (and how often) never even crossed your mind?

      The fact that you chose to “stand by my position” rings awfully hollow when you combine it with the type of willful ignorance and petty bickering you engage in here.

    • About those graduates

      67% of frequent Mass Lottery players did not graduate from college.

      I do not find this especially meaningful.

      Nationally, the percentage of people with a bachelor’s degree rose to over 27 percent, up from 24.4 percent in 2000. In Massachusetts, the figure was far higher at 38 percent, trailing only the District of Columbia.

      So, 33% of Lottery players have a college degree, as opposed to 38% of everybody.

      I think the Lottery is a bad idea. I also think arguments against it that use every marginally questionable thing about it are a bad idea. More focus would be good.

  4. Good as far as it goes.

    I’ve always thought that much of this comes down to “accusing” the Lottery (or casinos for that matter) of (God forbid!) good marketing practices, something which any good business will do. Actually, good political campaigns target as well. I still had to search a bit for the info. The link to page 163 still brought up the entire request. It took a couple minutes to realize I had to click on the document to make it readable and then I found the education information on p. 74 of the 438-page document.

    • A pattern, repeated

      Christopher, I wish you would do your research before — rather than after — you post caustic comments (“the Lottery is not the boogieman you make it out to be (and yes I looked at your links) and frankly you lose credibility when you go this route.”) here.

      The links, in fact, said exactly what was promised. I appreciate the patience of Les Bernal in doing himself, and posting the results of, research you should have done yourself. You complain about how the State determines the number of players with a college degree — surely you’ve heard of statistical sampling, and it took me only two clicks to see the state’s own information about the methodology used.

      This morning, you complain that you “still had to search a bit for the info”. Please.

      What you seem to have neglected to observe, after your complaining, is that the significant criticisms of the Lottery in the original post are well supported. I don’t know that anybody claimed the Lottery was a bogeyman, but it surely is an example of failed and regressive tax policy.

      You are active in local politics, and that’s a good thing. I suggest that as an active left-leaning liberal/progressive, it would be better for you to seek those “politically realistic” revenue alternatives. You are absolutely correct that we need them. The sad facts of this post are absolutely correct. It sounds like what you’re saying is “morality in government is ok so long as it doesn’t cost anything”.

      We need to create the “political reality” that Massachusetts residents are not taxing ourselves enough. The evidence is all around us. We need to get in the face of every legislator who refuses to consider new taxes and force him or her to confront the reality of what these selfishly misguided policies are causing.

      Taxing the poor, the ill, and the desperate (which is what the Lottery does) is despicable public policy and we should all admit that.

      • How is a voluntary purchase a tax?

        Don’t get me wrong, I’m not in favor of gaming as a public revenue source, but I have trouble seeing a voluntary activity, like buying lottery tickets, or going to a casino, as a government-imposed tax.

        This is not to say I don’t agree with you about gaming being a “despicable” tax policy.

        • would you then...

          but I have trouble seeing a voluntary activity, like buying lottery tickets, or going to a casino, as a government-imposed tax.

          … concern yourself with the gambling addict for whom such a purchase is anything but voluntary??

          • Gaming addicition is minor problem.

            Smoking is a much bigger issue. Besides, wasn’t this addressed in the legislation? I thought there’s some set-aside funds to “concern [ourselves] with the gambling addict…”

            Mostly, I lump all these social vices in the “personal responsibility” bucket, i.e., if you have a problem, get help but don’t make me pay for it.

        • It's a Sales Tax

          Essentially. And a 22% sales tax at that! The “purchase” is voluntary, sure, but the “tax” is imposed on these purchases the form of a 78% payout rate, with the rest collected as revenue. You can chose whether or not to by lottery tickets or any other product on which a “sales tax” is imposed. That doesn’t mean there is no tax.

          • Bad math

            Using your logic, it’s a smidge more than a 28% sales tax.

            $0.78 * 129% = $0.9984

            • Hmmm

              I suppose. Math is hard. And the “sales tax” analogy is a stretch.

              By your math (the logic of the analogy), you assume the “purchase” is really only 78 cents rather than a full $1? So, then, “taxing that purchase by requiring payment of 22 cents can be considered a “sales tax” of 29% on that 78 cent purchase.

              Instead, I was looking at it as a total $1 purchase. Which, if not “taxed”, would payout at a rate of 100%. The “sales tax” is imposed by the state in keeping 22 cents of that dollar (on average, of course). A 22% tax on the entire dollar purchase.

              You still think my math/logic is “bad”? I’ve managed to confuse myself with all this…

              • Sales tax

                If I told you I’d gone to Best Buy and gotten a doohickey for $21.25, and that the value of that doohickey was actually $20, would you say I’d paid a 5.88% sales tax (1.25/21.25) or a 6.25% sales tax (1.25/20)? You’d say the latter — sales tax is a surtax on top of the value of the item, not an included tax that gets lumped into the price.

                Stomv is right; you’re buying something that’s worth 78¢ and getting charged $1 for it. That’s a 28.2% surtax on top of the value of the item.

                • Thank You

                  The fact that “you’re buying something that’s worth 78 cents and getting charged $1 for it” makes a lot of sense to me. So, it’s basically a 28.2% “tax” from a public policy perspective.

    • Good Marketing is Part of the Problem

      I oppose the lottery and casinos.

      That said, I’m willing to accept the fact that a lot of people seek out opportunities to gamble. The lottery – where the potential winnings offer a very remote possibility of striking it rich – seem to be particularly attractive to a significant portion of individuals. For that reason alone, I accept the “prohibition” won’t work and would instead likely lead to black market lotteries that would be worse than the state’s (especially since the gambler’s losses now go – mostly – to decent causes).

      But just because we need to have a lottery, doesn’t mean it has to be so aggressively marketed. Cahill aside, the fact is that Massachusetts residents spend much, much more than any other state resident (nearly two times Georgia – the next highest state – and nearly three times the average U.S. resident) on the lottery. (http://media.bloomberg.com/bb/avfile/r3nbpFLrUooE ).

      We should be embarrassed that our Lottery spends millions of dollars a year in “good marketing” so that Massachusetts residents are confused, enticed and suckered in to making three times as many bad bets as the average American.

      Ending the lottery won’t work. But I’d rather we stop spending anything on Lottery advertising and stop encouraging people to make such abysmally poor decisions about spending their money. The state makes a lot of money on tobacco and alcohol taxes too. And prohibition won’t work for those products easier. That doesn’t mean the state should spend millions a year promoting bad “investments.”

  5. I appreciate Les Bernal's research.

    Some of the rest of you, however, are doing an absolutely horrible job trying to win me to your side when you do things like question my reading comprehension skills and call me dense. Tom, I said I looked at the links; I’m not sure what else you want. I’m all for raising taxes, but I also see no problem with voluntary contributions of this nature. The purpose of a blog is to discuss, not to hold a policy seminar, so while linking is helpful, doing so in a way that requires further digging and searching (because of the way the pdfs were set up I couldn’t even do a find function on the words “college” and “graduate” which is what I first tried) really isn’t in this context. Frankly, this topic on this forum has always struck me as “gang up on the guy who doesn’t adhere to the orthodoxy”.

    • Nobody is ganging up

      Please, Christopher, spare us the victimhood — nobody is ganging up on you. The comments that you object to happen after we read the same links you say you’ve “looked at”, and we readily find the information you seem to miss. I’m not claiming to be particularly “smart” (or whatever the inverse of “dense” is), I’m merely saying that with a little bit of effort I found that the supplied links did, in fact, support the thesis of the post. When I find a pdf that doesn’t support searching, I skim the text myself. When I did that, I found it. If it’s a really long pdf, and I don’t find it, I either give the author the benefit of the doubt or I ask the author to help me find it.

      This is a blog where we discuss things. Perhaps you are less willing to do “further digging and searching” than some of us — in all fairness, I think that is what I observed when I wrote “a pattern repeated”. I don’t see anybody ganging up on you, and I see a fair amount of back-and-forth on several aspects of this.

  6. I suppose I have to say it

    Lottery and gaming revenue are a result of the Commonwealth’s insatiable spending. The taxpayers’ political toleration for more taxation is, IMHO, exhausted, hence the deafening silence to Christopher’s earlier post asking where “how you will make up (or do you propose to cut?) the aide that goes to our cities and towns that is funded by the Lottery.”

    Once the casinos get in full swing and some additional revenue begins flowing into state coffers, I imagine the exact same questions will soon be posed.

    State spending has become like a crack cocaine addiction. The ever-increasing need for tax revenues is the addicts’ breaking-and-entering to get cash for the habit.

    To ANSWER Christopher’s question, the Commonwealth could do something bold, like eliminate its corporate income tax, update our incorporation laws, and streamline many permit processes, to make MA a magnet for business and industry. This would employ more people, increase wages, expand our state GDP, and increase our tax revenues.

    I figure a 10-15% increase in state GDP would wipe away all our revenue challenges and even retire, over time, MBTA/Mass Turnpike/Big Dig debt.

    • I suppose I have to say it

      Lottery and gaming revenue are a result of the Commonwealth’s inability to address taxes appropriately. Instead of rewriting our tax code for fairness, we’re petrified to float a new tax and, when we do, we end up with regressive increases like the sales tax increase or expanded gambling.

  7. i appreciate bostonshepherd's attempt to answer my question.

    I’m reluctant to eliminate entirely corporate income taxes as your analysis puts a lot more faith in supply-side theory than I would. As I recall in 2010 at least we were already ranked the 5th most business-friendly state in the union.

  8. Don't Reduce Revenue

    Today, in 2012, the only states that don’t have a lottery are Alaska, Hawaii, Nevada, Utah, Wyoming, Alabama, and Mississippi :

    http://en.wikipedia.org/wiki/Lotteries_in_the_United_States

    If the biggest pusher of gambling is “0,” and the biggest foe of gambling is “100,”I am a “50.”

    Reducing revenue for the state is a bad idea in this economy. And, ending the lottery would reduce revenue.

    More progressive way to get revenue (that have nothing to do with gambling either way) should be implemented.

    The biggest problem is really the way Congress spends federal money, but that is not a state matter.

    Massachusetts has a very small land area, and many people who are into the lottery would just go to New Hampshire, Vermont, Connecticut, Rhode Island, or New York to play.

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