Lost amid the lobbying controversy surrounding state lottery vendors is what they were lobbying for: to help the Lottery create a new, “innovative” bingo game. Even though lottery games like bingo are so simple a kindergartener can play, “the innovation” is how the Lottery can accelerate the speed of the game, intensify the buzz people get when they play and most importantly, increase the amount of money people wager and lose.
This practice of predatory gambling, using gambling to prey on human weakness for profit, is government’s version of subprime lending.By promoting predatory gambling, we are turning millions of people who are small earners with the potential to be small savers into a new class of habitual bettors. The Lottery Class.
The Lottery Class, according to the Consumer Federation of America,represents the more than 1 out of 5 Americans who think the best way to achieve long-term financial security is to play the lottery. Who is lobbying for them?
Les Bernal
In the gambling debate, it often seems as though the lottery is the elephant in the room. Everyone recognizes it is there, but no one is willing to actually debate it seriously.
Well, the Catholic Church used to be effective at lobbying against the lottery and casinos, but The Globe’s crusade against them has effectively silenced their voice. Here is a Globe article on their missing voice. (The Vatican doesn’t condemn gambling completely, if it is recreational, doesn’t risk too much money, and is fair, and if proceeds are directed to help the needy. But they used to be more vocal against exploiting people in Massachusetts).
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p>Here is an Arkansas article about Methodists lobbying against the lottery:
What’s the matter – afraid of competition? My religion teacher, a monk, once referred to bingo (half?)-jokingly as the eighth sacrament!
I really wish we’d stop this idea that people are victimized. Yes, there are people with problems, but the vast majority of us can control ourselves. I for one buy a scratch ticket once in a very great while and don’t feel the least bit preyed upon or “taxed” (another word I hate seeing used in this context). I have no business spending alot of money on this and I know that and when I lose, I’m at least comforted knowing that my couple of dollars is going to help cities and towns in this Commonwealth. One thing I would support is disclaimers on advertising indicating what the odds are, just like we require warnings on cigarettes.
If you have never seen a habitual gambler spend his last buck on keno, while forgoing his rent, groceries, utilities, car payments, etc – then you’re not going to get this. I have witnessed this. And you can say that “no one is victimizing him” – but let me tell you – his wife and kids sure are victimized.
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p>The people who play this $#%&!!! game are the poor and lower middle class; if you look at the stats from the Lottery Commission, you will see a remarkable trend in which the cities that play the most (cities with the lower EQVS and per capita incomes) receive comparatively less in return. One town (Harvard) doesn’t put in a nickel, but manages to get back significant returns. It’s gross, actually.
There are many more extreme examples of victimization along these lines in our society: cigarettes, alcohol, certain kinds of unhealthy food, some kinds of credit facilities like, perhaps, some credit card and mortgage contracts. All of them disproportionately harm people with lower incomes, yet we permit all of those activities. What justifies singling out gambling? Or, alternately, do you also want to ban cigarettes, alcohol, fast food, usurious credit card and mortgage contracts?
Ban? No, but severely limit their distribution, yes.
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p>The reason for focusing on the lottery, however, is that it’s totally state controlled, and therefore, is like a regressive tax on poor communities.
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p>What else are you going to permit poor people to do and not do with the private property they have earned? Is this elitism I’m hearing or is it just the nanny state calling?
Individual freedom and responsibility please.
I don’t think Massachusetts manufactures, designs, or sells cigarettes and alcohol like it does gambling products. In fact, we do the opposite, we tax them as a disincentive (ok that might be in conflict with relying on the revenue) and try to discourage people from buying them. We don’t use my tax money to advertise and hook people to them.
I don’t doubt the stats relative to who buys; that’s not what I’m arguing anyway. I’m just saying that nobody of any income level is buying tickets with a gun pointed at his head.
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p>I interpreted victimization in this context to refer to the actual gambler. I absolutely don’t dispute that families are victimized if one of their own has a gambling problem. I would, however, suggest that the problem gambler is doing the victimizing rather than the state.
When someone is broke, it usually means they can’t pay people money they owe them, so they have to borrow it from relatives or friends. Which means those people can’t pay other people the money they owe them, or at least that they can’t spend or lend it to someone else. A problem gambler in an affluent network where the family can help out might not be much of a problem to other people, but if the gambler’s community network is pretty much broke already, it brings down whole communities and families.
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p>If the state manufactured and sold $10 guns in every corner store for people to use responsibly, would the state be a little culpable if someone gets harmed?
I know a number of casual lottery players who feel like you, Christopher, that at least their loses are going to a “good cause.” But let’s look at the facts:
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p>(1) 45% of revenue earned by ticket sales goes to pay prizes.
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p>(2) About one third (currently 32%) of every dollar earned goes back in the “operating expenses” including the salaries for all those Lottery Commission hacks and their relentless advertising,
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p>(3) Only 23% of all revenues is returned to the cities and towns of the Commonwealth in the form of local aid.
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p>So, when you lose, less than a quarter of every dollar lost actually goes to this “good cause” you don’t mind supporting.
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p>On top of that, we have the regressive nature of it all.
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p>The lottery pulls each dollar from each local community, with poorer communities consistently “contributing” more dollars per capita. The Lottery then keeps 33 cents and gives back 45 cents in prizes. The other 22 cents is indeed “redistributed” to all cities and towns. But this is done so on a simple per capita formula. Cities and towns get a certain amount per resident, with “rich towns” receiving as much as “poor towns.” So, even this limited give back in local aid is having the overall effect of robbing the poorer to pay for the richer.
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p>Pretty bad state fiscal policy as far as I’m concerned.
Unfortunately, the casual lottery player like Christopher provide only a small percentage of the Lottery’s profits. The last time the US Congress looked at the issue of predatory gambling, here’s what they learned (See Pg. 12 to source all the facts below):
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p>1) About half the population plays annually which also means half the population doesn’t play; 2) The top 5 % of players account for 54 % of total sales (nearly $4000 or more each); and 3) The top 20 % account for fully 82 percent. ($1600 or more each)
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p>That means 4 out of every 5 players are of little interest from a revenue perspective – these casual players spend about $75 a year. What would happen if all players spent the same as these casual players? The answer is that sales would fall by 76 percent.
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p>Imagine if Franklin Roosevelt, instead of challenging the country to buy savings bonds to fund the war effort in the shadow of the Great Depression, held up two crossed fingers and exhorted the public to buy lottery tickets instead. Yet today, many of our elected officials deliver exactly that message.
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p>It’s time to rethink the Lottery as public policy and to ask the question why during these severe economic times is government trying to convince citizens to spend large sums on virtually worthless gambling products instead of urging them to save and invest in their future?
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p>Les
Not long after I read this post, I went to the convenience store for some milk and on the way out noticed a huge pile of scratched-off tickets on the sidewalk. (Normally I would have walked right by it.) Someone couldn’t be bothered to throw them an inch farther into the trash. Looked like about a hundred dollars worth, too. For that amount of money the buyer could have had a good meal in a local restaurant, bought a few groceries at the local supermarket and dropped some cash into the salvation army bucket at the town hall. Good for the State I guess, but not so good for the buyer’s pocketbook and the local environment or economy.
I always get a pile of them in my driveway. And NEVER ONCE has someone thrown away a winner by accident.
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p>The best argument for casino gambling in Massachusetts, to my mind, was that it might drive the Keno parlor kitty-corner to my house out of business.
…but it would drive an addict-generating, 24/7/365 drunk driving, water sucking, political corruption factory down the street from me – in Middleboro – or down someone else’s street.
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p>No Casino!
I don’t have a link, but during the casino debate, I heard a woman on NPR talking about how casinos and lotteries pull from different income groups.
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p>She stated that lottery users couldn’t access casinos because they lacked adequate transportation. Now I don’t know if the buses from NYC to Atlantic City or Chinatown to Mohegan counter that (although the driver likely wouldn’t be drunk) but she was firm that casinos would be a gambling tax on the middle class, especially if it was a casino with high minimums.
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p>So unless the casinos replaced the lottery, both would exist…
More people giving their money to international billionaire casino investors instead of saving it. More environmental destruction, crime, addiction, bankruptcies, foreclosures in my middle class neck of the woods. Just what we need.
Maybe I don’t want to save it. Maybe I have a terminal illness and would rather give it to the billionaire casino than the ingrate relatives. Whatever. What we really don’t need is more people telling us all what we can and can’t do with our time and money. I must say I am beginning to resent it enormously. At the margin, we’d all be better off in some way if no one gambled, smoked, drank, drove gas guzzling cars, burned wood in a fireplace, used land to build golf courses, ate donuts, etc. Live and let live.
You have the world’s two largest casinos less than 2 hours away, and $20 scratch tickets available at any convenience store and even in vending machines everywhere you go. If you want to play $50.00 scratch tickets you can fly to Kansas and knock yourself out. Go to Vegas and gamble yourself into a coma if you really like. The world is your oyster. No one is cramping your style, Pbrane.
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p>So, thanks, but no thanks, I will not get over it. Rich powerful people want to put the world’s newest largest gambling casino down the street, where people have homes and there are schools and where there are all sorts of environmental issues that you might not have where you live. And we care a lot about the place we call home. The corruption train is already out of the station. The communities on the South Shore have a right to health and safety that trumps your resentment over not being able to do whatever you want, when ever you want to do it.
You have no philosophical objection to casinos. Or to gambling in general. It’s just about finding the right place to put it.
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p>Riiight.
She doesn’t say that there is a need for a casino somewhere, but she doesn’t want it in her backyard. I think acknowledging a need for the project but put it somewhere else is a requirement to be a NIMBY, with all of its pejorative connotation as someone who is selfish and over privileged and using their clout to get something moved to a poorer community. That’s not what Gladys is saying here, she’s just telling you that there are already places you can go in other states if you really want to.
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p>Gladys is doing an absolutely necessary and honorable thing, which all people should do, when someone tries to do something really bad in their area. We rely on people who are affected to oppose bad things, rather than be apathetic or lazy. When the community is uninvolved or ignorant or apathetic, that’s when people take advantage of the situation.
There’s nothing in the Constitution about always being allowed to do what you want. Get over it.
unless that wood is pressure treated, there’s generally no harm to wood burned in fireplaces. The carbon released was sequestered by the tree, making it a carbon neutral process — and likely substituting for a carbon emitting process like the burning of home heating oil, natural gas, or coal [for electricity].
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p>But yeah, the rest of the stuff you mentioned tends to have major detriments to the users and/or others.
You have to make it possible for people to get a better return by putting their money into some productive investment rather than gambling it.
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p>Like the stock market.
It’s hard to make the case for private investment, however
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p>A. the gamblers must be getting something out of blowing all that money, either fun, or some way to impress chicks/meet guys, and you can do that with regular money too,
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p>B. If the stock market was providing better returns then it would draw more money away from gambling.
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p>The financialization of our economy has made the real economy not unlike gambling. Whether you win or lose your bet depends less on the product you’re investing in, and more on the vagaries of a large government entity to favor or disfavor your investment. If we could get people to put that money into wild bets for new products, that might deliver a million to one, we would have a lot better products. That would be the major difference between that kind of investment and the lottery.
Playing the lottery (on average) means a loss of 55% every time you play (only 45% of money goes in to prizes).
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p>Putting your money under your matress pays much much better at 0% interest.
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p>Putting it in a savings account or CD is ridiculously safe and can earn around 3% even at today’s very low interst rates.
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p>What are you talking about?
This is in response to Bob’s post:
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p>The question is not whether we “permit” gambling. It’s not about buying a square in the Super Bowl office pool or playing poker with the guys from the neighborhood on Friday night. Those are examples of social forms of gambling. The debate is about predatory gambling – promoting gambling to prey on human weakness for profit.
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p>The difference between the other forms of “extreme victimization” Bob references is that government is the promoter of predatory gambling. We are in a partnership with the predatory gambling trade. We don’t link teacher salaries to how much whisky Bob drinks or how many bacon cheeseburgers he can eat like we do with predatory gambling products. I can’t light a cigarette inside a bar in Massachusetts but I can lose several thousand dollars in one night at the same bar using state lottery products chasing dreams as addictive as nicotine.
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p>One of the core principles of American democracy is equal citizenship. The idea that there is no royal blood in America…all blood is royal. How does a State Lottery, something that all of us own and are responsible for but only a few play in a major way, square with that principle? By knowing that 54% of the lottery revenues come from 5% of the gamblers, we are knowingly playing other citizens for suckers. (These extreme gamblers are spending at least $4000 or more annually – see pg. 12)
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p>Martin Luther King famously wrote in his Letter from the Birmingham Jail: “Any law that uplifts human personality is just. Any law that degrades human personality is unjust.” How many of us, especially those on the left, believe our government’s embrace of predatory gambling passes King’s test?
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p>Les
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p>If the state got out of the gambling business and turned it over to private casino operators do you still think this particular activity is worse than manufacturing cigarettes, alcohol, or unhealthful foods? On what basis? Nicotine addiction, alcoholism, and obesity, all of which have a direct connection to these products, can be quite harmful.
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p>Personally, I think freedom is an important element of justice. We should be careful not to substitute our judgment about what is in a person’s best interest for theirs except in the most extreme cases. It’s degrading to be bossed around by others.
Plus, didn’t government take over lotteries in the 1950s onwards in part because private lotteries were corrupt, mob-run, Ponzi-like schemes?
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p>I would bet (no pun intended) that if you ended state-run lotteries, private lotteries would pop up everywhere, either legally or illegally. People are still going to gamble, and now the profits from the lotteries would go to private operators/Mafia with local governments getting 0% of the revenues. This seems like a major problem, and would exist even if true that state-run lotteries are otherwise unfortunate.
Thanks for the excellent and incisive post Les,
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p>My question, apropos the debate in Mass. over potential casino gaming, including possible casinos in urban areas of the state: Can we reasonably regard either casinos or lotteries as being more predatory than the other, in terms of their negative societal impacts ? Clearly, there are ranges of value, or possible extremes one could construct for either scenario, i.e. poorly regulated casinos in cities or the “innovative” hyper-predatory lotteries which you describe.
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p>Leaving these extremes aside, or perhaps not (given your studied understanding of the state of play in the gaming industry), how should we regard casinos vs. lotteries?
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p>Also, given the present view we have into the sordid world of State Treasurer Tim Cahill’s close adviser, friend, fundraiser and lobbyist who simultaneously represented two leading Mass Lottery bidders to his friend and patron, we have a direct answer to your lead question, Who Lobbies for the Lottery Class. The answer in the reign of Cahill is very clear. No one around the Treasurer represents or cares about the ‘Lottery Class’ that is most impacted by new schemes to make the state monopoly on gaming ever more predatory.
Bob, the question is not whether you or I have the freedom to gamble. The question is whether you, me and our democratic government have the freedom to use highly addictive and deceptively advertised gambling products to prey on and exploit the human weaknesses of other citizens in our community for profit.
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p>If it was really a matter of “freedom,” then why do many of the people who promote predatory gambling rarely exercise their freedom to gamble?
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p>Many proponents say it is simply entertainment, no different than drinking wine, going out to a restaurant or going to the movies. Yet, the owner of the vineyard drinks the wine he makes. The owner of the restaurant eats the food he serves. The movie producer watches the movies he makes. This is the only product or service I can think of where most of the people who promote it, don’t use it. (And with casinos, don’t want to live near it.)
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p>Many on the political left talk about a new war on poverty yet many on the left aggressively promote predatory gambling at every opportunity. For the last eight years, nearly every Democrat in America hammered George Bush for lowering taxes on the rich yet many of these Democrats are on the front lines aggressively pushing for faster, more intense, more accessible and more expensive lottery products.
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p>You ask whether predatory gambling is worse than “manufacturing cigarettes, alcohol, or unhealthful foods?” For the purpose of this debate, let’s assume they are all the same. The difference between predatory gambling and the other three is that government has sued the tobacco companies, prohibited smoking in public locations, holds bartenders liable if he serves a patron too much alcohol and in some communities, banned trans fats from restaurants. All of it was done in the spirit to promote the general welfare. In sharp contrast, government aggressively promotes predatory gambling, despite knowing it plays a large role in helping to trap a significant portion of people in a cycle of debt and poverty and poses public health problems for tens of thousands of local citizens.
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p>You pose the question would it make a difference if lotteries and casinos were privately owned? The only reason the predatory gambling trade exists in such a dominant way in our communities today is because government is a partner in it and making so much money from it. The predatory gambling trade, regardless of whether it’s a state-owned lottery or a major casino company, makes nearly all their money from extreme gamblers. If government wasn’t profiting from the predatory gambling trade, they would be prosecuting the individuals and companies involved for the severity of the financial exploitation presently happening with extreme gamblers.
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p>Les
It would be bad for business if there were a lot of other bookies. This could be why the state has excluded others from offering gambling legally.
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p>I disagree that if you ban it the behavior would cease. It would shift and in a way that would be highly sub-optimal.
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p>
gambling is more like a venus fly-trap than a Sahara Lion.
what gambling has accomplished.
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p>It was comforting to observe the corruption, political
scandals, the revelation of paid votes, lavish trips,
expensive skyboxes, payoffs and all that Jack Abramoff
et al wrought from a distance.
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p>But now it’s in our midst with more convictions assured.
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p>This is a complex problem that Les Bernal has done a
remarkable job in simplifying for presentation, but it
isn’t as simple as dismissal with a proclamtion about
infringement on the freedom to self destruct.
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p>One former CT casino employee explained the presence of
casino employees qualified to appraise your vehicle and
immediately disburse that credit to you to feed into the slot machines.
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p>A local woman said that she meets her 2 sisters once a year for a weekend vacation away from the kids and husbands. Last year, they chose Foxwoods because it’s located centrally to all 3. Of course, they talked into the
night. When they wandered around the grounds after midnight, they were horrified to discover little kids wandering around, mom glued to the slots because that’s the success of slot machines.
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p>And of course, the reason casinos provide day care is because kids were being left in locked cars all day/night.
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p>That’s what predatory gambling is.
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p>It creates an addiction so strong that reasonable responsibility is discarded.
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p>George Carney used the attendance of Seniors as an excuse to introduce slots in Raynham, explaining that the Seniors had little else to do.
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p>Each local COA offers trips to Foxwoods or Mohegan Sun that costs a pittance and includes a meal coupon.
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p>Certainly people have choices, but when they are deliberately targeted by convincing advertising,
mechanical manipulations like ‘near wins’ or minor
payouts, that’s predatory.
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p>Personal tragedies of suicides, prison sentences, embezzlement and family destruction are everywhere.
And our tax dollars pay for it at a rate of $4 for
every $1 earned from gambling.
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p>(Fellow bloggers have done a superb job
presenting the facts and the issues. And we’re
blessed that Les is on our side.)
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p>If we’re not our brothers’ keepers, what are we?
OK, lets look at both sides of the equation, from the perspective of the state lottery
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p>revenue:
* Lottery purchases from MA residents
* Lottery purchases from outside residents
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p>Given that the only states without lotteries are AL, MS, AK, NV, UT, WY, AK, and HI, I’d bet the revenue from out-of-state residents is quite low.
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p>expenses:
* Overhead (7.8%, maximum 15%)
– payback to vendors who sell tickets (5.8%)
– salaries of 400ish employees, etc. (2%)
– advertising budget $10M (2006), but I don’t know if that came from the lege directly or from their own coffers.
* Prizes (minimum 45%, currently 69%)
* Returned to the state and local gov’ts (23%)
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p>
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p>So it’s not much, but my bet is that we end up sending more money to Clearchannel et al in advertising than we bring in from out-of-state lottery players.
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p>In the mean time, why not give out less in prizes? Instead of giving out $3.2 million when there was no winner the first time around, shave it down to $2.8 million instead or somesuch. Essentially create a “graduated income tax” of the lottery jackpot before it’s given out… just don’t increase the mega-jackpots as quickly, bringing that 69% closer to 45% without trimming the number of winners or the winnings of anyone but multi-million dollar winners, allowing that 23% to go to something higher.
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p>
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p>Personally, I think it’s pretty lame that only 23% goes to state and local gov’ts. Local hockey leagues manage to run their lotteries 50-50…