State lotteries transfer wealth out of needy communities, investigation finds

https://www.cbsnews.com/news/state-lotteries-transfer-wealth-out-of-needy-communities/

by lxm • 4 years ago

206 185 4 years ago

cbsnews.com

ddtaylor• 4 years ago

In some places the local state lotteries are called the "dummy tax"

witheld• 4 years ago

Well based on this it should probably be rebranded a “desperation tax”

Tozen6• 4 years ago

Exactly. It's not a situation of well off people going somewhere to spend extra cash, as it is exploiting desperate people hoping to find some miracle to escape their circumstances, by shoving a negative vice in front of them.

sircastor• 4 years ago

I had a friend describe state lotteries as a tax on people who can’t do math.

mullingitover5• 4 years ago

I think of it as taxing hope.

dillondoyle2• 4 years ago

I can't be the only one here who buys them.

I make good money. They're only $2.

The 5 minutes I spend walking to the office after buying one spent thinking about what I would do with ___ is worth it.

Yes, I know the math and am under no delusion about winning. I'm more likely to die trying to avoid the shitty drivers on this walk.

It's day dream entertainment!

soulofmischief2• 4 years ago

Then maybe you don't follow under the demographic of "needy"

My mother also spends $2 on them. Sometimes a couple times a day. She also compulsively gambles and has endangered my life before trying to satiate the urge.

I also grew up absolutely dirt poor, she was homeless half the time, but two unwavering constants in her life have been cigarettes and gambling, and they are far from unrelated when speaking of industry motivations. These industries have ruined my relationship with my mother, severely impacted my own quality of life as a knock-on effect, and I'm far from the only one.

Keep buying the tickets. But you can't justify the state of the industry today because you're not the one caught in its net.

wronglebowski• 4 years ago

Being raised in what I believe to be one of these communities this feels very true. In Pennsylvania this supposedly supports seniors, but seniors often are the ones gambling. The most frequent shops for selling lottery tickets are also tobacco stores. I find it hard to resist a scratch off from time to time myself.

I don’t know what the solution is, I know it gives people hope and excitement. Even if they think it’s impossible to work themselves out of debt they hope they’ll “win big” one day keeps them going to an extent. It’s really just another version of the “Marshmallow Question” just with adults instead of kids. You could write it all down for them and spell it out, but to them the math wouldn’t work out.

HWR_143• 4 years ago

I find it hard to resist a scratch off from time to time myself.

As long as you aren't doing it to win but instead to enjoy yourself gambling, and you do it with disposable income, this is fine. Don't beat yourself up for enjoying something mathematically suboptimal.

Even if they think it’s impossible to work themselves out of debt they hope they’ll “win big” one day keeps them going to an extent. It’s really just another version of the “Marshmallow Question”

On the contrary. With the Marshmallow Question, you know you'll be rewarded. In this situation you do not think you will be rewarded. If the Marshmallow Question was "do you want this Marshmallow, or do you want it thrown away", that would be a better example. At least, in the mind of the players

but to them the math wouldn’t work out.

It's entirely possible the math doesn't work out. A negative EV is significant if we are playing a game where the purpose is to increase my bank balance, but it's entirely possible that for various reasons that doesn't apply IRL.

notjulianjaynes• 4 years ago

As long as you aren't doing it to win but instead to enjoy yourself gambling

What exactly is there to enjoy about a scratch ticket beyond the hope of winning?

Falkon13132• 4 years ago

No. It's more like "Do you want one single marshmallow, which might bring you a few brief seconds of pleasure - in the unlikely chance that the dog doesn't eat it first or it doesn't get covered in ants first? Or would you rather have a one in a million chance of having as many marshmallows as you want, whenever you want, for the rest of your life, with no more worries about the dogs or ants because there'd be plenty for the dog and you would never have ants anymore?"

landemva6• 4 years ago

what the solution is

No loss lottery run by local bank or credit union would be a good start.

https://freakonomics.com/podcast/is-america-ready-for-a-no-l...

https://pooltogether.com

yawnr• 4 years ago

Yotta does this in an FDIC insured account btw

kingkawn2• 4 years ago

I remember when my friend’s neglectful abusive father won a million dollars in the lotto and my friend said, “there is no God.”

Entinel• 4 years ago

If it makes your friend feel better, lottery winners more often than not destroy their own lives.

kingkawn2• 4 years ago

Yeah in this case his son’s life

david2ndaccount• 4 years ago

The argument for the state having a monopoly on lotteries is that if there wasn’t a legal lottery illegal lotteries would proliferate. Thus to protect people, the state should run it as it would then be guaranteed to be fair and free of the criminal element (mobsters, etc.). Ideally, the lotto would just take in enough to pay the winners and administrative expenses. However, most states have abused this monopoly and just see it as an alternative source of revenue, which turns it into a regressive tax.

State lotteries should be small, should not be advertised and should not be sources of revenue for the state.

grubbs• 4 years ago

The commercials I see here for the DC/VA lottery are quite disgusting.

I'm "kind of" fine with the state running it. But they should not be advertising on TV.

aaomidi• 4 years ago

Yep. They use dark patterns and FOMO to push people.

ISL6• 4 years ago

Washington State Lottery has a slogan, "It's good to play!"

It really should be, "Playing the lottery is a pretty terrible idea and we're going to, on average, take your money. If you still want to play, fine, but cheeseburgers really are better than lottery tickets. Wealthy people got wealthy by putting their money into index funds and savings accounts."

mod• 4 years ago

Someone's job is to increase the numbers.

I think they should spend the lottery money to hire someone who's job is to decrease the numbers.

giantg2• 4 years ago

Supposedly they use the revenues to help the needy groups. That's their reasoning anyways.

samtho• 4 years ago

In California, they give a certain amount to schools, but the state legislature uses lottery projections to justify slashing budgets to the public school system. Kind of thinking this is not how it was envisioned to work.

chernevik2• 4 years ago

Came here to say exactly this. People will play numbers games organized by the mob, so it does make sense to give them an honest game and keep the money from crooks. But the state take should be small. And absolutely no advertising.

cat_plus_plus2• 4 years ago

Mob, let alone legal casino operators, would never get away with such ridiculous margins. Even organized crime faces competition from unorganized crime, your neighbor's home poker game will probably have a pretty low rake.

encryptluks2• 4 years ago

I'm still not convinced that some lottery winners aren't preselected. I get it, that it is supposed to be auditable and resistant to cheating but wouldn't be the first time a large gambling system has been found to have issues. It also seems like whenever there is some financial crisis happening that Powerball and Mega Millions always go up and it gets talked about in the news.

pmontra2• 4 years ago

I accept that a state monopoly is better than making the mob richer and stronger. However given that it's mostly the poor that play lotteries, bingo, etc and all of them are rigged against the players, the state should find a way to give back most of those money to the players (there are expenses to keep it running.) If a private company is running it for the state, the margin should be small. This is maybe even something a politician could use in a campaign.

Spooky233• 4 years ago

Huh? The whole point is to generate revenue. Always was. Shitting down numbers rackets was just a side benefit used to sell the lotteries.

The horse is totally out of the barn on gambling. We’ve decided that it’s all good. I was at an MLB game this weekend and they go through the betting lines for different games in the scoreboard before the game. It’s fully mainstream.

ross2990• 4 years ago

A good example of an illegal lottery would be the Bolita [0] popular in SW Florida. It was all tied up with organized crime. This led to violence when Italian organized crime attempted to wrest control from the Latinos who first implemented it.

[0] https://www.tampabay.com/life-culture/history/2021/09/28/bol...

tunesmith• 4 years ago

Is that even true, though? I mean, there are varying levels of lotteries across the states. Five states don't have them. Is there clear evidence of illegal lotteries proliferating in the states with fewer state-run lotteries?

The first step here should start with the belief that the lotteries should just be outlawed, and then actually demonstrate why that won't work.

eloisius• 4 years ago

In GA the lotto funds scholarships. It might be regressive in that the poorest kids may be unable to get the grades necessary to earn HOPE scholarship, but insofar as taking vice that’s going to exist anyway and making it serve a public good, it seems like a pretty fair deal. It might be backward to call it so, but my entire life my dad told me not to play the lotto, that it was an IQ tax.

jimz• 4 years ago

State-run lotteries are ALWAYS about the transfer of wealth and property from the poor and marginalized to the wealthy and connected. This was true during colonial times, this was the manner by which the state of Georgia divvied up land stolen via Indian removal, culminating in 8 substantial (and all rigged) lotterying of land that can only be characterized as stolen under the threat of muskets and bayonets. It's not a coincidence that lotteries became increasingly unpopular. This was then deliberately conflated with private lotteries ran by blacks, immigrants, and the poor where the house odds were good but not anywhere close - to the tune of 1 in 900 compared to 1 in 14 million or so for your typical 6 out of 49 game, made a moral issue, then a tax issue (giving more reason to raid minority neighborhoods), until the 1970s when essentially states began seeing the system as a two-birds-one-stone scenario both in raising revenue and also booting out what was otherwise an illegible parallel society that it had little direct way to profit from or exercise control over.

The really interesting counter-example - or really, the most incompetent series of lotteries ever ran by a state - was the excise farming schemes the British colonial administrators ran in SE Asia, in particular Penang and Singapore and further afield in Malaya, between the 1840s and officially 1903. Excise farming is basically the lotterying of monopolies on the vice trade for fixed periods of time, which existed since the 1500s and periodically gets brought out (prominently under Cromwell, and a bit during the restoration), except because the decline of the East India Company and the lack of civil servants and administrators who had a working knowledge of Chinese, which had become the biggest financial players and essentially realized that the authorities were unable to make sense of the place-of-ancestral-origin system that had little to do with what the British were familiar with (like blood quantum) and inadvertently enabled the same native-place association or Landsmannschaft (we need an English word for this, btw) to simply dominate certain vice trades by the simplest subterfuge - by leveraging the comparatively fluid role personal names represented. Yes, it took more or less an actual case of "all Asians look alike" for a state lottery to fail. Carl Trocki's works are the authoritative research on this subject and time period for those interested in what probably represents one of the most mind-boggling peacetime self-owns by two successive governments that in mainstream academic discourse (outside Subaltern, Asian, and Diaspora/Migration studies, which are arguably niche and very much interdisciplinary), represents the archetype for hegemonic power relationships in practice. I suppose one can also chalk it up as a lottery win there, a rare one, but someone does usually actually win the lottery eventually.

INTPenis• 4 years ago

I love this idea that the state is free of illegal elements. Maybe that sort of thinking is part of the problem.

missedthecue• 4 years ago

Is it really a tax if it's voluntary? That seems like a contradiction of terms.

And why not ban the lottery entirely if you're not going to use it as a revenue source? Keep it around just to entertain poor people? 99.999% of them will still lose money anyway if it's morality you're worried about. Does it really matter to the winners whether they take home $100mm or $70mm (and the gov the remaining $30mm)?

It doesn't matter for the losers, they're out their money either way.

Biologist123• 4 years ago

It’s a tax on lack of training in basic statistics.

ajuc• 4 years ago

Is it really a tax if it's voluntary?

It's exactly the same situation as taxing smoking and drinking. So - yes.

kqr• 4 years ago

It is not a tax in the strict, technical sense, obviously. But in practise it functions much as one.

The comment you're responding to tells you why it shouldn't be banned: because then it will be held by criminals (by definition) instead. And those criminals tend to have ties to less nice forms of crime too. So it's sort of a damage containment strategy, but it could (in the eyes of GP) be executed better.

wildmanx2• 4 years ago

Is it really a tax if it's voluntary? That seems like a contradiction of terms.

Um, it's not voluntary. Buying the product is voluntary. But the state taking a cut once you do buy the product is not voluntary. Don't mix those two aspects.

It's voluntary to buy a pound of chicken feet. It's not voluntary to pay VAT on that purchase.

It's voluntary to go to work and earn a salary. It's not voluntary to pay income tax on that salary once you earn it.

And why not ban the lottery entirely if you're not going to use it as a revenue source? Keep it around just to entertain poor people?

One reason is to keep a legal way to do this, since otherwise illegal ones have higher demand and pop up. It's more expensive (and arguably worse for society) if you make gambling entirely illegal and instead need to go hunt down illegal lotteries with more police resources.

99.999% of them will still lose money anyway if it's morality you're worried about. Does it really matter to the winners whether they take home $100mm or $70mm (and the gov the remaining $30mm)?

You clearly don't play the lottery (and I don't mean that negatively). Most wins are small. $400 here, $2000 there. That's how you keep people hooked. And in those orders of magnitude, it makes quite a difference in practice.

phkahler• 4 years ago

In Michigan they sold it by saying all the lottery money would go to education. But other funding to education was cut by the same amount, so technically the lottery is funding education even though the revenue increase went somewhere else.

claar• 4 years ago

This is my biggest pet peeve with local tax increases. They always claim the money is going to whatever the public most cares about - education, etc. - but really it's just an overall budget increase, and the amount spent on education doesn't actually increase.

pharmakom• 4 years ago

By same argument government should sell drugs, payday loans, gambling rings

imtringued• 4 years ago

Ugh, you could literally pay a UBI from that and CO2 dividends, yes it will be small but it would be fair.

basilgohar• 4 years ago

This is true as is the nature of "food deserts" in the poorer neighbors, at least where I live – there are higher concentrations of convenience stores, drive-thrus, and gas stations that feature items like tobacco products, alcohol, and lottery tickets that similarly exploit the local populations impulse purchases and eat up what little income they earn from two or more low-paying jobs.

It's viciously cyclical and those sin-taxed items all promote bad habits, harm physical, mental, and spiritual health, and perpetuate check-to-check living and discourage savings. It makes sense to me because many folks in these communities rely on public transit and/or walk to where they need to go, so they buy from what's available.

This is the dark side of liberty where we see that people do not always choose the best options from those available to them when impulse buys are offered , or sometimes, there is far less to choose from for certain populations to begin with.

I recognize I'm oversimplifying and probably have committed more than a few gross stereotypical statements, but I am distressed to see the conditions in a lot of these neighbors, not for me, but because of what I imagine it must be like for a lot of folks who don't have the same opportunities to rise up simply due to the circumstances of their birth.

There is absolutely no good in the lottery and it should be abolished. Any alleged good for education or other programs is more than countered by the harm it does to the lower income populations. Education should be paid for from taxes, and just raise taxes if necessary. My guess is that the money that comes from lotteries don't usually end-up benefiting that much.

pm90• 4 years ago

Honestly its so much wasted human capacity. Its not even the case that we don’t have enough: there’s enough food to adequately feed everyone. Its a logistical problem and when markets are left to their own they will obviously lead to situations where only the cheapest products win out (not the most nutritious).

landemva6• 4 years ago

lead to situations where only the cheapest products win out (not the most nutritious).

Vending machine owners stock what sells. People vote with their dollars and their attention. We are free to choose what we eat, and free to throw out the TV. Most enjoy watching the 'breaking news' propaganda rather than putting in some effort to cook a simple meal at home. Your body, your choice.

WalterBright8• 4 years ago

This is the dark side of liberty where we see that people do not always choose the best options

Most evil in the world is done by people who know what is best for everyone else, and forces it on them.

mrguyorama5• 4 years ago

What strong evidence do you have for this thought terminating cliche?

bitshiftfaced3• 4 years ago

that similarly exploit the local populations impulse purchases and eat up what little income they earn from two or more low-paying jobs.

I don't understand this. What's special about this population? Should you not be able to make impulse purchases based off of your income level?

bobkazamakis2• 4 years ago

is your argument that impulse purchases at dollar general that hemmorage money out of the local economy are good because they are poor?

conciliatory• 4 years ago

It’s honestly shocking how many facets of American culture are predicated on addiction for profit. Alcohol, food, social media, gaming, opioids, cannabis, nicotine, gambling. It is extraordinarily difficult to find a sense of perspective independent of the influence of these industries.

bogomipz3• 4 years ago

It's pretty amazing how the states are in the business of:

booze, tobacco, weed, gambling and gas

Imagine what the total revenue from just those 5 things is? It's got to be like printing cash and yet in most states and cities across the US have crumbling infrastructure, failing schools, underfunded pensions and budget deficits. This is in addition to all their other more regular tax regimes. Where does the money go?

Rury2• 4 years ago

It's not as much as you'd think. For Illinois, lottery alone nets something like $3 billion, of which ~$700-750 million goes to funding public schools. Public schools expenditures are ~$35 Billion/year. So, less than 1/35th of costs. Add in the alcohol, tobacco, weed, gambling taxes, and you still not even close to covering half the state's school expenditures.

Granted, Illinois is perhaps the most fiscally screwed state, so might not be best example...

landemva6• 4 years ago

Alcohol, food, social media, gaming, opioids, cannabis, nicotine, gambling

and wars.

Hmmm, what demographic frequently buys lottery tickets? How much overlap with demographic of enlisted Army recruits?

I suppose lottery and Army is better than prison.

absherwin3• 4 years ago

There's a simple answer: Offer a lottery with a high payout rate and flatten jackpots to the extent they don't cause a shift into other worse sorts of gambling. The total amount of money transferred to support government programs makes up less than 0.5% of total government revenue; it's trivially replaceable.

rhacker• 4 years ago

play 1000 times, probably win $1000.

bogomipz3• 4 years ago

"Offer a lottery with a high payout rate and flatten jackpots to the extent they don't cause a shift into other worse sorts of gambling"

What is meant here by "flattening" jackpots? And how does it help?

HWR_143• 4 years ago

What is meant here by "flattening" jackpots? And how does it help?

Instead of 1 in 300,000,000 chance of astronomical money make it 1 in 50,000 of getting a new car or similar.

I'm not sure why it helps. I guess there are more (but smaller) winners, which the poster thought was better.

Spooky233• 4 years ago

Ireland has/had an interesting system where they sell bonds where the interest is paid like a sweepstakes.

It’s like buying into a raffle, except you can get your money out.

absherwin3• 4 years ago

If we assume the main problem with lotteries is that they make some people poorer, we need to solve two things: The payout being less than the cost due to both high overhead and transfers and the payouts tending to concentrate wealth since even in a lifetime of play few win the largest jackpots.

One can't make them too flat because consumers like large jackpots which is why they've grown over time and become harder to win. Presumably there's a level below which consumers would switch to other types of gambling regardless of legality.

pyrolistical• 4 years ago

So remove the very reason why people pay the lottery in the first place?

I actually think this is a good idea as long as the gov keeps the ban on black market lotteries

absherwin3• 4 years ago

Increasing payouts should bring more players though it would be offset by eliminating the advertising that currently consumes some of that revenue. Flattening jackpots would have a negative effect but we just need to optimize for being above the point at which there's competition instead of maximizing lottery revenue.

iudqnolq8• 4 years ago

There's an interesting theory that the solution to this is to subsidize the lottery and improve the odds significantly. Take to the extreme and you could essentially implement UBI this way.

I also don't think poor people are wrong to think a chance of getting a life-changing amount of money is a worthwhile luxury spend compared to the other available options. They may be wrong about the probability, but instead of fixing that with education, we could fix it by making the probability closer to people's intuition.

Given the well-known issues with means testing, randomly assigning the payouts instead might be a significant improvement.

hetspookjee• 4 years ago

I am very skeptic of this theory as a lot winners of lottery’s end up in enormous debt after few years due to horrible mismanagement of their funds. Why take this odd route and not just directly implement UBI if that is the goal?

iudqnolq8• 4 years ago

That's a serious issue, but I think it's mostly caused by the long-term impact of poverty both socially and neurologically. If you grow up worrying about money you often learn instincts that screw you over if you luck out.

My uninformed guess underlying this is that making the payouts smaller and more frequent would solve this. First off, people would grow up in better communities. Second, I think if the payout wasn't advertised as "retire for life and be a rich person" people would face less social pressure to shower friends and family in gifts.

I think given no constraints giving everyone $1,000/month is best, but I think there's a fair argument giving 1/1000 people $1000/month (and alternating) is better than giving everyone $100/month.

Mountain_Skies• 4 years ago

The "where are they now" stories have been getting more positive over the years. It seems like more of the winners are middle to upper middle class and also awareness of the curse of past lottery winners has made winners more aware that they need a plan so they don't end up penniless a few years down the road.

Andaith• 4 years ago

I really like this idea(not for UBI, but for a better lottery that more evenly distributes winnings), couple it with X amount of free tickets per week/month for low income earners too!

ISL6• 4 years ago

If playing the lottery becomes worthwhile, arbitrageurs will immediately step in until it isn't.

Got a lottery ticket with a 10% chance of being worth $100? I'll give you and each of your friends $8.50 for them, guaranteed, today.

Lotteries penalize people who are bad at math. It really is that simple.

iudqnolq8• 4 years ago

I disagree on minimal evidence. My intuition is it's more likely you're wrong about what people value than that many people are wrong about that kind of math.

Arbitrage is a real issue, but it's not magic and there's a lot of friction in the real world. For ex, you don't get spam callers trying to buy your chance of a large settlement payout.

forgotloginonp42• 4 years ago

The claims of “bad at math” ring hollow as Selbee did appear to use statistical analysis and there is a movie being made celebrating those wins.

https://highline.huffingtonpost.com/articles/en/lotto-winner...

But it’s also possible that math whizzes like Jerry Selbee are finding and exploiting flaws that lottery officials haven’t noticed yet. In 2011, Harper’s wrote about “The Luckiest Woman on Earth,” Joan Ginther, who has won multimillion-dollar jackpots in the Texas lottery four times. Her professional background as a PhD statistician raised suspicions that Ginther had discovered an anomaly in Texas’ system. In a similar vein, a Stanford- and MIT-trained statistician named Mohan Srivastava proved in 2003 that he could predict patterns in certain kinds of scratch-off tickets in Canada, guessing the correct numbers around 90 percent of the time. Srivastava alerted authorities as soon as he found the flaw. If he could have exploited it, he later explained to a reporter at Wired, he would have, but he had calculated that it wasn’t worth his time. It would take too many hours to buy the tickets in bulk, count the winners, redeem them for prizes, file the tax forms. He already had a full-time job.

Tozen6• 4 years ago

You seem to be also missing the point of these lottery retailers being disproportionately clustered in the poor Black neighborhoods. The "math problem" also involves pushing the distribution of the "vice" off on them (where such people are more desperate to escape their circumstances), then negating any overall or possible benefit to those poor Blacks that don't have such a vice (like kids) and need greater educational funding and opportunities.

chernevik2• 4 years ago

And once word of that gets out, just what exactly do you think happens then?

codelord• 4 years ago

Yes. Let's make a lottery based economy. That would boost the productivity and make the nation prosperous. This is like fixing a pothole by creating a supermassive black hole.

iudqnolq8• 4 years ago

Okay, just replace our existing failed welfare system with this then. You don't think there's massive suppressed innovation because so few people can try a startup?

yunohn4• 4 years ago

How is the lottery like UBI? This is similar to crypto maxis gambling on shitcoins and saying “generational wealth opportunity”.

Both of these are the siphoning of money from large volumes of people to a few people, who are the “success stories” used to dupe the next set of people.

iudqnolq8• 4 years ago

I'm saying it's about the specific values of the parameters. Right now they're set so it's an evil trap. But we could maybe just tweak the parameters so that wasn't the case.

If the evil of the lottery is that the expected value is lower than the ticket cost that's just a simple stats problem to fix.

ipaddr• 4 years ago

Changing the lottery into a similiar model compared to Spain where there is one big price pool and thousands of winners winning smaller amounts might go a long way.

blabberwocky• 4 years ago

I think there is an inherent tension between the two ideas in that a lottery is, fundamentally, one profiting at the expense of (a consenting) many, while UBI guarantees a baseline state for many without particularly disadvantaging any one.

Some might consider UBI an implementation of John Rawls' Difference principle [0], that distributive inequalities should work to the advantage of the worst-off. Lotteries would support utilitarians' counterargument that one may very well prefer to roll the dice on his or her welfare, rather than accept a guaranteed, minimally satisfactory baseline.

[0] https://en.wikipedia.org/wiki/Justice_as_Fairness#Second_pri...

mc32• 4 years ago

Question is, before states implemented legalized lotteries, where did people spend this money? Bookies, horses, craps, betting pools at work, smokey card houses, gambling parlors?

Do we make all this illegal, put alcohol, tobacco, prostitution, pro sports and weed into that bucket too. All unnecessary and transfer wealth.

On the other hand, yeah, I'm not sure the argument by the state that hey, it's vice, we'll regulate it and hand the profits over to schools (etc.) is an honest one. Often they dip into the fund for unrelated things.

bombcar• 4 years ago

I suspect some did, some will always find a way.

But all those things take time and effort to access; the lottery is literally available at every gas station in the nation, and most grocery stores, etc.

mullingitover5• 4 years ago

Georgia's lottery[1] is overall a pretty decent system, all things considered.

the lottery takes in over US$1 billion yearly. By law, half of the money goes to prizes, one-third to education, and the remainder to operating and marketing the lottery

It pours massive amounts of money into Georgia's education system. It's not perfect but it has put hundreds of thousands of students through school. If we must transfer wealth out of needy communities I can thing of worse places to put it than into education.

[1] https://en.wikipedia.org/wiki/Georgia_Lottery

dymk2• 4 years ago

Well, they're ranked 26th in education, so at best it's just not the worst it could be

jlarocco2• 4 years ago

That seems overly negative, to me. Being 26th makes them average, and they get to use the money that other states use for education on other things, or lower taxes.

ISL6• 4 years ago

Generally when lotteries "fund education", it can enable legislatures to allocate tax money that had previously gone to education to other priorities. This shift can turn lotteries into a de facto tax on being bad at math.

atwood22• 4 years ago

This shift can turn lotteries into a de facto tax on being bad at math.

Would lotteries be ok if the expected value of the players prize equaled the price of the ticket? Being bad at math and lotteries being a regressive tax seem orthogonal.

s17n2• 4 years ago

You don't have to transfer anything, though - just get rid of the marketing, take a couple percent to cover administrative expenses, and spend the rest on payouts. If you need money for education, tax people in a fairer way.

mullingitover5• 4 years ago

If you need money for education, tax people in a fairer way.

I don't think anyone is compelled to gamble by the Georgia Department of Revenue. This is essentially Georgia saying, "We know we can't stop you from engaging in this vice, so we're at least going to make it beneficial to society in some way." Colorado and a number of other states are doing the same thing with cannabis revenue.

I personally hate gambling, I understand how people get addicted to it, but like illegal drugs it's just a thing that the government can't possibly control. The next least bad thing to do is harness it for good in some fashion.

analog31• 4 years ago

Money is fungible. In the state where I grew up, when the lottery was proposed, it was promised that the money would go to "education." Within a few years, the education budget remained neutral, as the contribution from the general fund was reduced by roughly the same amount as the lottery contributed.

In other words, we got took.

llip• 4 years ago

I saw someone suggest better odds and smaller jackpots. That isn’t a solution, win $1000 and $1000 is going to buy crack or similar.

throwawaysleep2• 4 years ago

Yeah. These people have demonstrated a willingness to throw money into a garbage bin.

If you play the lottery and are poor, I want the government managing as much of your spending as possible.

femto• 4 years ago

It's true of gambling in general. A case study is the state of New South Wales in Australia: the state with the most poker (slot) machines per capita [1], in the country with he most poker machines per capita [2] (excluding gambling specific destinations such as Macau and Monaco). One poker machine in NSW for every 82 people, with an average loss of AU$1000 per adult per year. The losses (called profit for the hotels and clubs) are heavily skewed toward lower income local government areas [3]: a loss of about $AU2500 per adult per year. Considering that not everyone gambles the losses are even bigger for those who do gamble.

Granted an unknown amount of these losses are "business costs" for money launderers [4], but the damage to the community is still there from the associated crime.

[1] https://theconversation.com/three-charts-on-australias-addic...

[2] https://www.australianethical.com.au/blog/australia-needs-to...

[3] https://chetre.org/2020/10/barriers-enablers-policy-gambling...

[4] https://www.abc.net.au/news/2022-04-10/nsw-crime-commission-...

josephg• 4 years ago

The "You Can't Ask That" episode on gambling in Australia was a massive eye-opener for me. They interview a bunch of people who are lifetime gambling addicts. Its shocking how badly its ruined their lives.

I have no idea how many people who gamble regularly have a problem with it; but I'd support banning gambling entirely.

https://iview.abc.net.au/show/you-can-t-ask-that/series/2/vi... (Does iView work outside Australia?)

speakfreely• 4 years ago

but I'd support banning gambling entirely

If this was possible, that would be great. But you cannot eliminate a service where there is sufficient demand. You can only drive them underground, which frequently cause worse externalities for society than the original things being banned (drugs, prohibition-era alcohol ban, prostitution).

mrguyorama5• 4 years ago

For my brother's bachelor party, I went to a casino for basically the first time. We were there from quite early in the afternoon and it's absurd the clientele that can be considered "regulars". As my brother darkly called it: "You have to be careful, otherwise you will lose your trailer". Meanwhile at least one old man spent several hours assuring us of his "system" to "beat the odds" while he lost hundreds of dollars, never once showing even the slightest understanding of what "the house always wins" means. Indeed, the rules for play for the card games were artificially more complicated than they could be, in my opinion this was done in order to more confuse players and make them think they found a "hole" in the rules to "beat the system"

Too many people, especially here, espouse the "but gambling is entertainment" line. I don't buy it. I've spent thousands on video games, and sitting in front of a slot machine built by "Konami", a literal video game publisher, and it was abysmal from an entertainment aspect. Nobody would pay to play these games if there wasn't some internal pretending that "I can beat the system"

Tozen6• 4 years ago

Very good points.

ConstantVigil• 4 years ago

Yet more evidence that lotteries and other forms of gambling really are just a stupid/desperate person tax.

xoa• 4 years ago

"Sin taxes" on self destructive behavior and officially run regulated versions of things which are infeasible to reasonably ban (and the black market "cure" would be worse then the disease) can often be reasonably justified. But every single last one of them should always be completely revenue neutral. All money should be divided amongst the state's residents and sent right back without exception. There's clearly been a long standing temptation to give into the argument of "we'll use this money to make up for the negative effects" but in practice anything that feeds into the general fund directly or indirectly creates perverse incentives that are just too dangerous. Government should take no direct financial interest in whether money from sin rises or falls to zero. That's a big missing piece in a lot of these systems, and the risk of dependence seems similar to that of fines which are often effectively "sin taxes" too. There a number of examples of places [0] which came to depend on fines as a significant source of revenue to run government and in turn took actions to increase the take to great destructive effect.

----

0: https://www.forbes.com/sites/nicksibilla/2019/08/29/nearly-6...

throwawaysleep2• 4 years ago

They evidently don’t consider themselves needy if their idea of entertainment is throwing money in a garbage bin.

May as well be a state one that tries to educate kids out of such communities.

wly_cdgr• 4 years ago

No shit

eyelidlessness• 4 years ago

It’s a running joke, even among my lottery buying friends and fam, that the lottery is a poverty tax. It’s just not a very good joke.

jancsika• 4 years ago

You can actually increase your odds by choosing your own numbers: 1 2 3 4 5 6.

Then all you do is convince everyone else playing to choose those numbers, too.

No one wins, the jackpot rolls over, and game eventually[1] everybody wins at the same time.

Together we can do it!

1: Warning: timeline to win may exceed humanity's existence.

forgotloginonp42• 4 years ago

A quick search reveals that this region of human activity is already well colonized by DAOs and NFTs.

hn_throwaway_99• 4 years ago

I'm curious, the article talks about the issue where a small number of, essentially, addicts, are responsible for a huge portion of total sales (10% of players are responsible for 2/3 of total revenue). I find this interesting because this pattern repeats in a number of different "potentially addictive" pursuits, where the pursuit can be a pleasant and welcome diversion when done in moderation, but is ruinous for addicts.

For example, I love having a good glass of wine or two a couple times a week at dinner. But the alcohol industry would essentially collapse without alcoholics - a study in the UK found that 77% of alcohol was sold to problem drinkers - 30% to "harmful" drinkers (women who drink more that 36 and men more than 51 drinks a week) and 48% to "hazardous" drinkers (women 15-35 drinks a week and men 15-50 drinks a week). Similarly, I like blowing 5 bucks on the lottery whenever there is a huge jackpot (I can afford it and am basically just paying to fantasize about what I'd do with a couple hundred million), but apparently folks like me make up a relatively small proportion of lottery sales.

So, I'm basically just wondering there is anything that can, or should, be done here. I'm assuming these distributions are what you'd always see in something that shows a power law distribution - the huge percentage of total sales is always from those with addictions because they indulge so much in the first place (related very interesting article: https://astralcodexten.substack.com/p/drug-users-use-a-lot-o...).

Falkon13132• 4 years ago

Sure, that's easy.

Consider where lotteries come from - everyone in the room puts their name in the hat and then one winner is drawn (or maybe also a 2nd prize and 3rd prize). But it's simple - 1 person, 1 chance.

You just can't buy more in that system. So the 'problem gambler' that blows most of their paycheck on lottery tickets just isn't even possible.

Maybe the limit doesn't need to be strictly 1, but even just having a limit, low enough to not be too much of a hardship even to a poverty-level person, would still be a simple solution.

People sure wouldn't like it though.

They'd immediately start working on ways to get around that limit. Same as they would if you limited them to only buying 1 6-pack of beer per week.

egberts1• 4 years ago

Number one problem with lottery, notably state-run variety, with multi-year payouts is the following:

It is next to impossible to discontinue without any impact to your state budget.

In short, it’s that giant sucking vortex of economic and a form of state-sanctioned, self-imposed addiction.

caymanjim• 4 years ago

There are plenty of people who get sucked into spending more than they can afford on the lottery, to be sure. For most people, it's cheap entertainment. They know they won't win, they understand the odds. They're not idiots or suckers. They're buying a cheap thrill. For a few bucks a week, they get some anticipation and fantasy. The big jackpot tickets are great. For $2 you get a harmless thrill, and you can have those fantasy what-if conversations. Scratchoffs are fun to do, and they offer a ton of small payouts. Everyone always mocks lottery players and assumes they're being duped, but most of them are just buying the only thrill they can afford. Beats crypto.

cat_plus_plus2• 4 years ago

This really needed an investigation? Collecting money is the whole point and state monopoly ensures much bigger margins than casinos. The only good part is that's it's avoidable voluntary taxation.

Tozen6• 4 years ago

Not at all surprised that these state lotteries in America are taking advantage of poor Black people. It's just another demonstration of how various exploitative systems are put in place for such purposes, like the school-to-prison pipeline, then the pretense by the creators or those profiting from it that they don't know or understand what is going on.

It is also "funny" how after generating so much money from those poor Black neighborhoods, how little the percentage of that money ever goes back to them. The states involved could very much legislate that a percentage of profits (and at what percentages) have to be shown benefiting the poor neighborhoods they are exploiting. But, we all know such problems will not be fixed (despite being exposed by the media), unless forced to and they will be fighting against it at every step.

anm89• 4 years ago

Did anyone ever think otherwise?

kornhole• 4 years ago

Lottery is a tax on people who don't understand probabilities and those who need something to hope for. Basically it taxes the poor. It makes many of these already poor people poorer and a very few richer. This has been known for decades or more. The results of the investigation are consistent and no surprise.

999900000999• 4 years ago

I grew up poor, lotteries are 1000% entertainment.

No one is stupid enough to really think they'll win. It's a fun shared moment, like watching football.

bshepard• 4 years ago

There are, I believe, real prosocial possibilities in the lottery form: https://deepsocks.substack.com/p/nomophobia-and-the-future-o...

tiku• 4 years ago

Selling hope. I've read somewhere that it is tax on the poor, since then I've stopped playing the lottery.

thayne• 4 years ago

Is that surprising?

janandonly• 4 years ago

Lotteries are an extra tax on those that do not understand math and/or statistics.

sam-s• 4 years ago

1. Lotteries are not taxes because the participation is voluntary (unlike the soviet lottery/got's bond combo).

2. People buy lottery tickets just like they buy movie tickets - it is a form of _entertainment_. They heard many times that they should not expect to win - just like they heard many times that what they see on the silver screen is not real. Nevertheless they keep dreaming.

State lotteries transfer wealth out of needy communities, investigation finds

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