Lotteries played an important role in the foundation of the United States but were abandoned because of abuses in the nineteenth century. Their reintroduction occurred in the second half of this century, when states turned to them as a way of generating needed revenue. This article explores the revenue-generating potential of state lotteries and concludes that they are incapable of contributing significant amounts of money to state coffers, and that they have not made inroads into illegal gambling. In the drive to increase revenues through legalized gambling, legislators may be ignoring their responsibility to address critical social issues directly through more progressive forms of revenue generation. To the extent that lotteries are utilized as a politically expedient alternative to taxation, they impede effective and constructive approaches to the amelioration of critical social problems.
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References
1.
1. The following history of lotteries in the United States is drawn from John Samuel Ezell, Fortune's Merry Wheel: The Lottery in America (Cambridge, MA: Harvard University Press, 1960).
2.
2. Ibid., p. 95.
3.
3. Ibid., pp. 99-100.
4.
4. Ibid., p. 301.
5.
5. New York, New Jersey, Massachusetts, Pennsylvania, Connecticut, Rhode Island, Maine, New Hampshire, Vermont, Ohio, Maryland, Delaware, Michigan, Illinois, Washington, Colorado, Arizona. The District of Columbia also has a lottery, as do Puerto Rico and the Virgin Islands.
6.
6. Michael P. Davis, “The `Lotterizing' of America,”Gaming Business Magazine4(5):6-10, 55 (May 1983).
7.
7. U.S., Bureau of the Census, Statistical Abstracts of the United States: 1984 (Washington, DC: Government Printing Office, 1984), p. 290. Data do not include Colorado, Washington, or the District of Columbia.
8.
8. Daniel B. Suits, “Gambling as a Source of Revenue,” in Michigan's Fiscal and Economic Structure, ed. Harvey E. Brazer and Deborah S. Laren (Ann Arbor: University of Michigan Press, 1982), p. 832.
9.
9. “Annual Report” (Trenton: New Jersey State Lottery, 1982).
10.
10. U.S., Bureau of the Census, Statistical Abstracts of the United States 1982-1983 (Washington, DC: Government Printing Office, 1983), p. 155.
11.
11. Daniel B. Suits, “Gambling Taxes: Regressivity and Revenue Potential,”National Tax Journal, 30(1):33 (Mar. 1977).
12.
12. David Weinstein and Lillian Deitch, The Impact of Legalized Gambling: The Socioeconomic Consequences of Lotteries and Off-Track Betting (New York: Praeger, 1974), p. 74.
13.
13. Statistical Abstracts of the United States 1982-1983, p. 155.
14.
14. Eric Nalder and Larry Lange, “Lottery Mania Spreading West to Fill State Coffers,”Seattle Post-Intelligencer, 2 Aug. 1982.
15.
15. Address to the Third National Conference on Gambling, Las Vegas, NV, 19 Dec. 1976.
16.
16. Commission on the Review of the National Policy toward Gambling, Gambling in America (Washington, DC: Government Printing Office, 1976).
17.
17. Suits, “Gambling as a Source of Revenue,” p. 833.
18.
18. Ibid., pp. 833-34.
19.
19. New York Times, 6 Jan. 1980.
20.
20. Roger E. Brinner and Charles T. Clotfelter, “An Economic Appraisal of State Lotteries,”National Tax Journal28(4):402 (Dec. 1975).
21.
21. Michael H. Spiro, “On the Tax Incidence of the Pennsylvania Lottery,”National Tax Journal, 27(1):59 (Mar. 1974).
22.
22. Charles T. Clotfelter, “On the Regressivity of State-Operated `Numbers' Games,”National Tax Journal, 32(4):546-547 (Mar. 1979).
23.
23. H. Roy Kaplan, Lottery Winners: How They Won and How Winning Changed Their Lives (New York: Harper & Row, 1978), pp. 134-153.
24.
24. Ivan Light, “Numbers Gambling among Blacks: A Financial Institution,”American Sociological Review, 42:892-904 (Dec. 1977).
25.
25. Frederick D. Stocker, “State Sponsored Gambling as a Source of Public Revenue,”National Tax Journal, 25(3):439-440 (Sept. 1972).
26.
26. Kaplan, Lottery Winners, p. 12.
27.
27. Personal communication with Gerry Fulcher; Ralph Batch, the director of the Delaware lottery, disputed these findings in a telephone interview.
28.
28. See H. Roy Kaplan, “Sports, Gambling, and Television: The Emerging Alliance,”Arena Review, 7(1):1-11 (Feb. 1983) for a discussion of the role of television in popularizing another form of gambling—sports betting.
29.
29. Personal communication with Dr. Robert Politzer, director of the Johns Hopkins Center for Pathological Gambling.
30.
30. Robert Politzer, James S. Morrow, and Sandra B. Leavey, “Report on the Societal Cost of Pathological Gambling and the Cost-Benefit/Effectiveness of Treatment” in The Gambling Papers: Proceedings of the Fifth National Conference on Gambling and Risk Taking (Reno: Bureau of Business and Economic Research, University of Nevada, 1982), vol. 3.
31.
and H. Roy Kaplan, “Survey of Lottery Winners” (Final report to Loto Canada, 12 Feb. 1979).
32.
32. The New Jersey income maintenance study and labor force projections further support these data, indicating a decreased commitment to work when economic alternatives to it are available. See Irwin Garfinkel, “Income Transfer Programs and Work Effort: A Review,” in How Income Supplements Can Affect Work Behavior (Washington, DC: Government Printing Office, 1974).
33.
33. Herbert Marcuse, One Dimensional Man (Boston: Beacon Press, 1964).
