Sunday, October 07, 2007

Just Like The Gambinos

Many state officials justify running state lotteries by saying that much of the money from the lotteries goes toward education. Of the 43 states that run lotteries, 23 earmark all or some of the lottery money to education.

But the NY Times reports today that as little as 1%-5% of the total revenue for K-12 education in states that earmark lottery funds for education actually comes from the lottery.

The Times says most of the money raised by the lotteries goes to maintaining them - that is to say, it is spent on advertising fees, lottery prizes and vendor commissions.

The Times also says that most state lotteries are raising the amount of their prizes in order to increase lottery players, further decreasing the amount of lottery money that goes toward education.

So why does any of this matter?

Well, the Times article says the rationale for the states to run legalized gambling - that the money goes to help children - is coming under increased scrutiny as at least 10 states look to privatize their lotteries.

States have long argued that the social ills often associated with gambling are mitigated as long as states themselves run the lotteries and the money goes for a good cause.

It's like one big bake sale for education - only with scratch-offs.

But most state lotteries long ago moved away from the "dollar and a dream" business model.

At least 15 states have introduced video poker and keno games to their lottery systems, which critics have labeled "video crack" for their extremely addictive qualities, and watched their lottery revenues sky-rocket.

A few states have introduced the "premium scratch-off ticket" - one that costs as much as $50 dollars to buy but has higher prize opportunities.

States are also trying to boost "core lottery players" - that is, those who spend way too much money every week on the lottery - by increasing the prize money in lotteries.

They are also considering turning state lotteries over to private companies in the gaming business who really know how to squeeze dollars out of gamblers - further transitioning state lotteries into one big Vegas-style competition.

So, the question becomes, if so little education money actually comes from state lotteries and the lotteries themselves have come to resemble one big legalized Vegas-style gambling opportunity for players, along with all the attendant social ills that come along with that, why are they still rationalized by state officials as "socially beneficial"?

Let's call lotteries what they are - legalized gambling.

They're not a big bake sale for education - they're revenue crack for states.
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