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[Florida state government] pays millions to probe the thoughts and habits of potential lottery players. Consultants ask what they buy at convenience stores, whether they rent videos, go to theme parks, even how they feel about owning things and belonging to a group.
The results show the lottery relies on the poorest and least educated — "Thrill Seeking Dreamers," it calls them — to spend more than everyone else. Floridians shelled out nearly $4 billion on lottery tickets in 2008-09, with the Thrill Seekers accounting for half of those purchases.
...The Thrill Seekers are the lifeblood of the lottery. They make up 15 percent of the adult population, but they account for 50 percent of the lottery's revenue.
Most of them are women. Their income and education tend to be low or moderately low, though most have full-time jobs, and they "live for the moment," said a 2006 Ipsos Reid marketing study. Last year, about 20 percent of the Thrill Seekers surveyed said they spent more than $100 on the lottery in the most recent month. Four percent spent more than $500 in that month [Lindsay Peterson, "Lottery Pushes Floridians to Spend More Amid Recession," Tampa Tribune, 2010.03.05].
Florida gets 30 cents out of every lottery dollar. So they aren't just shifting tax burden; they're also shifting income straight from the poor to the not-so-poor. How's that for regressive?
State lotteries are essentially a tax on the poor and uneducated. Instead of making the hard political case that we should all pay our fair share for roads, schools, police, and fire departments through taxes, politicians turn to lotteries to get money through marketing and manipulation.
In South Dakota, three quarters of our lottery revenues have gone to lower property taxes. So three out of four of your lottery dollars don't even go to improve South Dakota's infrastructure or services; they just go to keep someone else from paying taxes. So really, if you own property, the best way to win at the lottery is not to play. You're guranteed a payoff at tax time.
To play the devil's advocate, do you believe that these people wouldn't spend their money on equally bad investments if the lottery wasn't around or would it simply be shifted elsewhere? Perhaps illegal forms of gambling?
ReplyDeleteAlso, it would be interesting to see a broader demographic breakdown of this group. I doubt that a causal link between poverty and gambling could be established. Poverty is most likely a symptom rather than the cause.
Also, I can't remember the name of the TV show, but I caught part of an episode dissecting the lives of people that won various amounts of money through the lottery. The percentage of people that win greater than 1 million dollars and are back to poverty within 5 years was amazingly high. I'll need to find some citations.
ReplyDeleteCausality is always tricky... but something weird is happening when a taxing mechanism gets disproportionate support from low-income payers.
ReplyDeleteThe article also notes:
"Studies of lottery spending, including one from the Federal Reserve Bank of St. Louis, show the money comes largely from Social Security, unemployment and other government support. Government, in other words, is paying government — with a lot of money siphoned off in the process. It's inefficient, the reserve bank writers concluded."
Darned inefficient way to fund public services.
How long can this sector of the economy sustain a kind of inverse, rural ghetto of automatons cranking out cookie cutter commodities-driven fodder for a clique of fly-overs and not produce a class of addicts?
ReplyDeleteThe cascade engulfs the legislature.
One of my favorite bumper stickers:
ReplyDeleteThe Lottery: a tax on people who are really bad at math
"State lotteries are essentially a tax on the poor and uneducated."
ReplyDeleteMay I suggest that state lotteries constitute a tax on the stupid and fiscally irresponsible?
This morning I read on FOX, CNN, or MSNBC (I forget which one) that states have begun to turn increasingly to lotteries in order to boost revenues in these hard times.
I guess the government knows how to suck on the suckers. Maybe we can call these revenue administrators "equidons" -- the word verification sequence I see as I post this comment.
I'm with you, Stan. Look at that 30% ratio in Florida again. Their state legislature won't pony up to take the 30 cents in tax directly from everyone, but they'll take 30 cents from volunteers who also have to pay another 70 cents to the private firms offering the gambling opportunity. Interesting study in perceived utility.
ReplyDeleteYou would really need to manage these peoples' lives to a large degree to keep them from buying lottery tickets or other poor investments. I'm not entirely against that idea. We do so for some social support programs.
ReplyDeleteHowever, imagine that we abolish all lotteries/gambling. Is the obvious conclusion that people wouldn't waste their money on these types of things correct? Of course not. They would find something equally questionable to buy. This is high risk behavior plain and simple.
The only question for the state is whether they should take a cut of the money or not. They've decided to take a cut.
Tony, you make perfect sense here.
ReplyDeleteI've actually never purchased a lottery ticket before, I once found a 'winning' $1 ticket before next to a trash can, I picked it up, and threw it back away. Couldn't find the nerve to claim it, kind of wierd I guess.
ReplyDeleteLotteries are a tax on the poor, unfortunate our state supports it, especially since it benefits the rich. It's a real disgrace, not one of our state's best moments.
I figure since a local won, lake county will have a boom in ticket sales, if someone local wins, doesn't your chances like double? Sad state of affairs all around, we should be able to do better than this.