Religion & Liberty Online

The government should scratch the lottery

State lotteries may seem like a good thing. They raise money for government programs like public schools. People contribute their money voluntarily (unlike most forms of taxation), which removes the moral weight involved in forcing people to hand over their money. They are fun games for the participants and can be life-changing for the winners.

These reasons lead many people to support – or at least tolerate – state lotteries. But the lottery deserves neither our support nor our toleration, as it has no place in an ethical government. Here are two major reasons why.

First, the lottery hurts the poor. The lottery is a regressive tax. Lottery tickets have the same price tag for rich and poor alike. Therefore, the poorer you are, the higher percentage of your wealth you pay to play. If John’s income is $10,000 and Susan’s is $100,000, and they each spend $500 on lottery tickets over a year, then John has paid 5% of his income while Susan has paid only 0.5%.

The federal income tax, by contrast, is a progressive tax, which means the richer you are, the higher percentage of your wealth you pay. Susan not only pays more income tax than John but a higher percentage of her income. Regressive taxes are a greater burden on the poor than the rich, while progressive taxes try to focus that burden on the rich.

But it gets worse. Studies have shown that while lottery players come from all income brackets, lower-income lottery players purchase more tickets than higher-income players. One study found that people in the bottom 20% of income earners spent an average of $433 a year on lottery tickets, while those in the top income bracket spent an average of $193 a year. Another survey found that households with an income of less than $30,000 spent an average of $412 a year on lottery tickets – four times as much as households earning $75,000 or more spent. So, not only do the poor spend a larger percentage of their income than the rich on the lottery, but they actually pay more money in total.

Second, the lottery creates and exploits gambling addiction. Gambling addiction is a serious problem that can lead to more than just financial trouble. It harms the addict’s relationships and destroys families. Legal problems, drug and alcohol abuse, and suicide sometimes also result.

Much of the lottery’s success comes from taking advantage of people in desperation. Manipulative marketing campaigns sell an unlikely hope and leave many of the most desperate players worse off. Even some of those who win end up in a worse situation than before. Finally, above and beyond these external side effects, there is a moral issue. If we take excessive gambling to be a vice, then the lottery develops and prospers from bad moral behavior.

While the lottery presents itself as a good alternative to other forms of taxation, it is one of the worst forms of taxation. It profits, in large part, from the lower class, the desperate, and those struggling with addiction – people whom it further exploits and harms in a variety of ways.

But what about the government programs funded by lotteries? What would happen to these if we got rid of this revenue source? While it is questionable that lottery revenue really goes to the programs that its feel-good ads promise, the more important point is that the government already needs to cut spending. Since the lottery only accounts for a small percentage of most states’ revenue, if the states reduce spending by even one or two percent, we can keep important government programs without needing to increase taxes or exploit poor people with a lottery.

Both the Republican and Democratic parties are failing miserably to reduce spending, because excessive consumers of the lottery aren’t the only ones addicted to it. Money is the government’s drug of choice, and the government has all the power it needs to maintain its supply. It is, therefore, unlikely to stop feeding its addiction, even through comparatively small supplies like the lottery. This is why during the peak of the COVID-19 related shutdowns of businesses, despite recently instating an online lottery, Michigan kept in-person sales of lottery tickets open, even while closing many garden centers and churches.

Regardless of how states should rework their budgets or tax systems, the bottom line is that the lottery is a harmful way for the government to raise money. If our priority is simply to establish a voluntary tax, even if it harms people, then the government should also establish a monopoly in the tobacco industry and sell cigarettes to its citizens. After all, by selling cigarettes, we can raise needed money for schools, while providing pleasurable experiences for smokers.

But if our priority is to promote a society that leads to human flourishing, we must advocate both freedom and virtue. The lottery is not a moral way for states to raise money. The odds may be against many states scratching their lotteries, but if they do, our society will win big. You can bet on it!

(Photo credit: Mark Ou. CC BY-SA 2.0.)

Nathan Mech

Nathan Mech is the Program Outreach Project Manager for the Acton Institute.