The President’s Lottery Ticket

Tom Watson

The President’s Lottery Ticket

Much is being made of U.S. Supreme Court nominee Harriet Miers' background as the head of the Texas Lottery Commission for five years under then Governor George W. Bush, an appointed stint that eventually landed her in the White House counsel's office. According to the Associated Press, Miers was a "tough, no-nonsense administrator ... firing two executive directors to stamp out scandal but leaving unexpectedly amid lagging sales and player interest."

No doubt she will be asked in the coming days about her work in Texas lotteries - and her political activities during that time. But I wonder if any Senator will ask her about the efficacy of state lotteries themselves: are they good policy, do they really benefit education, and what is their impact on the poor and middle class?

State lotteries would seem to be popular on both sides of the American political aisle, and their implentation knows no red or blue tinge. After all, the money goes for eduation, right? Well, it's certainly a big business: according to the North American Association of State and Provincial Lotteries, state-run lotteries combined were a $42 billion per year business for state governments in 2002.

But scratch below the surface of the operatons run by people like Harriet Miers around the country, and the odds don't seem quite as good - for players, or for schools.

For one, lotteries absolutely promote gambling - and not just the innocent buck-a-week variety either, but the crushing, obsessive, diseased variety that turns workers into debtors. (Even Dr. James Dobson, right-winger founder of Focus on the Family agrees; his site has a large anti-lottery section). And it starts early: in Massachusetts, 47 percent of seventh graders have purchased lottery tickets. Nationwide, more than four in 10 adolescents gamble on lotteries. And the lottery takes from the poor: a landmark Duke University study by Charles Clotfelter and Philip Cook found that earning less than $10,000 per year spend more money on lotteries than any other income group, that high school dropouts spend four times as much as college graduates, and that blacks spend five times as much as whites.

Still, even if it preys on the weak in society -- and saps real ambition in the process -- the money still goes to public schools, right? Not so fast, bub. Said Donald E. Miller, a professor of mathematics at Saint Mary's College, in a recent USA Today column:

"Regardless of when or where the lottery operated, education spending declined once a state put a lottery into effect. ... This study indicates that states without lotteries actually maintain and increase their education spending more so than states with lotteries. ... Hence, citizens should recognize that claims that lotteries will improve education funding are likely to be as misleading as their odds of winning those lotteries are meager."

There are other problems. A huge amount is spent on advertising: State lotteries spent approximately $466 million on advertising and promotional costs in 2002. And state lotteries are exempt from Federal Trade Commission truth-in-advertising standards. So you get the "dollar and a dream" malarkey from your state government.

Finally, there's the tax fairness issue. The Tax Foundation, an anti-taxation group (no liberals these folks), views state lotteries as a form of taxation, and strongly opposed a recent proposed lottery in Alabama for just that reason. Wrote Alicia Hansen in the Birmingham News:

"Lottery tickets are heavily taxed. In 2003, the 39 lottery states sold $45 billion worth of tickets and kept $14 billion of it. They don't call this money "taxes," preferring the term "profit." But it actually is a tax, and a high one - 45 percent was the average tax rate on a lottery ticket in 2003. Lottery promoters insist it's not a tax because playing the lottery is "voluntary." But it's the purchase that's voluntary, not the tax. Of course, no one has to buy lottery tickets, but if you want one, the tax is not optional. Same as a car or carry-out food or anything else you buy. Sales and excise taxes are not optional. The only difference is that the lottery ticket tax is hidden better - the state creates a monopoly for itself and builds the tax into the price of the product."

So when Harriet Miers raises her right hand, Senators should ask her about the major piece of policy she was involved in at the highest levels in the state of Texas. Was it good policy or bad.

Maybe Chuck Schumer can phrase it this way: "Why did you people turn every decent newspaper store into a damned casino?"