In Illinois every couple weeks the game spins off a $3 million, one-time cash payment to some lucky winner whose life then changes for better or worse forever. The indigent instant millionaire is typically indigent again in a few years.
The big sell when the Illinois lottery started was that it would fund education. After 20 years, after expenses, the amount spent on education is so minimal it is almost insignificant. The lottery in Illinois is a zero sum game. A cynical shell game, at best.
So why? Why publish this false hope in a ticket? I’ll admit it, from time to time when the lotto gets up there I’ll pay this voluntary tax and see if I can fund my retirement. For many people I know, this is their primary retirement strategy. Get old, win the lottery.
The mantra selling the lottery is, “Somebody’s got to win, it might as well be YOU” and “You can’t win if you don’t play”.
The truth about the lottery everyone in Illinois knows is that in the poorest parts of the states the amount of direct welfare money that goes into an area like the poor south and west sides of Chicago equals the amount spent on lottery tickets by the poor.
Hope springs eternal, even among the poor.
Then, I read today’s Wall Street Journal. This is an intentional strategy. If the poor are going to pay this voluntary tax and send back all their welfare money you can send them more welfare money, look really compassionate and you have no net out of pocket expense. Cute eh?
The ultimate refinement of this insight might have been a 1997 paper by economist Sam Papenfuss, which showed a strong correlation between lottery adoption and welfare spending. He concluded that lotteries operate as a mechanism by which taxpayers are able to reclaim the money they're forced to spend on welfare programs.
Lotteries advanced on the same wave of voter frustration that led various states in recent decades to adopt balanced budget amendments, property tax caps and requirements for legislative supermajorities to enact tax hikes. Lotteries are but a symptom of a growing standoff between the beneficiaries of federal transfer programs and the taxpayers called to support them.
And, it doesn’t fund education at all. It’s all a scam.
Lotteries don't solve fiscal problems: The Texas proceeds go into a "Foundation School Fund," but that hasn't stopped legal and political wars over education funding from being the nemesis of the past three Texas governors. Studies increasingly conclude that lotteries don't add to state revenues in the long run. They just shift the burden of taxation from higher-income households to lower-income lottery players.
I didn’t get it. Now I do. Clever. Which walnut shell is the pea under?