NCPA - National Center for Policy Analysis

State Lotteries and Taxes

August 29, 2001

The outcome of the recent giant Powerball jackpot has focused public attention on state -- and multi-state -- lotteries.

Here are some interesting insights into the subject:

  • Multi-state lotteries are sizzling because their huge jackpots are bringing back participants who have become bored with single-state lotteries -- which are losing players.
  • Participation in lotteries is roughly equal among people of different income and educational levels, but poorer and less educated individuals buy more tickets each year -- with high school dropouts spending an average of $334 in 1999 versus $86 per capita spent by college graduates.
  • Although states like to proclaim they earmark lottery money for such things as education and health-care, legislatures in fact reduce general-revenue appropriations by a similar amount and use the money for other projects.
  • A survey by Money magazine in 1996 revealed that states with lotteries had raised their per capita taxes at three times the rate of non-lottery states in the first half of the 1990s.

At present, 37 states and the District of Columbia have lotteries.

Source: Ryan H. Sager, "Multi-State Lotteries Are a Bad Bet," Wall Street Journal, August 29, 2001.

For text (WSJ subscribers)


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