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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