For the weeks (if not months) that stay-at-home orders are in place in many areas, it will not be feasible for millions of people to work as the country practices social distancing and avoids contact with the public as much as possible. More than 3 million people claimed unemployment benefits last week, and surely, there will soon be a report with millions more doing the same this week. The unemployment rate is high, but we’re still waiting on official numbers. Many people are desperate and need money.
In this crisis, there is a small step that state governments can take to help the unemployed: suspend lottery ticket sales for the foreseeable future.
While many enjoy playing the lottery, it’s main purpose is not public pleasure. Rather, it’s a way for states to make revenue without coercing people. In other words, it’s a voluntary tax — and a highly regressive one.
A 2017 CNN report found that the average adult spends $325 per year on the lottery and that only 63% of that is paid out in prizes, with most of the rest being government revenue. However, only 49% of the country plays the lottery, according to a 2016 Gallup poll, so those playing would be spending about twice that amount on average and losing around 37% of that (about $240 annually). But even among lottery players, the losses are not equal.
Low-income people spend a disproportionate amount of their earnings on lottery tickets. A September 2018 Bankrate study found that 28% of people who earn less than $30,000 per year play the lottery at least once per week compared to 19% of those who earn more than $80,000.
In December 2019, they reported that those low-income workers who play the lottery spend 13% of their annual income on lottery tickets compared to the 1% spent by those who earn more than $80,000.
A 2002 study conducted by the South Carolina state House found that despite being 28% of their state’s population, households earning less than $40,000 annually composed 53% of the state’s frequent lottery players. Plus, research in 2012 found that those who earned less than $13,000 annually spent, on average, 9% of their earnings on lottery tickets.
Sure, the people who play the lottery probably don’t expect to win, and they’re paying for the pleasure of daydreaming about what they’d do with millions of dollars. But when many people don’t have money to cover their bills, the last thing they should be doing is giving the government more of their money for nothing in return.
Even those lucky few who hit the jackpot on a scratch ticket or a Mega Millions drawing are not necessarily better off in the long term.
A 2011 study from the Review of Economics and Statistics found that people who won lottery jackpots were more likely to declare bankruptcy within the next five years than the average person.
For some states, the lottery generates significant net revenue. Massachusetts, for example, netted about $1.1 billion in revenue from lottery sales in fiscal year 2019. However, the high-tax Democratic stronghold also has a rainy day fund with more than $3.4 billion, so the state would be okay if it forewent lottery revenue during this crisis. Not to mention the fact that keno sales are likely down already with bars closed for the time being.
Yes, some people might find other ways to bet. But the options are limited and not particularly convenient. Casinos are closed, and there are basically no sports to bet on. In comparison, lottery tickets are sold at convenience stores, so getting them does not take much effort.
Not to mention the fact that suspending lottery sales would give people one fewer reason to go out in public and could marginally help prevent the spread of the coronavirus.
If states suspend their lotteries, it might not be a popular decision. But the public would be better off for it.
Tom Joyce (@TomJoyceSports) is a freelance writer who has been published with USA Today, the Boston Globe, Newsday, ESPN, the Detroit Free Press, the Pittsburgh Post-Gazette, the Federalist, and a number of other media outlets.
