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Eight reasons to oppose a state lottery

by Patrick Briney, Ph.D, President Arkansas Republican Assembly
Issued: February 21, 2007 (Revised: 3/3/07)

Lt. Gov. Bill Halter announced a proposed constitutional amendment to create a state sponsored lottery in Arkansas. Presently, the state’s constitution bans lotteries. Halter hopes the Legislature will approve the constitutional amendment in time for the November 2008 general election.

“Once almost universally rejected as ethically unacceptable, lotteries and other forms of state-supported gambling have become major sources of revenue for U.S. states reluctant to raise taxes; they have also created new ethical challenges for governments.” (John K. Roth, December 2004, Claremont McKenna College, Ethics, Revised Edition, Salem Press, https://salempress.com/Store/samples/ethics_revised/ethics_revised_lotteries.htm).

For over 130 years, states abandoned sponsoring lotteries because 1) revenues could be better gathered by other means, 2) because of the criminal activity associated with the practice of lotteries, and 3) because of the unethical treatment of the poor (The State Lottery: California Hustle, January 15, 2007, Jonathan J. Bean, Donald W. Gribbin, The Independent Institute). In 1964, New Hampshire initiated the rebirth of lottery adoptions, and since that time forty others have followed suit. Arkansas has not, up to this time, instituted a lottery.

Is a state lottery a good source of revenue for Arkansas, and will it promote well being of Arkansans? The facts says no.

According to data from the U.S. Census Bureau, 37 states sponsoring lotteries in 2000 generated $127 in per capita sales. This amounts to approximately less than one-half of one penny for each dollar of personal income in the state (0.44%). However, the Arkansas Advocates for Children & Families (AACF) discovered from data of lotteries in Louisiana, Missouri, and Texas, and six states (Iowa, Kansas, Nebraska, West Virginia, New Mexico, and New Hampshire), which are more demographically or economically similar to Arkansas, that from 1998 to 2000, “these nine states had median lottery ticket sales of about 0.27 percent of state personal income.” Based on this percent and on personal income figures for Arkansas in 2002, the UALR Institute for Economic Advancement calculated that a ‘traditional’ lottery in Arkansas might generate a net of $55.4 million after the typical two-third deduction for administrative and prize expenses associated with lottery sales. Though these figures could be increased by using the video lottery terminals (VLTs), most states reject their use fearing their association with increased gambling addiction (An Arkansas Lottery, A Bad Bet for Education & Families? Richard Huddleston, 2002).

A lottery in Arkansas might generate an apparent net revenue for the state. However, indirect costs and social consequences quickly diminish this ethereal gain.

  1. Arkansas’ relative rural and low population density will reduce lottery revenues.
    1. The estimated net revenue of $55.4 million may be less for Arkansas in light of findings by University of Mississippi Professor Donald Moak. He reported that state lotteries are more costly to operate in southern states like Arkansas than in more dense and urbanized states in the Northeast and Midwest (Hill, Dr. John, Lottery Revenues Not Stable South Carolina Policy Council (803) 779-5022).
    2. Factors that could further reduce revenue from a state sponsored lottery in Arkansas compared to other states include the state population base, personal income of citizens, tourism, interstate traffic, the mix of lottery games utilized by the state, the availability of other forms of gambling, and citizen willingness to play the lottery (An Arkansas Lottery, A Bad Bet for Education & Families? Richard Huddleston, 2002).
  2. State sponsored lotteries diminish local and state tax.
    1. “The California Grocers Association reported an average decline in food sales of seven percent since the imposition of the California Lottery.” (“Not so small change” Los Angeles Times, March 26, 1986, cited in Hill, Dr. John, Theft by Consent, Alabama Policy Institute (205) 870-9900)
    2. Given the low rate of savings among Arkansas citizens (an estimated 25% of Arkansas families have negative net worth), money spent on lottery tickets would come from reduced purchases of other goods and services. This, in turn, would reduce state and local tax revenue generated from sales of other good and services.
    3. According to a 2000 study by Arkansas Advocates for Children & Families, the average taxpayer spends about 5.7 percent of their income on state and local sales taxes. At this rate, the estimated $169 million spent on lottery sales would result in the loss of about $9.6 million in state and local sales tax revenue.
    4. Convenience stores have reported that selling lottery tickets hurts their businesses due to: 1) employee time required to sell tickets, 2) subsequent shoplifting increase because of inattentiveness by employees occupied with lottery sales, and 3) lost sales due to longer lines resulting from lottery customers. (Watson, Tom, “Many convenience stores say lottery sales not a big draw” USA Today, May 4, 1995)
  3. State sponsored lotteries promote problem gambling (Richard Huddleston, 2002. An Arkansas Lottery, A Bad Bet for Education & Families?).
    1. Research shows, “… that the lottery is a powerful recruiting device, which is responsible for inducing about one-quarter of the adult population who would not otherwise have done so to participate in commercial gambling.” Lotteries create gamblers who otherwise may never have gambled. (Clotfelter and Cook, Selling Hope: State Lotteries in America (Cambridge, Mass., Harvard University Press) 1991 pg. 105).
    2. Dr. Lance Dodes, who runs Massachusetts' largest outpatient treatment center for problem gamblers says that lottery players comprise 44% of his patients. (Golden, Daniel and Halbfinger, David, “Lottery Addiction Rises and Lives Fall” Boston Globe, February 11, 1997).
    3. 43% of all callers to the national 1-800-GAMBLER hotline indicated problems with lottery gambling. (Council on Compulsive Gambling, “1995 Statistics for 1-800-GAMBLER Hotline” March 20, 1996)
    4. 39% of persons who entered publicly funded alcohol and drug treatment centers in Texas stated that the lottery was their most problematic gambling activity. (Wallisch, Lynn, “Gambling in Texas: 1995 Survey of Adult and Adolescent Behavior” Commission on Alcohol and Drug Abuse).
  4. State sponsored lotteries makes states liable for gambling addiction. Given the current state of liability litigation (for example, the tobacco lawsuits), it may not be too long before states get hit with major lawsuits by addicted lottery players. (Novak, Viveca, “They call it Video Crack”).
  5. State sponsored lotteries violate government responsibility and purpose.
    1. “Opponents challenge state-sponsored gambling on grounds of hidden social costs as individuals, especially with low incomes, gamble away money that should properly be used to care for their dependents. For those low-income individuals succumbing to a gambling addiction, the state may be encouraging the impoverishment of families, especially poor families with children. Gambling may even be associated with other social problems, such as alcoholism and drug addiction. By supporting gambling, the state may seem to encourage other maladies. Above all, by supporting gambling, the state may promote get-rich-quick attitudes that contribute to eroding the work and savings ethic badly needed in any society.” (John K. Roth, December 2004, Claremont McKenna College, Ethics, Revised Edition, Salem Press)
    2. “The lottery is unhealthy for the common good. First of all, lotteries convey ‘a message at odds with the ethic of work, sacrifice and moral responsibility that sustains democratic life’ (Sandel, 1997, p. 27). Americans value earning a living through hard work, but the lottery encourages the idea that someone can get something for nothing. Yet, state governments promote the lottery, encouraging citizens to participate. Doing this, the government essentially turns gambling into some sort of civic virtue, equating it with staying in school or abstaining from drugs (Hertzke, 1998). (From Jesse Aukeman, State Lotteries: A Losing Game, Universal Journal).
    3. Lotteries are used to bail governments out of financial crisis and fiscal incompetence. The legislature should take responsibility for the state’s fiscal condition. But instead, “[T]hey seek easy, superficial, painless solutions to the state’s pressing revenue problems” like using a lottery.
    4. Government works against the well-being of citizens when it lures citizens into risky ventures that result in an increase in social welfare cases and an added tax burden.
    5. Government has no business enticing people to gamble their hard earned money for an against-all-odds chance of winning a big cash prize. It is bad enough that government takes our money from us in taxes. Promoting high risk gambling to get rich is irresponsible and immoral.
    6. Knowing that it is the poor who spend more per earned dollar on lottery sales makes legislators responsible for targeting poorer people. In the hope to quickly and easily improve their conditions by the lottery (reinforced in this unwise thinking by the government), the poor lose the most. This is reprehensible.
    7. Rep. Roscoe Cunningham (R., Lawrenceville) referred to the lottery as, “the pathological pursuit of the unattainable—an effort to get something for nothing” (Gilbert 1973b).
    8. People can voluntarily donate already more tax money to the state without the aid of a lottery. Promoting a high risk gambling game is irresponsible.
    9. “States need to spend less time promoting the lottery as a fun, recreational activity and follow the cue of New Hampshire's lottery director. Compulsive lottery players need to be reminded that the odds are against them.” (Michael Ring. published on September 3, 1998. The Problems with State Lotteries: Chance for Quick Fix Presents Irresistible yet Dangerous Lure for the Poor, The Tech Vol. 118, Nmbr 39).
    10. “As new gambling ventures drain potential investment capital for other businesses, as existing businesses lose more of their consumer dollars to gambling ventures, more businesses are being pushed closer to decline and failure, more workers are being laid off, and enormous public and private costs are incurred to deal with a growing sector of the population afflicted with serious gambling problems; do we really want our governments so dependent on gambling that they are forced actively to promote an activity that takes disproportionately from those who can afford it least, does great damage to existing economies, and can be highly addictive? If governments are going into business, couldn't they find alternatives that create less trouble and offer more real long-term economic and social value?” (Carnahan, Ann, “Lottery analyzing players brains” Rocky Mountain News, July 8, 1997. Goodman, Robert, “The Lottery Mystique: Why work at All?” Newsday June, 1991).
    11. Legalized “... gambling is definitely not painless, especially to that 10% of the population who will become problem economic gamblers (PEGS) or the 1.5% to 5% who will become compulsive economic gamblers (CEGS). A guaranteed 10% of practically any U.S. population base will redirect proportionately large amounts of consumer dollars away from the preexisting economy and transform those dollars into gambling dollars once gambling is legalized by the state government (i.e., the 'acceptability factor'). (John Kindt, "Legalized Gambling Activities as Subsidized by Taxpayers," Arkansas Law Review, Volume 48, Number 4, 1995, p. 896.)
  6. State sponsored lotteries hurt children suffering in families cursed by gambling addiction.
    1. The state is obligated not to hurt or threaten the well being of children and their families.
    2. Studies suggest that the costs of parental gambling are borne heavily by children.
    3. Children of problem gamblers have higher levels of tobacco, alcohol and illegal drug use, and overeating compared to their peers.
    4. Three-fourths of problem gamblers’ children reported their first gambling experience before age 11, compared to 34 percent of their classmates.
    5. Children of compulsive gamblers are twice as likely to come from homes involving separation, divorce, or the death of a parent before the age of 15.
    6. Compared to their classmates, children of problem gamblers rate themselves as more insecure, emotionally down and unhappy with life, and perform poorer at work and school. They are also acknowledged suicide risks at twice the rate of classmates.
    7. Studies also suggest lotteries encourage illegal gambling by children.
  7. State sponsored lotteries hurt poorer and uneducated families.
    1. Lotteries are sometimes called stupid tax because as a, “governmental revenue-raising mechanism, a lottery will attract only those consumers who fail to see that the game is a very bad deal.”
    2. “One third of the families with annual incomes of less than $10,000, spend one fifth of their income on lotteries. The National Bureau of Economic Research found that ‘the poor bet a much larger share of their income,’ and that ‘the less education a person has, the more likely he is to play the lottery,’ and that lotteries do best in urban areas with large proportions of minority groups” (Business Week, June 5, 1989).
  8. State sponsored lotteries increases welfare costs.
    1. “When statistics are included for the state lottery and race tracks, the overall pathological and problem gambling costs in Massachusetts work out to $170 million a year according to a behavioral study released by the University of Massachusetts Dartmouth Center for Policy Analysis.” (Fraga, Brian. UMass study: Out-of-state casinos bring costly problems to Bay State, SouthCoastToday.com, posted Wednesday, February 21, 2007).
    2. “The societal costs from pathological gambling to individuals are seen in bankruptcies, legal proceedings, and divorce. Private businesses are hurt by lost productivity, while the state pays for law enforcement, treatment, social welfare and other costs, The Center for Policy Analysis (CFPA) said. A recent University of Chicago National Opinion Research Center study on pathological and problem gambling estimated the annual cost to U.S. society to be $6 billion” (Ibid).

Significant reading:

  • Bean, Jonathan J, Donald W. Gribbin. 2006. Adoption of State Lotteries in the United States, with a Closer Look at Illinois, The Independent Review 10 (3), [Accessed 2/22,07]
  • Page, Larry L. The case against legalized gambling, economics 101, Executive Director, Arkansas Faith and Ethics Council
  • Huddleston, Richard. 2002. An Arkansas Lottery, A Bad Bet for Education & Families?
  • Arkansas Republican Assembly Blog - Search Lottery
  • Arkansas Republican Assemblies

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  • Contact List of committee members & the contact info for legislators
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