‘Sucker Index’ shows underside of state-run gaming

March 17, 2012 

This is the side of the lottery business everybody knows about, but you won’t see it on those clever ads with people sipping fruity umbrella drinks on the private island they got by hitting the right six numbers.

It’s hardly a secret; money spent on lottery tickets has been called an “idiot tax” for years. A prominent local official once described it, in private conversation, in somewhat more diplomatic but no less accurate terms: He called it “a tax on people with poor math skills.”

Try explaining to somebody buying 50 lottery tickets why that doesn’t give him 50 times the chance of winning as a single dollar, and you understand exactly what my friend meant.

You have a far better statistical chance of coming out ahead in Vegas than at your nearby convenience or package store … and all those glittering palaces on The Strip didn’t get built with gamblers’ winnings. Lottery odds are by far the most prohibitive of any form of legal gambling.

Mathematically and demographically, the lottery is more regressive than the heaviest sales tax, even one loaded with special-interest exemptions -- the defining difference, of course, being that the “idiot tax” is voluntary. American volunteers fund it to the tune of about $50 billion a year.

According to a new ranking, Georgia’s idiot tax attracts the biggest idiots of all.

The Bloomberg “Sucker Index” reports that of the 43 states with lotteries, Georgia’s per capita income is about 10 percent below the national average, yet players spent the nation’s second-highest percentage of their income on the lottery -- a disproportionate amount of it from low-income Georgians.

In 2010, Bloomberg reports, the average Georgia resident spent more than $470 on the lottery. Take out the people who never buy a ticket, and the casual middle- or upper-middle-income players who spring a buck every now and then, and $470 a year starts looking really ugly.

That’s costly mathematical ignorance in a poor state whose lottery funds education.

Which brings up the other part of the dilemma. Few would argue that the HOPE scholarship hasn't been a resounding success in Georgia. But as its funds dwindle and the awards get smaller, its beneficiaries are limited to people higher and higher up the income scale -- those whose families can afford to pay what HOPE doesn’t. Duke economist Charles Clotfelter calls it “a pro-rich wealth redistribution technique in Georgia … To link that tax revenue to a benefit that goes largely to middle- and upper-class citizens is a little stunning.”

If the lottery were literally “tax” revenue, he’d be absolutely right instead of just mostly right. At the very least, it’s an argument for rethinking means-based HOPE criteria.

So what’s the answer, economically and morally? Do away with the lottery -- and with HOPE? Won’t happen. Try to fund college scholarships with a real, more progressive and hence fairer tax? Alabama tried that one, and it got nuked at the polls.

Encourage Georgians to be even bigger suckers and buy more lottery tickets?

Here’s another Catch-22: As the economy has shrunk, lottery purchases have shrunk with it, and so of course have HOPE revenues. But to take a bigger share of lottery proceeds for education means less for players … and less incentive to buy tickets.

If you sense sanctimony or moral posturing in any of the above, let me put that to rest right away: Yours truly isn’t above spending the occasional buck in beer change for a short-lived fantasy of effortless wealth.

But even my humble math skills can grasp lottery-odds reality. Spending a disproportionate chunk of modest income on a legal numbers racket, and thinking it’s a realistic path to financial security, is a dangerous and expensive delusion. Especially, it seems, in Georgia.

Dusty Nix, 706-571-8528; dnix@ledger-enquirer.com.

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