Instant winners: Legal change in transition and the diffusion of state lotteries

2000

This report provides an overview of lottery operations, with particular attention to who plays the lottery, how the lotteries are marketed, and what kinds of policy alternatives exist for state and federal policymakers. Section I of the report provides a descriptive overview of state lotteries, a statistical profile, and a description of the distribution and size of their revenues. Section

Public Finance Quarterly, 1993

This article both theoretically and empirically identifies sizable cross effects of lottery taxes on other sources of state tax revenue. Specifically, those states without income taxes and those with high sales and excise tax rates may lose as much as 23 cents in alternative state revenue for every dollar of lottery revenue they collect. Even though this extreme still implies that the state receives 77 cents more tax revenue than before the lottery was imposed, those states that earmark their lottery dollars likely see significant reductions in their nonlottery revenue sources that need to be accounted for in their budgets. Otherwise, a bonanza in one area of the budget causes a sizable and likely unexpected shortfall elsewhere.

Growth and Change, 1987

State lotteries are the fiscal gimmick for the 1980s, receiving widespread popular and legislative approval. Unfortunately, the impact of structural and external influences on lottery sales is not well understood. This analysis sheds light on these influences, demonstrating that state economic activity, age of the game, interstate lottery competition, and game portfolios significantly affect sale and, consequently, benefit to the state. TATE LOTTERIES ARE ENJOYING a burst of interest as a mech-

2013

Over the past half century, there has been an increasing prevalence of legalized gambling in the US. At the same time there is a general recognition, empirically supported in the economics literature, that spending on lottery and gaming products tends to be regressive in nature. In addition, gambling addiction is a widely acknowledged social problem. This raises the question of whether the increased presence of casinos and state lotteries results in relatively more bankruptcy filings in the states that offer them. This paper adds to the existing literature by comparing the relative impact of the presence of lotteries to that of casinos on both personal and business bankruptcies. States that adopted lotteries and casinos prior to 1995 experienced significantly higher personal bankruptcy rates while the effect of lottery and casino adoption on personal bankruptcies has disappeared since that time.

Review of Regional Studies, 2007

In this paper, we estimate the impact of earmarking lottery revenue to education as opposed to filtering lottery revenue through a state’s general fund. A unique facet of this investigation is the comparison of states with lottery revenue earmarked for spending on K-12 education and states with lotteries for general funds. This approach enables us to investigate the effect of state lottery revenues on education and other budgetary components in a more controlled environment by mitigating lottery preference differences across states. Consistent with previous research, we find that earmarking lottery proceeds for K-12 education has little or no impact on actual state K-12 funding. We also find that lottery revenue does seem to increase K-12 funding in states that deposit the revenues into their general funds .

American Journal of Economics and Sociology, 2007

State-sponsored lotteries are a lucrative source of revenue.

Australasian Marketing Journal ( …, 2004

Legal State Lotteries have significant effects on those state's revenues, their residents' behaviours and their ultimate welfare. Reported Lottery product purchase appears to reflect patterns that suggest high levels of habitual behaviour. Analysis of a US State's Lottery data found that this pattern was exhibited early in a game's introduction, and was evident in three apparently different product offerings: six-number and three-number Lotto, and Instant (scratch-off) games. These findings have important implications for understanding gambling behaviour, lottery marketing and gambling regulation.

2007

Abstract This article uses voting and sales data from the South Carolina Education Lottery to test whether the vote for a new lottery is driven by latent demand for lottery products or whether it reflects free-riding behavior or other public finance considerations. Including the predicted component of the lottery vote adds no explanatory power to a lottery sales regression.

Review of Policy Research, 2003

This article examines the Georgia lottery as a "policy laboratory" and its potential effect on state-level policy diffusion. The authors summarize an extensive research project they directed that included a survey of every state that offers a lottery, a general population survey of Georgia citizen attitudes toward the lottery, and results from an economic model summarizing the economic effects of the lottery. The analysis qveals that the Georgia lottery has been a significant source of revenue for the state's budget and operates in an administratively cost-effective manner. The analysis also confirms the conventional wisdom that lower-income households spend a greater proportionate share of tkeir income on the lottery and that African Americans are more frequent players than whites. Furthermore, the Georgia lottery enjoys broad public support, the key to which appears to be the earmarking of lottery funds to specific, new, popular education programs. However, the data reveal that those educational programs promulgated by the Georgia lottery benefit citizens from both high and low socioeconomic status. Finally, the article suggests that lottery-generated funds may reach a plateau or peak during the first decade of implementation and that state policymakers should design lottery-funded programs accordingly. Supporters (of the Tennessee lottery) point to Georgia's HOPE Programwhich provided 277 million in scholarships to 169,399 college students last year-as the model if Tennessee voters pass a lottery referendum in the This article is a revised version of a paper presented at

Upse Discussion Papers, 2011

UPSE Discussion Papers are preliminary versions circulated privately to elicit critical comments. They are protected by Copyright Law (PD No. 49) and are not for quotation or reprinting without prior approval.

International Tax and Public Finance, 2012

Under the standard summation technology, pure public goods can be provided via the direct contributions mechanism, even in an arbitrarily large group. However, if the public good exhibits any degree of rivalry, individual consumption of the public good will fall to zero as group size grows large. Thus, the direct contributions mechanism is not robust to the introduction of rivalry. By contrast, Morgan's (2000) lottery mechanism is robust to the introduction of rivalry when the lottery prize is proportional to group size. The lottery mechanism can provide public goods in a large group when the public good exhibits a degree of rivalry, provided that the degree of rivalry is not too high. This suggests that the lottery mechanism can provide a broader range of public goods in a large group than the direct contributions mechanism.

Journal of Policy Analysis and Management, 1990

Many of our academic colleagues are uncomfortable with the lottery. They neither play, nor encourage their teenage children to play, because lotteries seem to be a poor bet and a waste of money. Yet knowing that the majority of less educated people do play the lottery, our colleagues are inclined to be tolerant. If people enjoy playing, they reason, why not allow them the opportunity? This familiar argument regarding paternalism is relevant to the legalization of lotteries, but it misses an important point. For citizens who live in the 32 states where lotteries have already been legalized, the question of paternalism is moot. What is not moot is the issue of how the lotteries are to be run and to what end. With few exceptions, the states that have legalized lotteries have handed over their operation to managers who define success purely in revenue terms. In doing so, the states have moved far beyond mere legalization to active promotion.

2013

Many of the central papers on the topic of lotteries have been collected in Stone, ed. (2011).

Growth and Change, 2013

Over the past half century, there has been an increasing prevalence of legalized gambling in the US. At the same time there is a general recognition, empirically supported in the economics literature, that spending on lottery and gaming products tends to be regressive in nature. In addition, gambling addiction is a widely acknowledged social problem. This raises the question of whether the increased presence of casinos and state lotteries results in relatively more bankruptcy filings in the states that offer them. This paper adds to the existing literature by comparing the relative impact of the presence of lotteries to that of casinos on both personal and business bankruptcies. States that adopted lotteries and casinos prior to 1995 experienced significantly higher personal bankruptcy rates while the effect of lottery and casino adoption on personal bankruptcies has disappeared since that time.

State lotteries have been implemented in a majority of the United States. The anti-tax sentiment throughout the country has contributed to the approval and growth of this alternative method of revenue generation. In Texas, over $2 1 billion in sales has been produced since the lottery began operating in 1992. Generally, this source of revenue has not been a stable or predictable one. Through the examination of certain influences on lottery revenues, officials can gain insight on ways to increase sales and maximize revenue if they so desire. In this study, multiple regression analysis is employed to evaluate the impact of four selected determinants on Texas lottery revenues. The four determinants analyzed in this study are the lottery payout rate, advertising expenditures, number of jackpots of $25 million or more and the state unemployment rate. Of these four, the unemployment rate was found to have a significant impact on lottery revenues. Since the unemployment rate is a factor outside the control of lottery officials, the remaining three were also analyzed. Of the remaining three determinants, advertising expenditures were found to have a significant impact on lottery revenues.