Pinched states try lotteries; hidden costs may cancel gains
Lotteries - one of the oldest forms of gambling - are spreading anew across recession-squeezed America. Sixteen states plus the District of Columbia now have such government-sponsored moneymaking operations. Another is about to join the ranks. And more may be on the way in the coming years, if not months.Skip to next paragraph
Subscribe Today to the Monitor
This, despite warnings from lottery foes like Arnold Wexler of Parlin, N.J., that the benefits in revenues are outweighed by the social problems lotteries create.
The outspoken vice-president of the New York City-based National Council on Compulsive Gambling charges that although state laws restrict lottery ticket sales to persons 18 or older, enforcement is lax at best.
''We are breeding a society of gamblers - and some of them are going to be compulsive gamblers,'' cautions Mr. Wexler, who blames the growth of this legalized gaming activity on ''media publicity given to the big winners, who are portrayed as heroes.''
Wexler calls lotteries a waste of money, saying the chances of hitting the jackpot and becoming a millionaire are ''only one in 2,960,000.''
Critics say some young people use lunch money to buy tickets. And, they add, lotteries attract low-income people who can least afford it.
Such views, however, are disputed by pro-lottery forces. A 1980 study in New York, for example, showed that a ''higher proportion of those in the $18,000-to- '' according to John D. Quinn, director of the New York State Lottery.
These conclusions appear to clash with those of a Michigan study completed about the same time by economist Daniel Suits. He reported that lotteries are by far a heavier burden on the poor. People with annual incomes under $5,000 spent about 0.30 percent of their money on lotteries, he said, while people in the over-$30,000 bracket spent only about 0.02 percent on gaming activities.
Mr. Quinn, who is currently president of the National Association of State Lotteries, estimates that such operations grossed more than $4 billion during 1982.
Since a state's share of lottery revenues is generally 40 to 45 percent, states netted in excess of $1.6 billion, he adds, noting that New York's yield for the year ending last March 31 was ''up 77 percent'' over the previous year and is expected to be 44 percent greater this fiscal year.
At a time when ''the public is drowning in a sea of taxes,'' fund-raising alternatives such as lotteries will become increasingly popular, Quinn suggests. In recent months, he says, interest has surfaced in a number of states, including Alabama, California, Florida, Iowa, Louisiana, and New Mexico.
After nearly three-quarters of a century of being restricted or banned in the United States, lotteries began their return with the New Hampshire Sweepstakes in 1964. New York followed suit in 1966, as did a dozen Northeast and Midwest states during the 1970s.
Besides the Michigan and New York lotteries, which are among the most lucrative operations of their type in the nation, there are similar government-run gaming activities in Arizona, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Ohio, Pennsylvania, Rhode Island, Vermont, Washington, D.C., and Washington State.
The latter two are the newest. The District of Columbia lottery began last August and Washington's in mid-November.
Colorado is about to join the growing list with its ''instant game.'' The new venture, being promoted as ''Rocky Mountain Fun,'' will feature prizes of $2, $5 , $50, $500, $1,000, and $10,000, with all $50 winners eligible for a later ''millionaire drawing'' of $50,000 a year for 20 years.
Unlike the Colorado lottery, which stemmed from a 1980 voter referendum, the Washington lottery is the result of special legislation hustled through last summer when the state faced a critical revenue shortfall. That new venture is projected to yield $170 million during the two years beginning next July 1.
Besides the 40 cents from every lottery-ticket dollar that goes to the state, 45 cents is earmarked for prizes, and the remaining 15 cents pays administrative costs, including fees to dealers who sell the chances. The split in Colorado will be 50 cents for prizes; 35 cents going to three state funds; and the remainder for ticket-sales commissions and other operating costs.
Moves to set up state lotteries to help ease budget problems are particularly strong in Florida and Louisiana. Proposals in both states are expected to come before state lawmakers in coming months.
Despite strong support within the legislative delegation from Dade County (which includes Miami), the move faces stiff opposition from the state's horse-racing and jai-alai industries. Gov. Bob Graham strongly opposes the idea because ''it creates false hopes and false promises,'' as a top gubernatorial aide puts it.
Those pushing for a Florida lottery note that the state is heading for a $411 million deficit, and there is little political sentiment for higher taxes since the sales tax was raised 1 percent last year. An annual lottery yield of $200 million is projected.