A few states are trying to sell or lease their lotteries. For politicians, the idea is like an instant-gratification scratch ticket: a jackpot in the billions for more spending. But it will only further victimize the poor and gambling-addicted.
Among states with lotteries (42), this get-rich-quick scheme is furthest along in Illinois. The governor hired investment banks in January to help solicit private bids to buy the state lottery (without the legislature's permission). In February, the Texas governor proposed selling the lottery for an estimated $14 billion. Last month, California's governor proposed a long-term lease of the state lottery for a one-time payment of up to $37 billion. Indiana's governor was able to have the state senate pass a measure this spring to privatize the Hoosier Lottery, but it was shelved in the house. The idea is percolating in many other states.
All this is short-sighted nonsense and potentially hurtful of the less well-off – much like gambling itself. As Indiana's House speaker told The New York Times: "This is a greedy generation of governors. They're selling everything off and not thinking about the future." The nonpartisan California Budget Project finds that a private lottery operator – more eager to make a profit than government – "would likely encourage low-income Californians to spend more of their limited dollars." And with even more people betting on lotteries, consumer spending would drop, leading to lower tax revenues.
Most of all, such sell-offs raise the question of why state governments are in the gaming business at all. (The first modern state lottery began in New Hampshire 24 years ago. By 2005, state lotteries earned $52 billion in sales.)
Beyond the dubious notion that lotteries bring a painless windfall for state coffers, one of the original ideas was that they would drive out gangsters that ran numbers rackets. They would provide a wholesome outlet for those compelled to gamble – even though such legal vice still impoverishes many low-income people – and despite other government programs to lift them up. Gambling only reinforces a belief in the whims of fate.
The numbers rackets are long gone and unlikely to resurface in this age of Internet gaming. For young people, the lottery has become their "parent's game," as Massachusetts Treasurer Tim Cahill says. Cash-strapped states are themselves now addicted to lottery revenues and worry about the dollars increasingly lost to other forms of gaming, such as casinos.
States now speak of "revenue gaps" from lotteries, which drives them into more aggressive marketing, addicting even more poor people. And rather than take responsibility for cutting spending or raising taxes, many officials now want to balance the books with a windfall sale or lease of the lottery and allow private firms to run them as regulated monopolies. Such firms could easily become unscrupulous in how they advertise to the most vulnerable: the young and the poor.
Many states also now see casinos as a better cash cow. But they should not be peddlers of false hope. Horrific crimes have been committed by compulsive gamblers (about 2 to 3 percent of people) who seek cash for an addiction to lotteries.
Gambling is a perverse, downward cycle for both states and many people. Selling the lottery shows just how perverse.