In his final State of the Union address, President Obama warned of changes in society that can “widen income inequality.” Here is one change he probably did not consider: Last year, the rules for the Powerball lottery were altered – because of a slump in ticket sales – to increase the winning jackpot and thus lure more gamblers. It worked. By Jan. 13, the jackpot had hit a record high of $1.5 billion (yes, with a “b”). And based on past studies, guess which class of Americans probably dished out a disproportionate share of personal income to buy one or more of the $2 tickets?
For the majority of states that run lotteries and participate in Powerball (or Mega Millions), the addiction to revenues from legal gambling has only grown – even as public interest in gambling fell during the past decade. These states know all too well that low-income people – acting in an irrational fantasy about winning sudden wealth – can spend as much as 5 percent of their income on lottery tickets each year.
Lotteries, in other words, amount to a regressive tax on the poor. They only widen inequality.
If state officials want to help the working class, as Mr. Obama called for, they need to stop promoting lottery sales. In addition, government should not be in the business of selling the idea that one advances in life by chance. During his presidency, Obama has put a strong emphasis on education and worker retraining – not a superstitious belief in luck – to help lift the poor. Government must assist individuals to tap their talents rather than push them toward the temptation of a momentary “thrill” of an illusion about winning the lottery.
For society at large, state lotteries are neither a low-risk investment nor innocent entertainment. The absurdity of offering a $1.5 billion jackpot should be a wake-up call for states to focus less on faith in chance and more on the enduring potential of their citizens.