State Lotteries: They Prey on the Poor and Trash the Economy, and Political Leaders Don’t Care
State lotteries are inefficient and expensive—and an inappropriate enterprise for the state: a numbers racket is not something to be proud of. Steven Rosenfield writes in AlterNet:
State lotteries amount to a hidden tax on the poor. They eat up about 9 percent of take-home incomes from households making less than $13,000 a year. They siphon $50 billion a year away from local businesses—besides stores where they’re sold. And they are encouraged by state-sponsored ads suggesting everyone can win, win, win!
State lotteries, which once were illegal, now exist in most states . What many people don’t know about lotteries is that they prey on those who can least afford it; most people never win anything big; and 11 states raise more money from lotteries than from corporate taxes. Beyond the moral, mental health or religious debates over gambling, lotteries are another example of how society preys on the poor and the working-class.
Let’s look at why state lotteries do far more harm than good—especially at the bottom of the economic ladder.
1. Legalized gambling is almost everywhere.Legalized gambling is available in every state except  for Utah and Hawaii. This includes state lotteries, which are in 42 states , Puerto Rico and Washington DC. Lotteries were illegal for most of the 20th century, but that changed in 1964 when New Hampshire—a state without  an income tax—reinstituted  a state lottery. The first lotteries predate the American Revolution, but those mostly privately run efforts were so corrupt they were completely prohibited  by every state in 1894.
2. They suck billions out of the economy.In 2009, $50.4 billon was spent  on state lottery tickets and video kiosks. The governmentpocketed  $17.9 billion of this total in 2010, which breaks down to 30 percent in profits and 8 percent in administrative costs, including advertising. The rest went to prizes and commissions to stores selling the tickets. Many corner stores could not remain open without  the income from lottery sales.
3. They are a tax from anti-tax politicans. Tax-averse Democrats and Republicans have increasingly been relying on state lotteries to subsidize basic public programs like schools instead of raising taxes for that purpose. In 11 states—Delaware, West Virginia, Rhode Island, Oregon, South Dakota, Georgia, Michigan, Ohio, South Carolina, Texas and Washington—the lottery raised more per person  than corporate income taxes. “The long-term shift in tax burdens from capital and corporations to individuals and their activities is perhaps best illustrated by the rise of state lotteries,” wrote  tax expert David Cay Johnston, calling lotteries “the most heavily taxed consumer product in America.”
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