Position Paper - A State Lottery - A Bad Bet

By:  Paul Stam, Jr.

A State Lottery - A Bad Bet

July 8, 1997

It looks like the General Assembly has rejected state sponsored gambling this year. There were solid reasons for this decision.
A lottery exploits the poor and gullible. Those with incomes under $20,000 per year pay twice as much as others. It is a regressive tax on the foolish.

Massive amounts of false and deceptive advertising are necessary to sustain a lottery. The lottery commission will create a million dollar prize and pay it at $50,000 a year for 20 years. If I pulled that stunt as an attorney I would be reprimanded by the bar. The present worth of such a prize is more like $300,000.

Every advertisement which appeals to the victim's desire to win should bear the warning label: "Caution: This investment bears a negative rate of return of 50%", since only 50 cents of every dollar spent on a lottery ticket is returned in prizes.

The lottery bill is not libertarian. It is not about freedom to do as you please. Gambling remains very illegal under the lottery bill. If it passes, you can still go to jail for doing the very same acts which the states legalizes, promotes and sponsors. If this bill were about liberty, it would legalize lotteries, regulate them, and tax them. Instead, this bill creates a state run business which the sponsors declare to be illegal and criminal if engaged in by and individual.

Easy access to gambling through a state lottery means that citizens will gamble. Of those who do, studies consistently show that 5 percent will become compulsive gamblers (10 percent of they are teenagers). In one study, 86 percent of compulsive gamblers had committed a felony to get money to gamble. I estimate that North Carolina will have between 150,000 to 200,000 compulsive gamblers in 10 years.

A lottery hurts retail businesses. Retail merchants in southeastern Virginia lost $430 million over 3 years to the lottery. Lost sales mean fewer businesses and fewer jobs. Every dollar that goes to a lottery is a dollar that cannot be spent somewhere else - or invested.

A lottery creates a climate which is conducive to organized crime. Once citizens are hooked on gambling via the lottery they soon discover that the Mafia offers better odds, unsecured credit, and no pesky reports to the IRS for the occasional winner.
Putting the state in the gambling business through a state lottery sends the wrong message to children. Hopefully parents raise their children to study hard, work hard, and learn to manage money. States with lotteries are saying to children and their citizens, "Don't worry about work and savings. Gamble, hit the jackpot, and you'll be rich!"

Is this really the message we want the state sending to our children and citizens on a daily basis?

Help us stay free for all your Fellow Americans

Just $5 from everyone reading this would do it.