I'm glad the article makes the very important distinction that: "The lottery is not a tax. The inflated price of lottery tickets is."
I thought the article was going to be yet another claim that "a tax on people who are bad a math", I was pleasingly surprised that it focused on the tax created by the state monopoly, not on the fact that lotteries have negative EV.
The main counter I would offer to the article is that it isn't clear that there would be much of a "social" benefit in opening the lottery to competition. With the variance so high, and the players paying little attention to the odds, it's likely that the result would simply be a tiny amount of people earning about 35% more when they hit large prizes, and the rest spending the same amount of money on lottery.
I think it's a stretch of the imagination to suggest that lottery players would be better off at all if they removed the "excise tax" by opening it up to competition. One of the characteristics of monopolies is they tend to profit by selling fewer units than a competitive market does, and fewer lottery tickets sold is a good thing for gamblers.
The comparison to casino games in the article is particularly unhelpful, since the reason why most casino games have low house edges is nothing to do with competition and everything to do with being designed to encourage bigger and more frequent bets by deluding the gambler into believing their small wins are cancelling out their small losses. A roulette player loses 5.3% per spin, not per week, and since bets are sequential and games fairly rapid, a weekly session at a casino don't even have to be unusually long for expected losses to approach 35-55% of the amount bet; the same proportion of principal the participant could otherwise have expected to lose on buying tickets for that week's lottery. But because of the structure of the returns, people tend to bet more in casinos, and they can spend all day every day there if they want to. Bookmakers for horse racing are actually in a more competitive market than casinos in most areas but have much bigger house edges, because races can only happen so fast.
Lotteries are at the other end of the scale, marketing the dream of a weekly opportunity to achieve massive lifestyle changes to people whose decision to play isn't at all affected by whether they can remember ever winning anything from it, and probably have no idea of the expected return from the game they play
And allowing people three different privately-run massive dream jackpots to pursue is probably going to encourage them to buy more tickets. This means that even if margins do come down as a result of competition - despite participants' indifference to expected return and marketers' active avoidance of the subject - a lottery player tempted to buy a ticket in each of three competing weekly lotteries is almost certainly worse off than they would have been had there just been a single lottery in town (and they been happy to settle for a single ticket per week). It seems certain that new entrants pushing similar products will increase rather than decrease the amount wasted on lotteries; demand for lottery tickets simply isn't elastic enough with respect to expected return[1] for the alternate scenario of them succeeding by cannibalising the state lottery's business with juicy jackpots to make sense.
[1]if it was elastic with respect to expected return, demand would be negative!
It's not clear that's the case. My own intuition would be that demand for lotteries is inelastic because of scope insensitivity. There's essentially no difference between a $7 ticket for a chance at winning a $400M prize, and a $7 ticket for a chance at winning $500M prize. I would speculate that people will spend a fixed amount on lottery somewhat irrespective of the odds. That also means that liberalizing lotteries wouldn't particularly help most poor either...
I do see one potential for a lottery that could diminish lottery spending. A lottery that you pay for only once in your life, and that automatically enters you for a daily drawing every day, for the rest of your life. The odds of winning would be adjusted accordingly, but people would still get the thrill everyday that today, maybe, they could win.
It is an interesting philosophical question of whether vice taxes are a good thing however given this result of those vice taxes. (I am generalizing a bit as cigarettes and alcohol are also vice taxed and also lead to the same problems as lotteries).
Vice taxes only make sense if they reduce the likelihood of someone committing the vice. Otherwise it's just profiteering(especially when the tax funds aren't pumped back into, say, anti-vice programs).
Economically vice taxes always reduce consumption. Determining whether reality matches that prediction is probably an open field of study at this point.
Yes, but still. The essence of a tax is its involuntary nature. The mafia's numbers racket was a tax, or would be but for the mafia's lack of legitimacy (if you consider being a legitimate government a precondition for levying a tax). You played or someone broke your legs or burned down your house. Last time I checked, no state is doing anything like that. There are many things wrong with state-run lotteries, but they're not a tax. If you don't like the way the lottery is priced, don't play. Your kneecaps won't know the difference.
I'm not saying that state monopolies are good. I'm saying that people need to get over the idea that everything they dislike or disagree with is "a tax". It isn't. A state monopoly on fuel would be almost impossible to avoid, and you could reasonably assert that it's a tax (there would be debate, but your position would be reasonable). After all, even if you don't yourself consume fuel, almost every product you could possibly buy has to be transported from somewhere, and most transportation services available today use fuel. A lottery is nothing like that. The product, such as it is, does not form a component of the cost of any other product. All you have to do to avoid giving the state money is not play the lottery, which should be very easy since they are very up front about the fact that a ticket is not only -ev but much more -ev than any casino or cardroom game you could possibly play. If people stopped playing, the state would either give up its monopoly or (in a classic monopoly-monopsony dynamic) cut its prices. And in the meantime, ex-players would be better off as well.
When you buy liquor, you pay the market price (call it $10) plus an excise tax that the government adds on (let's say $2).
Imagine the government nationalizes the liquor business. The buy up every liquor company, and continue operating them the same way as before ($10 price + $2 tax). I think anyone would agree that this $2 would still be considered a tax.
Now let's say the government gets rid of the $2 tax, but bumps the price of liquor up to $12. The tax is still there, it's just implicit now.
You can absolutely avoid paying them by not drinking, and millions of people indeed do just that, but the fact that a tax is easily avoidable does not make it any less of a tax.
There are huge negative externalities to liquor which muddles the issue. If not forcing people to pay a carbon tax is a subsidy then the 'liquor' tax may not be an economic tax.
The "tax" part of the lottery is a component of the gambling part. The gambling part is the product people pay for. Just like a tax on cigarettes, or in some countries a tax on every consumer product (VAT). You can always avoid the tax by not buying the product or reduce it by buying cheaper products, but we still call it a tax.
Here in Pennsylvania, only the state can sell liquor (with a few exceptions - e.g. bars can sell drinks and producers can sell their wares which are generally wine here).
What about sales tax? Is that not a tax? After all buying things is voluntary, you could (and some people do) live a self sufficient lifestyle and not have to pay any sales tax.
I occasionally buy lottery tickets just for fun. It's enjoyable for me to fantasize about what I would do if I suddenly never had to worry about money again. I think about quitting my job, going back to school and learning about something I care more about (I didn't care for my major) and doing some travelling. I only buy one ticket every month or so. This $1-$2 actually gives me mental enjoyment, more so than a candy bar at least.
However, last time I bought one the woman next to me bought $80 worth of mega millions tickets. To be blunt at the cost of sounding unkind, she looked like she was a lower class individual. I truly felt bad for her (for reasons I won't elaborate on for conciseness) and I thought about all the people spending a decent sum of cash on something that is analogous to flushing money down the toilet.
I think the lottery does much more harm than good to society as a whole and should be done away with. The people who get into spending loads of money on these tickets are ones who are - generally speaking - uneducated and in a position where they don't have much going for them. Instead of being proactive and trying to improve their lives (easier said than done though, i know), they get caught up in this dream that destiny will save them from a life of difficulty. Obviously those susceptible to addiction are most affected and taken advantage of here, as mentioned by some other comments. It's not really a "tax on the stupid" because these people are more of a cost to society by wasting money and putting themselves in harder positions.
Not to mention the people who DO win the lottery don't often find themselves living the peachy life they would expect.
It's not just winners typically don't find themselves living peachy, winning a large lottery is one of the best ways to ruin your life.
Fully 1/3 of lottery winners eventually declare bankruptcy. Not only that they have a x20 chance of being a homicide victim, and 120x of homicide by a family member. Basically all of your relationships are likely to be destroyed by greed, and you will die alone and unhappy.
I wonder if (not the homicide stats) being aware of these stats would improve your chances of not ending up in a weeker finanicial position, avoiding the common traps kind of thing.
I agree that lottery is bad for society but the only reason that the government is doing it, I think, is because it was worst when organized crime had control over it.
But I do think that the government should reinvest all profits in education (not necessarily gambling related), gambling therapy, etc...
The problem with that, is they wind up cutting education funding from other sources in favor of lottery funding. That said, funding isn't the biggest problem in education. The bigger issues are teacher pay vs. other costs don't encourage those who would be better teachers.
Just because someone dreams of working with kids, or being a vet doesn't mean they have the natural skills needed to do so, or that the training they receive is appropriate for the task. Too much of this is driven by emotions over statistics and policies backed by those emotionally/politically driven ties.
The U.S. already spends more per student than most other countries do, and we're behind many of them. This isn't a money problem it's a political one. From the publishing companies to churches, the teacher's unions and everyone opposed and in between. There is far too much politics in and out of the classroom. Kids need to learn that life isn't fair, not everyone wins, and that sometimes you will lose. That doesn't mean you give up and stop trying.
While having organized crime run lotteries is certainly bad, some of the examples of predatory advertising mentioned in the article are absolutely despicable and unworthy of a government.
If the government runs lotteries, it should only if they have ascertained that a total ban would send lottery players into the arms of organized crime, and government should only run those lotteries with the health of these addicts in mind, and not with any kind of profit motive.
Advertising should be of the form: "If you absolutely have to play a lottery, here's how to do it, but be aware that you will lose money and very likely not win anything", and certainly not of the form: "This could be your ticket out of this mess!"
Consumption taxes are voluntary. You don't have to pay alcohol duty, or tobacco duty, or fuel duty. You can just refrain from consuming alcohol, tobacco or fuel.
In fact, a decent accountant will show you most taxes are voluntary...
There is a compulsory tax on alcohol but its consumption is voluntary. That's like saying an income tax is voluntary because you can choose to not have any income.
Point of this article is that state lottery monopolies impose a tax on gambling. You aren't free to participate in a pooled-cash chance game without paying the lottery 'tax'. It's a consumption tax on gambling.
That's probably not a very controversial thing to tax, though.
For some individuals, especially with certain psychiatric disorders, moderate use of alcohol to control an episode, especially a panic attack(true panic attacks); is not a voluntary consumption.
The drug has been vilified, for good reason in many cases, but is used as a sedative to the poor who don't have access to good doctors in too many communities.
(I really don't want to debate this. I know when I had panic attacks 2-3 drinks would stop them. I have yet to meet a doctor who won't admit privately that moderate, specific controlled use of alcohol is beneficial to for certain psychiatric disorders. Doctors don't bring it up because it's just not worth worth it. They are afraid of lawsuits because alcohol use carries so many risks, like the real risk of the patient becoming an alcoholic.
(Just keeping it real Homies. If you are currently suffering from an anxiety disorder(including some symptoms of PTSD, and the doctor is just offering a heterocyclic drug(like Prozac), or a drug that really does nothing, like Buspirone. Light, specific use of alcohol will help with some symptoms. Don't abuse the drug. Don't start drinking every day, or drinking socially. You only drink to alleviate specific symptomology. You need to save those liver cells because you use alcohol differently from the rest of the population. In other words; don't become a alcoholic? I'll get a lot of heat from this post, but it's meant for individuals who are suffering, and this advice only goes to individuals who have some self-control? If you didn't have self-control before the illness, and life was just a big party, don't follow this advice. Specific use of alcohol to control your symptomology will just result in your disorder getting worse, and yes--you will end up homeless, or worse. I am not a doctor.)
Alcohol is a great anti-anxiety drug and sedative, in small doses (like 1-3 drinks). That’s precisely why it has been so popular for thousands of years.
The problems with alcohol are (a) it just treats the symptom and doesn’t help fix whatever underlying issue is causing the stress, (b) it’s easy to take a far larger dose than necessary, far more often than necessary leading to abuse, and (c) acute effects of a large dose and chronic effects of frequent use are both highly destructive.
While I don't know about panic attacks, I think it's known that small quantities of alcohol are either harmless or beneficial to health. The general public can't see shades of grey though, so they only look at the extremes of alcoholism and binge drinking and decide that all alcohol is bad.
That is true. In fact, some people make this argument that people "mooch" off the government by purposefully restricting their income in order to reduce taxes and qualify for welfare programs.
This is a bit of a ludicrous example. Fuel is certainly more necessary than a lottery ticket, and to at least some portion of the population, alcohol and tobacco are as well.
Yes, because smoking cigarettes or purchasing alcohol is not mandatory. However if you choose to do either, the separate activity of paying taxes on them is.
The only way one can misunderstand this distinction is to believe government is involved in anything by default.
If there were no taxes/transaction fees (ultimately the same thing), then E(any lottery) would be unity. Which is exactly why people smugly say "the lottery is a tax on people who are bad at math" - which the article recognizes but discounts just to state it in different terms.
So sure, we can hope that some day that people who desire higher variance can conveniently play non-profit lotteries which won't "cost" them anything in expected value terms. And perhaps separating the nuance between "losing money by playing the lottery" and "being taxed for playing the lottery" is a step on that path. Although I think it's likely that privacy technology solves this problem before the cathedral does.
But this doesn't change GP's implying that not buying alcohol or cigarettes is equivalent to not paying the taxes on what you have bought. I suppose this nitpick is so divisive because people either view playing the lottery as equivalent to paying a tax due to that long held adage and that most every transaction is simply giving money directly to the government, or as the act of playing the lottery with an inbuilt tax as the article has led them to. But IMHO if you want to highlight the nuance of the latter, you'd be better off pointing out how people that run/play private lotteries are thrown in jail rather than equating tangible vices with purely throwing money away.
That's what happens to tax evaders who fail to evade enough taxes to pay off the people in charge. It does not apply to entities that are too big to fail and too big to jail.
Nobody will break down your door if you don't pay other taxes either. You don't need to earn income, buy food, or live in a home. You're free to be homeless, jobless, and starving.
If you don't like that, you're welcome to protest and vote for candidates that provide hope for change. That's the system and it's here to protect all of us.
This is incorrect. When you buy a ticket, a portion of the price goes to the government. This portion is not optional. Therefore it is compulsory. Hence the author's argument.
Then that portion is the tax, not the lottery ticket itself. In the same way that there's a tax on alcohol, but the alcohol itself is not a tax because no one's forcing you to buy it. The author himself states: "The lottery is not a tax. The inflated price of lottery tickets is"... which makes his headline "The lottery is a tax" shameless clickbait.
I think this characterisation is excessively persnickety.
Much like many other comments on this article, that seem to have been written in a painful rush to demonstrate just how damn rational the comment author is.
The headline is neither wrong nor sensationalised, and the article is nuanced and cogent.
I am of the opinion that comment authors should, if capable, explain his or her reasons for thinking the way he or she does, without resorting to throwing unqualified insults.
Furthermore, I think everyone has a right to his or her own opinion.
All taxes are optional. You don't want to pay income tax? Don't earn income. Actually come to think of it, that's the conservative argument against income tax, some people will supposedly earn less because they don't want to pay the tax.
> Lotteries are exempt from the Federal Trade Commission truth-in-advertising laws.
Honestly, this is the biggest case against the lottery, of all the things listed in the article.
I can't remember the last time I saw an ad for the lottery on TV, let alone something as ridiculous as the one from Illinois they show in the article. I wonder how much of the problem would be fixed by fixing this, rather than doing away with state lotteries altogether?
> if state governments are going to continue offering lotteries, they need to be regulated at the federal level and with the same standards as private businesses.
Some states actually have privatized their lotteries. Illinois is one of them, though they're changing that back now.
Ironically, the main "problems" that Illinois and New Jersey have reported with this approach are decreased revenue and sales[0] (ie, the exact things this article is trying to accomplish in the first place). So it seems that privatizing the lottery systems would be another approach.
> I can't remember the last time I saw an ad for the lottery on TV, let alone something as ridiculous as the one from Illinois they show in the article. I wonder how much of the problem would be fixed by fixing this, rather than doing away with state lotteries altogether?
Here in Germany (and Europe I think) they have to be super honest about it. The ads actually do say the chances are something in the ballpark of 1 in 100 million. Smallprint of course.
I believe they still make lots of cash.
A few lines down OP says:
> For example, in Ohio’s marketing plans for its SuperLotto game, it stated that advertisements should coincide with the receipt of “Government benefits, payroll and Social Security payments.”
> what they really did is outsource the management to a private company.
> Those lotteries are not privatized in the sense of opening it up to competition.
Privatization typically refers to the management, not to competition. For example, we say that electricity is privatized in NYC because it is managed by a (highly regulated) publicly traded company, even though there is no competition[0].
[0] There is now competition for the supply (though not delivery) via ESCOs, but that is a very recent move.
It's surprising that few people have pointed out that lotteries are essentially communist -- the government owning a for-profit business.
If you believe in the free market, you can only have one of two logically consistent positions on any and all forms of gambling -- either (1) open up the market to any business that can prove it's adequately capitalized and the odds of the games are as represented (e.g. in card games, the deck is standard and not stacked; in lotteries, the winning tickets are randomly mixed in, not given out to shill redeemers in exchange for kickbacks), or (2) ban all for-profit gambling operations.
I don't understand why someone who 'believes in the free market' must accept a binary position on 'free' market. In experimental design, you're supposed to produce tasteful granularity of measurement conditions to capture the breadth of a phenomena. Free vs. not-free is not very granular.
And given the immaturity of the state of economics relative to other disciplines, I don't see why anyone should just have blanket faith in the free market. The "freeness" of a market is but one variable in what is possibly a million-factor model, a model that possibly won't ever be developed in our lifetime.
John Oliver had a segment on the lottery [1]. It may be difficult to wean states off lottery income in the short-term. A ban - or severe limitations - on their advertising would be a good, realistic first step.
Of all the taxes in the world, I have no real problem with lotteries. I can see there is an argument for needing to have clearer advertising on what the house 'take' is on the he tickets, but most people don't know how much tax they are paying on their fuel, electricity, alcohol etc.
Yes, it's regressive on the poor as these people overwhelming play the lottery. But so are alcohol and cigarette taxes. The point of those taxes is to raise revenue from undesirable activities as they both have inelastic demand curves and need to be curbed if possible for the good of society.
Perhaps a useful improvement woudo be to cap the number of lottery tickets a person can buy.
Certainly it makes me depressed to see how much selling lottery tickets dominates retailing in small stores. That means a lot of money is being raked in.
State lotteries don't try to curb gambling, despite broad recognition of the harm it inflicts. It's rather the opposite: they're elaborately designed and marketed to draw people in.
Sure, and tobacco and alcohol taxes only do a mild job in curbing consumption - the collectors of the excise taxes are designed and marketed to draw people in.
A 'sin tax' really only operates at the margin and are -clearly- not effective at stopping people with a dependence on the 'sin'. At most it encourages under-consumption with people who only have a mild tendency to use that product.
Well, for starters, Robert De Niro is getting a bit old to star in the mob movie surrounding the early infancy stage of corrupt privatized lotteries.
</s>
I'm glad you point this out. So far no one has noted that lottery is a service the government provides as an alternative to gambling privately in dangerous, much more exploitive conditions.
Interestingly, the job of advertising state lotteries should walk a fine line between drawing would-be private gamblers to safer state circumstances and inducing people who wouldn't normally gamble to take it up. And it sounds like some of those ads have stepped over the line.
So the most salient part of this article deals with advertising lotteries.
The part about turning the lottery over to private businesses I don't find compelling. After all, the role of private business is to make profit and often does so by gravitating laws in their favor. I don't think businesses would compete to see who can make the most benevolent advertising.
The lottery is society's attempt to capture money that would otherwise go to illegal bookmaking operations on the theory that the state deserves the money more than citizens.
The tax is so extreme that it actually inspires illegal bookmaking operations -- doing a pick-3 with a 20-30% cut instead of the 50% the state takes is as good a way as any to raise capital for your criminal enterprise.
It doesn't. The mafia's games were cheaper. The problem was that playing was compulsory. What keeps people from playing the mafia's games is that the mafia is essentially defunct.
It's easy to understand why states are willing to raise a significant amount of their budget through the lottery. It's because people -- especially Americans -- hate taxes, and many politicians come to power by promising lower taxes. But states still need money for schools and roads and all those good things that people still expect, so lottery is an easy way to raise that money. Without the lottery, states will never come close to balancing budgets unless efficient, progressive taxes are implemented. Something tells me that will be hard to do.
Lotteries are a sucker game because, as in California (for example), the players put their money into the pot, the house takes one-third off the top (administrative expenses), the house takes another one-third for a good cause (education or whatever), and the players take their chances against one another playing for the remaining one-third.
I don't care how normal odds of winning are calculated. The above is a shell game in which the only certain losers (from a financial standpoint) are the players.
That is what a typical lottery system boils down to, in essence. It may be possible to justify them for the social causes they promote but they clearly take advantage of the players and particularly those who do not focus on the obviously horrible odds against them when they play in such a stacked game.
This may or may not be a "tax" in the technical sense but it sure is a case of the government rationalizing a system by which it (in my view) takes advantage of its citizens in the name of advancing its social agenda on other fronts.
This article doesn't make a lot of sense to me. The author states that lotteries exploit people of lower intelligence and addicts. Then he states that we should allow private companies to run lotteries instead of the state, so that they can be run on more advantageous terms for the players. But if the players are not intelligent or are addicted, how will they choose "better" lotteries? It seems more likely to me that with private companies in the mix, there will be more advertising and more players, but not better terms.
My grandmother plays the lottery every week and she enjoys it. She is not stupid or addicted, just someone who enjoys the feeling that she might win something.
Do we really need to have a moral panic over something that is quite normal and ordinary? I'm sure there are people who buy too many lottery tickets or are irresponsible with their money. I'm equally sure that privatizing or driving the lottery underground will not solve their problems.
"It’s not a tax on the stupid. It’s a tax on addicts, and their families."
That, I think, is the most fair categorization. But you already see such taxes (for example, in the inflated medical insurance premiums for smokers). So it's not particularly different from existing "addiction premiums".
Digital currencies would pose a worse problem for addicts as there is less of a wait time between playing and getting the result, which may result in more frequent playing and more money spent.
Also when you win $1m in bitcoin, cashing it out is probably a bit of a challenge, and you probably need to pay tax on the winnings.
Really? The following text is coped from them message at the top of the link you provided.
TLDR: block.blockhash() only works for the previous 256 blocks, so EtherPot is broken.
Something strange happened with EtherPot after it launched. There were 3 subpots the first round, but somehow a single player was being reported as the winner of all 3. This single account only had 8% of the tickets, so winning all 3 subpots was pretty unlikely.
However, that game is not totally fair. There's a house edge and of course fees to pay the Ethereum network (the miners).
And stepping back, I think Ethereum overall slightly missed the mark. I like the idea of Turing complete programs verified in a blockchain. But I don't think there should be any cost if you're able to run your own node. Further, it's impossible to know the cost of a Turing complete program (halting problem) which is further compounded by the relatively confusing fee chart (variable based on market demand) and currency unit names.
Anyone verifying the blockchain will have to run the programs in it. So it makes sense to charge a little bit for people to be able to put programs in there.
That's already the case in most states. After all, they don't want any competition - that'd mess up the whole point of being a monopoly for an addiction-driven product.
The worst thing is IMHO (when what was stated is true) that the state uses lottery spending on education to withdraw tax money from education.
Education is (or should be) one of the major duties of the state. When this is more and more committed to charity, than we are about to loose one of the main pillars of modern society. Already, education of the masses is getting weaker and weaker in many countries, so that the better of people send their children to private schools ... and that is a growing trend.
But of course, when taxes have to go down and down (this is a political manifesto today in some countries), schools and people will loose.
If you are going to enter a lottery, it makes sense to buy the cheapest possible ticket and enter as infrequently as possible.
Why? Because there's no rational basis for entering a lottery. It relies entirely on magical thinking. You are effectively polling for the existence of a personal luck deity. There is no need to use a complicated, expensive system for this.
A single $1 ticket, purchased annually, will suffice (this is available in Australia).
In the infinitesimal chance that the magical thinkers are correct, this single purchase will be sufficient for your personal luck deity to respond with the appropriate riches.
I saw somebody argue once that the main purpose of a state run lottery is to keep the masses from rising up. As long as the poor think there is a magic way out - as long as they can draw some hope from buying a lottery ticket - they will be more sedated. To be extra effective, there was also the need to nurture the idea that wealth doesn't make you happy, to provide comfort for those who did not win; hence the steady stream of news stories about lottery winners squandering their sudden wealth, or losing their friends and family.
its always amazed me that gambling on lotteries goes so unregulated.
i can get gambling on a lot of things like sports, rare events or whether your mate can do x in y seconds... this has some element of fun. lotteries though, they distil gambling to its purest form - numbers...
its like injecting nicotine instead of smoking cigarettes.
> its like injecting nicotine instead of smoking cigarettes.
They're halfway there already with "vaping". Tobacco requires a lot of land and labor to grow and process; "vapor juice" can be made by third-rate chemistry labs in China for half the cost.
Eventually they'll do away with lottery tickets too, and instead the clerk will just tell you that you lost. Which is reminiscent of https://www.youtube.com/watch?v=xe5rZFCiLsA.
We have the words "inefficient, regressive, and exploitative" but the missing word is "voluntary."
If we are going to treat the lottery as a tax, what products and services should also be treated as taxes levied by companies rather than the government?
Would it be possible to run a "redistributive" lottery with positive expected value below a certain tax bracket but negative expected value above that bracket? The idea would be to redistribute wealth from rich players to poor players.
You can do this with enough marketing. Some ideas on how to engage the "1% minus 0.01%":
1. Avoid associating your new lottery to the low-status images of "making it big" and "lifting out of property". Instead sell them on the image that they are so much more moral for "giving back" and "doing their share".
2. Instead of cold cash, make the prizes be aspirational things that mark them as high-status. Houses, cars, overseas vacations, etc. Make the prizes classy, let the prospect indulge in the fantasy that they too are part of the elite.
3. Make the tickets both scarce and expensive. This way, the ticket itself is a high status marker. Bonus points if you present the image on how much better the chance to win is compared with regular lottery (never mind that both quantities are negligible from a practical point of view). This way they can congratulate themselves on how much more smart than the hoi-polloi they are, on top of being nicer and more benevolent too.
The lottery (and gambling generally) is also a disgusting side-effect of free-market economies.
It enables those 5% of ticket buyers who are buying 54% of all tickets to experience a false sense of economic security or maybe possibility. In terms of intellectual toxicity, the lottery (and gambling) is right up there with religion.
In my opinion, it is a manifest moral failing on the part of state governments, regardless of the fiscal details. If only -- if only -- there was another source of hope besides the accumulation of more consumer goods.
Absolutely. Fully agreed. And so are casinos. You notice they're built near high concentrations of poor people so they can get back all that welfare money rather than cutting it.
"Abstractly considered, the hanging of the gamblers at Vicksburg, was of but little consequence. They constitute a portion of population, that is worse than useless in any community; and their death, if no pernicious example be set by it, is never matter of reasonable regret with any one. If they were annually swept, from the stage of existence, by the plague or small pox, honest men would, perhaps, be much profited, by the operation."
Abraham Lincoln said this. But you cut him off right before he got to the point!
"Similar too, is the correct reasoning, in regard to the burning of the negro at St. Louis. He had forfeited his life, by the perpetration of an outrageous murder, upon one of the most worthy and respectable citizens of the city; and had not he died as he did, he must have died by the sentence of the law, in a very short time afterwards. As to him alone, it was as well the way it was, as it could otherwise have been.--But the example in either case, was fearful.--When men take it in their heads to day, to hang gamblers, or burn murderers, they should recollect, that, in the confusion usually attending such transactions, they will be as likely to hang or burn some one who is neither a gambler nor a murderer as one who is; and that, acting upon the example they set, the mob of to-morrow, may, and probably will, hang or burn some of them by the very same mistake."
Interesting but not surprising that the frequency/volume of play is an almost perfect example of the 80/20 rule: 20% of the players account for 82% of the sales, while 80% of the players account for 18% of the sales.
A bit offtopic, but where did that article get their chart with house odds from? Generally, Blackjack has been said to have better odds, usually with roughly a 1% house advantage and supposedly the closest to 50% odds there is.
My father has always taught me, since I was young, that the state lottery is simply a tax on people who have never been taught probability or statistics. He used that as a lesson when he was teaching me about probability and compound interest :)
Obviously if you win, you win big, but overall, I tend to strongly agree with him. It is a tax on those who don't think about probability, except for the people who gamed the system and won: https://slice.mit.edu/2012/08/14/winning-the-lottery/
The article precisely argues that this viewpoint is wrong and damaging. The problem isn't the fact that lotteries are "irrational", the problem is that the state monopoly works de facto as an excise tax on a product which is extremely popular with the poor.
Lotteries are just a tax on people who are bad at math. But it seems like people who are bad at math will be at a disadvantage with just about anything involving money.
The distinction between monopoly rents from a government-mandated monopoly and a tax on the category of service for which it is a monopoly is very hard to see.
> A tax would be if a certain class of people were forced to pay for the monopoly service, in this case some people would be forced to play the lottery.
If the government taxes a particular non-monopoly service, no one is forced to buy the service, but the tax is still recognized as a tax.
Mandating a monopoly on a class of service, which monopoly then extracts monopoly rents -- especially where the state receives the rents, or a share thereof -- is pretty hard to meaningfully distinguish from taxing the class of service. Sure, no one is compelled to purchase the service, but a tax on alcohol or tobacco doesn't stop being a tax because no one is forced to purchase alcohol or tobacco.
Behavior is affected by advertising; otherwise, advertising wouldn't exist. The personal accountability argument rings hollow compared to the examples in the article of marketing directly towards people that can't afford lottery purchases as a simple "entertainment" choice.
I thought the article was going to be yet another claim that "a tax on people who are bad a math", I was pleasingly surprised that it focused on the tax created by the state monopoly, not on the fact that lotteries have negative EV.
The main counter I would offer to the article is that it isn't clear that there would be much of a "social" benefit in opening the lottery to competition. With the variance so high, and the players paying little attention to the odds, it's likely that the result would simply be a tiny amount of people earning about 35% more when they hit large prizes, and the rest spending the same amount of money on lottery.