Powerbull: The Lottery Loves Poverty

What is America’s national antipoverty strategy? Apparently, the Powerball lottery. All across the country last week, millions of people lined up for hours to get their shot at a payout that would end their financial struggles. On Wednesday night, one ticketholder won a $759 million jackpot. That sounds like a lot until you hear the government’s take.

Powerball—the lottery shared by 44 states, the District of Columbia and two territories—is just one of the sweepstakes run by 47 jurisdictions in the U.S. These games produce nearly $70 billion a year in government revenue and enjoy profits of about 33%—much higher than margins in the private gambling industry.

Who are these lotteries’ most loyal customers? Poor people. Lots of folks buy the occasional ticket, but studies have long shown a steady association between poverty and lottery play. Many scholars report that the poorest third of Americans buy more than half of all lotto tickets, which is why states advertise so aggressively in poor neighborhoods.

Harmless entertainment, you may say, but poor people don’t see it that way. They tend to view lottery tickets as an investment. .. Hardly a surprise, since this is the idea that lottery advertising is selling. In California, the slogan is, “Imagine what a buck could do!” In New York? “Hey, you never know.” Scholars have dug up evidence that states intentionally direct such ads at vulnerable citizens. A marketing plan for Ohio’s lottery some years back recommended scheduling campaigns to coincide with the distribution of “government benefits, payroll and Social Security payments.”

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What’s the social cost of all this? Ms. Kearney says lottery players finance their tickets largely by cutting spending on necessities. After a state introduces the lotto, the bottom third of households shift about 3% of their food expenditures and 7% of their mortgage payments, rent and other bills. Effectively, the lottery works like a regressive tax.

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Politicians who profess a desire to alleviate poverty often lament how few levers they have to pull. So here’s a novel idea: Stop selling poor people a mirage of the American dream at the end of a convenience-store line.

Mr. Brooks is president of the American Enterprise Institute.

https://www.wsj.com/articles/powerbull-the-lottery-loves-poverty-1503868287

(If you google the title you may be able to find the complete story, or on twitter, I am told)