Tuesday, February 06, 2007

The Demographics of Lottery Players: Whose Idea of Enlightened Social Policy is This?

Inspired by Derrick Jackson’s Boston Globe column on expanded gambling, I did some research yesterday into the demographics of gamblers. The text and figures below document the demographics of state lottery players. These are taken from a 1999 study entitled “State Lotteries at the Turn of the Century: Report to the National Gambling Impact Study Commission” authored by four professors at Duke University. Every visit I have made to casinos in Atlantic City and Connecticut adds good (but anecdotal) evidence that the demographics of slot machine players are similar.

(Click on the picture to see the gory details).

Except for dogmatic libertarians, I don’t see how one can justify a public policy that exacerbates this situation through expanded legal gambling gaming. It’s safe to say that Deval Patrick has no libertarian leanings. These charts would nauseate any liberal worthy of the label. Even libertarians object to a state monopoly on gambling. So exactly who is in favor of funding our last 5-10% of incremental state government spending ($1-2B per year) through this form of taxation and/or malignant social policy? Who now wants the Commonwealth to do even more of this? Stand up and be counted, folks. I’m listening for good reasons why this practice represents an enlightened social policy.

From the report:

For the race/ethnicity category, participation rates are nearly identical across groups. However, average spending by blacks who play is much larger than for other categories, and hence per capita spending by blacks is higher than for other categories. …spending by players drops sharply as we move up through the education categories. The result is that the education category with the highest per capita spending is those who did not complete high school, and the college graduates have the lowest. With respect to household income, we see that participation rates increase up to $100,000. But players with incomes less than $50,000 spend more than others, and the lower income categories have the highest per capita spending….Hence lottery expenditures represent a much larger burden on the household budget for those with low incomes than for those with high incomes.

By the way, this study is from national survey data taken from states with lotteries. The most recent study exclusively concerned with Massachusetts lottery players dates from 1994 -- 12 years ago. You can see the entire 1999 report here.

UPDATE: The second of Derrick's 2 columns on casino gambling is here. He spoke with some researchers about delayed effects of casinos. I would not be surprised if these exist, but they are certainly more difficult to measure than the blunt demographics that clearly show that the heavy Lottery players are far more likely to be poor, uneducated, and from minority groups. The column ends with an insightful quote from one researcher:
"It is harder to put numbers on family breakups, depression, and divorce. Many of those negatives take much longer to manifest themselves than the benefits. It takes problem gamblers a while to run through their finances and relationships."

14 comments:

Ramon Amore d'Hombre said...

I was always under the impression that one of the tenets of conservatism was a belief in individual responsibility. The lottery is to my mind the purest form of non-coercive taxation. These people are not forced to gamble, and to take away the lottery simply because some people can't control themselves seems to infantilize the population in a way I thought conservatives were supposed to, if not oppose, at least not advocate.

To say the lottery has a malign effect on families is a stretch as I don't think anyone spends themselves into destitution on lotto tickets. Casino gambling may have a more direct effect but any good Reaganite supply-sider should be able to conjure a good response to that. (Lest I sound sarcastic I should say I would probably be inclined to agree with such a response.) Nonetheless there are undoubtedly unfortunate tolls taken by these phenomena on the lower classes but one could say the same thing about alcohol, sporting events, fast food,Wal-Mart and misguided investing among other and probably better examples of things which should obviously not be made illegal. These are not children who need candy taken from them to save their teeth.

marci said...

An astute column. I've seen this firsthand, the problems that multiply for families confronting lottery gambling addiction. There are so many other ways to generate revenue. There is no need pile on to people's problems.

Harry said...

I do believe that some people spend themselves into destitution in order to gamble, as some do with every other vice. However, ramon makes some very good points, especially that gambling is only one among many aspects of our culture that disadvantage the poor and uneducated. That is not a reason for the Commonwealth to operate a professionaly run monopoly in this area which seeks to "develop underserved markets".

I also note agreement with ramon's point concerning individual responsibility, but again here the monopoly power of the state is at work (with help from contracted professional marketeers in the private sector) to separate the poor and uneducated from their money. Why? So that our Commonwealth's annual public sector budget does not have to be cut 5 or 10%, or taxes raised.

How charmingly progressive.

Teresa said...

On the point about people spending themselves into destitution via gambling - they would do this even if legal gambling wasn't available. Oh you might save a few people from themselves - but most people who are "gamblers" will find a way to do it - to the detriment of their families. That's been pretty well documented over the years.

What isn't mentioned and is far more of a concern - with gambling comes increased mob activity. There's big money in them thar gambling halls - and organized crime wants their share. They push for it to be legalized and then use some of the proceeds to coerce politicians (like any in this state need coercing... but I digress).

It's impossible to save people from themselves (especially when they don't want to be saved). But it's possible to slow organized crime from moving in to an area by not opening casinos.

Harry said...

I know it is not possible to save people from themselves, Teresa. I'm just suggesting that government should not pave the road to perdition.

fly morgue said...

Of course this is no tax, non-coercive means not a tax in my book. Looking at the stats, it seems so clear that it 'hammers' the poor and then you can see the rate goes back up for people who make over $100K. Any notion why? Anecdote: my Dad is 72, works (still) like a dog, pulled in over 100K last year and is a huge lottery player: "you can't win if you don't play" is his philosophy.

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Shay R said...

I think you analysis is amazing! i though poor people can't eford buying the lottery but now I learn that they are most of the people buying a lottery ticket, I do wonder how many people buy lottery tickets online in compression to offline lottery ticket sales anyway, good luck to you all.