GOING FOR BROKE
Flaherty, Francis J .
GOING ¦FOR BROKE The lottery craze makes for lots of losers BY FRANCIS j. FLAHERTY ay the fours be with you!" So goes a Star Wars-styk television commercial for Pennsylvania's state...
...And it grieved for the Michigan woman who turned from winner to loser in a few days several years ago: Told that she had won $200,000 in the lottery, she soon learned that officials had held her finalist's number upside down, reading her losing "9" as a winning "6...
...As one gambling counselor says, "You stand seven times better chance of getting struck by lightning than you do of winning a million dollars in the lottery...
...A state's take from a lottery—ranging from 25 to 42 per cent of the gross—is counted on to fund a variety of state programs...
...In 1980, Pennsylvania was plunged into scandal when a televised $ 1 million drawing was found to be fixed...
...In November 1984 the Atlantis Casino Hotel filed for bankruptcy, the first to do so...
...A group of immigrant factory workers in the Bronx split one of the three winning tickets in the $41 million contest...
...A New Jersey man who spent $1,500 a week on the lottery enrolled in a hospital treatment program for compulsive gamblers...
...It is inappropriate, says Branstad, for a state "to be in the business of enticing and encouraging people to go out and gamble...
...He grew up in Atlantic City and owns a men's clothing store near the city bus terminal...
...Whatever the luck of the nation's gamblers, the force is certainly with the promoters of government-sponsored gambling...
...But even if he did, Atlantic City doesn't need a conspiracy...
...Deaf ears met both remarks...
...In the rush to promote government gaming, states risk corruption and infiltration by organized crime...
...Last August, as the day approached for picking the winner of New York's celebrated $41 million game, the airwaves and news columns were full of tales of homeless people collecting bottles and cans to come up with a dollar for a ticket...
...Maryland's, $15,000 to $21,000...
...A year ago, former New Jersey lottery commission chairman Reese Palley pleaded guilty to falsifying evidence in a state ethics commission investigation of charges that he sought private business from companies with state lottery contracts...
...In the others, where such revenues are earmarked for some special purpose, deception often crops up once more...
...About half the states with lotteries deposit the income in their general funds...
...The back streets resemble the South Bronx: one supermarket, no legitimate movie house, shuttered bars and restaurants, and a disastrous housing situation...
...The Federal Commission found, for example, that during the recession of the 1970s, Michigan not only had the country's highest unemployment rate but also its most lucrative lottery...
...It's doing badly enough on its own...
...A casino," says Thomas Carver, president of the Atlantic City Casino Association, "is not a golden goose laying golden eggs...
...Big as the game is now, its backers plan an even bigger future for it...
...Atlantic City has turned into a company town, vulnerable to shifts in the economy and the threat that nearby communities are considering legalized gambling...
...So goes a Star Wars-styk television commercial for Pennsylvania's state lottery...
...The lack of new housing for long-time residents and casino employees is a major disappointment of the gambling experiment...
...And Connecticut is not unusual...
...Evidence abounds that the poor spend more than they can afford on lotteries...
...The casinos tower above the resort as glitzy, gaudy symbols of success and high style, but a short distance away from the high-rollers and hype are idle working-age people...
...The imaginative city officials of Ishpeming, Michigan, even tried to use a parking-ticket lottery to encourage scofflaws to pay their fines, Francis J. Flaherty, a member of The Progressive's Editorial Advisory Board, writes on legal issues from New York City...
...With ever more states operating lotteries each year, the annual take approaches $ 12 billion, according to the Public Gaming Research Institute of Rock-ville, Maryland...
...Advocates add that spurning lotteries because people may not play them prudently smacks of paternalism...
...The odds are the lottery is here to stay...
...Lotteries may be the most popular form of gambling in the United States, and they may ease the financial burdens of government...
...In New York, for instance, 45 per cent of lottery revenues are set aside by law for education, but the education budget is fixed...
...Actually, Jacobson doesn't believe in conspiracy theories...
...The lottery is a regressive and inefficient tax that promotes addiction to gambling, seduces the poor into purchase of a bogus American Dream, turns states into sleazy shills for a game with infinitesimal odds, and provides ample opportunity for corruption...
...The talk of $40 million ignored the tax payBoardwalk Casino Blues The whole thing is a joke," Gene Wallace says bitterly...
...The Federal Commission on the Review of National Policy Toward Gambling reached a similar conclusion in 1976...
...The tristate lottery Wyman railed against began operations last September, and the Iowa version opened for business in August...
...Back in 1976, though, the press and public were quick to accept the unremitting stream of promises made by gambling advocates, believing that Atlantic City would be transformed into a money-making mecca, a Las Vegas by the sea...
...He is not alone in his thinking...
...In 1985, Scientific Games, the leading lottery-ticket maker, topped its 1984 figure of one billion tickets sold to state lottery commissions...
...Ten years after an overwhelming majority of New Jersey voters bet that a get-rich-quick solution known as legalized casino gambling would revive a dying Atlantic City, frustration is common among the handful of merchants who have hung on, the city's steadily declining population, and even some casino executives...
...optimists say it could net up to $ 100 billion in five years...
...He did not win the case...
...The lottery is not an efficient way to raise revenue...
...The states of Maine, New Hampshire, and Vermont launched the first regional lottery last September...
...But they simply saddle the poor with an unfair share of public expenses...
...Around the turn of the century, a series of scandals led to the abolition of lotteries in every state of the union...
...Talk of the game's regressiveness as a revenue-raiser is off base, they say, because the lottery is not a tax at all...
...Thomas Jefferson, too, was persuaded by this reasoning: Lotteries, he said, "lay taxation only on the willing...
...When he found out about the twenty-year installment plan to pay out his winnings, he was so enraged that he sued the state for fraud...
...Even if the games are inefficient compared to traditional taxes, they are popular and politically achievable, unlike tax increases...
...A quarter of the residents live below the poverty line...
...The casinos wish to be viewed as catalysts of civic improvement, not limitless sources of money and answers to perplexing municipal problems...
...About two-thirds of the public solidly backs its use, and politicians have found it a potent source of patronage and a painless way to raise money...
...For a few more bucks, the player can join such groups as the Happy Players Club or One to Won and be supplied with computerized picks...
...The nation cheered for the unemployed Jamaican house painter who raked in $5.9 million in the Pennsylvania lottery a while back...
...The only people benefiting from casino gambling are the casinos themselves," he remarks...
...In Connecticut, players with annual incomes below $5,000 buy 5.3 per cent of the lottery tickets but earn only 1.3 per cent of the state's income...
...Yet these are average incomes that include the earnings of many people at or below the poverty level who also play the lottery...
...Indeed, the group that led the legalization campaign called itself the Committee to Rebuild Atlantic City...
...In their behalf, they say that like any business they are responsible to the city only insofar as they create jobs, pay taxes, and perhaps exercise their charitable impulses...
...In New York's $41 million jackpot, the largest to date, the odds against buying the lucky ticket were an unsporting 6.1 million to one...
...ments he would owe as well as the fact that the prize is paid out over twenty years...
...For example, the $40 million that an Illinois man won in a 1984 lottery was actually worth less than $8 million at the time of the award...
...The eleven casino hotels employ 40,000 people, but joblessness in Atlantic City exceeds 10 per cent and is much higher in the cold months when tourism falls off...
...And the IRS has even come up with a new tax form—Number 5754— exclusively for lottery winners...
...To the contrary, they echo the statement by Washington State's lottery director that "it's the middle class who plays...
...Traditional taxes cost a penny or two per dollar to collect, but lotteries can cost up to seventy-five cents per dollar of revenue...
...Iowa Governor Terry Branstad agrees...
...Zealots can subscribe to Lottery and Gaming Review or Lottery Advantage for analyses of the game, while more casual devotees can open their local newspapers to lottery columns like the half-page "Will Wynn" featured in the New York Daily News...
...Jasper S. Wyman of the Christian Civic League of Maine said last August that government by jackpot only "lowers the entire moral tone of government...
...Best of all, say advocates, the lottery is fun...
...the amount spent on education remains constant...
...but the state attorney general said their scheme was illegal...
...The casinos have invested $2.7 billion in the city and now lure twenty-eight million free-spending visitors annually, but the business section of town is sagging and depressed...
...The Florida report also discloses that Arizona lottery players average $27,000 in annual income...
...A man in Arizona recently won $ 1 million...
...There is no end to the poignant tales...
...They also say states could monitor more vigilantly against criminal infiltration, though monitoring and reporting provisions in current laws are taken seriously in few states...
...Lottery lovers dismiss these problems...
...The lottery has provided America with a real-life soap opera...
...They vigorously dispute the contention, according to a recent report by the Florida attorney general's office, "that poor people bet more heavily on lotteries...
...If lottery revenues go up, the state cuts back on other monies slated for schools...
...As a Connecticut official told Newsweek, "People seem less annoyed at losing their hard-earned money on the lottery than losing it in the form of taxes...
...All this buildup has taken little more than twenty years...
...People "don't have to play if they don't want to," says Duane Burke, president of the Public Gaming Research Institute...
...The lures of the jackpot prey upon others, as well...
...Funding for this article was provided by a grant from Essential Information, Inc...
...No more than half—and often much less—of lottery revenues ends up in state coffers...
...Three lottery directors in Ohio have resigned following allegations of political patronage and kickback schemes...
...As the late Texas Congressman Wright Patman noted, "Gambling is actually the most regressive form of taxation that can be devised...
...I wonder if that isn't why they'd rather not hurry to fix up Atlantic City...
...The game craze has turned into a cash machine that is the predominant new revenue source for state governments in the 1980s...
...In effect, then, large lottery revenues translate as more money for other state programs—programs often less politically palatable than education...
...Defenders insist that the long odds and the dangers of corruption are not fatal flaws...
...Indeed, the chances of winning big money in a lottery are barely more than nil...
...Robert A. Polner (Robert A. Polner reported for The Press of Atlantic City and now writes for The Record in northern New Jersey...
...Bally Corporation, the major supplier of equipment for games now in operation in twenty-two states and the District of Columbia, has spent hundreds of thousands of dollars lobbying for new lotteries in states that lack them...
...They say states could offer more, but smaller, payouts to increase bettors' chances...
...Indeed, data can be cited to show that lotteries are not primarily the province of the poor...
...A Michigan woman was charged with dozens of counts of criminal fraud for allegedly forging checks to finance her thousand-dollar-a-day lottery habit...
...The private sector also perceives the lottery to be long-lived and lucrative...
...A teen-ager in Erie, Pennsylvania, spent $6,000 on lottery tickets and tried to kill himself when he lost...
...New York Governor Mario Cuomo wants to expand his state's game to include a sports lottery...
...California started a game in October that was expected to become the biggest such revenue-raiser in the nation—and promptly sold thirty million one-dollar tickets in the first two days...
...The son of a foundry worker nets $40 million in the Illinois lottery...
...Lottery officials add insult to the injury of long odds with their deceptive descriptions of lottery prizes...
...Nationwide," says the Florida report, "the poor bought lottery tickets at 2.8 times their income share" during one surveyed year...
...According to Daniel Suits, a Michigan State University professor of economics, the lottery is two-and-a-half to three times as regressive as the sales tax...
...And therein lies the proper measure of regressivity...
...The California Senate's study cited research suggesting that "lotteries can increase compulsive gambling by as much as 10 per cent...
...Nonetheless, these players continue to risk the dangers of addiction for a pipe dream...
...It lets people dream of vast riches, laugh and cry with winners and losers, and feel the thrills and chills of the chase for cash...
...Every working day, he breathes the exhaust fumes as tour buses carry thousands of tourists past his Atlantic Avenue shop...
...A player seeking guidance can shell out a few dollars for Dr...
...You know what these [casino] people fear most is competition," Joel Ja-cobson told a group of Rutgers alumni...
...But in 1964, New Hampshire initiated the new round of government-sponsored lotteries, and the ball was rolling again...
...Lottery officials see it differently...
...If nothing else, the city's sad fate should be viewed as a warning, a red flag to the many well-intentioned communities that are thinking of betting their futures on casino gambling...
...It is designed to pick the pockets of the poor...
...New York's, $25,000 to $30,000, and Vermont's, $17,000...
...It's much better for them if every other town looks at that one and says that they don't want that to happen to them...
...They worry about the Catskills or North Jersey or even Coney Island...
...A sprawling peripheral industry has sprouted as well...
...administration, promotional campaigns, and vendors' fees gobble up 10 to 25 percent...
...A Pennsylvania man in 1972 buys a ticket that wins $1 million, only to lose it when his wallet is swept away by Hurricane Agnes—and then to find the wallet and ticket two days after the statutory deadline for claiming the prize...
...One thing is certain: Political realities favor lotteries...
...The spectacle of the state as bookie also rankles...
...This state of affairs led Joel Ja-cobson, a member of the New Jersey Casino Control Commission, to describe the city as "eleven Taj Mahals in a war zone...
...But the critics of bettor government are steadfast—and rightly so...
...Congress mulls over no fewer than four bills proposing a national lottery to deal with the Federal deficit...
...The prizes account for something between 40 and 50 per cent of the gross take...
...Yet the casinos, with their sophisticated lawyers and connections, assembled prime real estate along the ocean front and bay...
...Unrealized expectations have put the casinos on the defensive...
...Colorado lottery officials, for example, analyzed the claim forms filled out by winners and found "the typical lottery player is a middle-aged man who makes $30,000 per year and has at least a high-school education...
...Speculators made millions buying and selling littered lots and crumbling tenements in a process that has allowed land to stagnate and its value to rise to the point where construction of low-income and even moderately priced housing is out of the question for legitimate developers...
...While casinos and race tracks keep 5 to 25 per cent of their takes, state lotteries keep as much as 60 per cent for profits and costs—prompting the irreverent to rename them "looteries...
...More important, a California Senate study concluded that poor lottery players spend a greater proportion of their incomes on the game than those who are better off...
...It has turned out otherwise, and the resort is hardly the example the 1976 New Jersey Casino Control Act anticipated, when it called legal gambling a "unique tool of urban redevelopment...
...Robert Hieronymous's How to Pick Your Personal Lottery Numbers or any one of dozens of similar books...
...Thomas Jefferson notwithstanding, the lottery exploits the American Dream and turns the state into a purveyor of slim hopes for Shangri-La to those with no other chance at financial security...
Vol. 50 • March 1986 • No. 3
