Lottery Revenues Research Articles

Особенности финансирования спорта в Бразилии

The article presents an analysis of the sports financing system in Brazil. The state and non-state sources and main areas of financing are considered, as well as the distinctive features of the Brazilian sports financing system are identified. The high role of lottery revenues among sources of sports financing is noted. Special attention is paid to the analysis of the mechanism of indirect financing, implemented in the form of tax incentives for sponsors and benefactors who direct funds to sports. It is concluded that the Brazilian experience can be useful for Russia in terms of regulation and practice of implementing the mechanism of tax incentives for sports support, as well as the management and distribution of lottery revenues.

Powerball: Somebody's Gotta Win!

The case evolves around the Powerball lottery and the rule changes implemented in 2015, which, among other things, changed the chances of winning the jackpot from 1 in 175 million to 1 in 292 million. What is the impact of such rules on lottery revenues? The expected value rule is unable to explain why people play in the first place and fails to give the appropriate weight to the factors that explain the attractiveness of a lottery. This case is ideal to introduce the notion of decision weights as put forward by Kahneman and Tversky's prospect theory. By calculating decision weights, we obtain a reasonable prediction for the willingness to pay for the lottery as a function of different jackpot amounts. Using past data, we can correlate lottery revenues with predicted willingness to pay for a ticket. Quantitative-inclined audiences can then develop a simulation model of how likely it is that the jackpot grows, which, coupled with the prediction of revenues as a function of the jackpot, would give the evolution of the revenues under the new rule. The accompanying spreadsheet provides data for students to work out various scenarios to narrow objectives and maximize revenue from Powerball tickets.

US Gambling Stagnation

Much has been written recently in the popular press about the rise of sports gambling, historical horse racing or instant racing (HHR), and esports. However, despite this, some note an overall decline in the popularity of gambling and gaming in general as horse racing (pari-mutuel) wagering has declined dramatically over the decades and as casino and lottery revenues have fallen slightly since before the Great Recession. This exploratory research note examines the trends in US gambling over the last several decades and explores whether the new forms of gambling will stem and reverse overall gambling stagnation in the United States. Despite reports of new gambling outlet successes, it appears that sports gambling, HHR, and esports have not done much to stop the overall fall in gambling revenues. This is probably due to stagnant disposable personal income growth.

Revealed political favoritism: evidence from the allocation of state lottery grants in Israel

This paper explores whether rules-based allocation is an effective tool for restraining political favoritism. We exploit a policy shift in distributing state lottery revenues to Israeli municipalities from discretion-based to rules-based allocation to estimate the extent of political favoritism. By comparing the likelihood of receiving grants by two types of localities before and after a policy reform, our approach offers a complementary empirical strategy for studying political favoritism that can be used even in the absence of exogenous variation in political connections; it likewise may reveal the overall impact of multiple political interests and social affiliations on favoritism. We find that political favoritism toward Jewish (versus Arab) and affluent (versus less affluent) municipalities diminished significantly after the reform but has not yet disappeared along the ethnic dimension. Our results suggest that adopting rules-based allocation might be effective in coping with political favoritism.

US Gambling Stagnation: Will New Gambling Forms Make a Difference?

Much has been written recently in the popular press about the rise of sports gambling, historical horse racing or instant racing (HHR), and esports. However, despite this, some note an overall decline in the popularity of gambling and gaming in general as horse racing (pari-mutuel) wagering has declined dramatically over the decades and as casino and lottery revenues have fallen slightly since before the Great Recession. This exploratory research note examines the trends in US gambling over the last several decades and explores whether the new forms of gambling will stem and reverse overall gambling stagnation in the United States. Despite reports of new gambling outlet successes, it appears that sports gambling, HHR, and esports have not done much to stop the overall fall in gambling revenues. This is probably due to stagnant disposable personal income growth.

Poverty and economic behavior: gambling on social security paydays

ABSTRACT The goal of this research is to explore whether actual lottery revenues are sensitive to economic scarcity, as measured by intra-monthly stock of financial resources. Paydays of social security benefits are employed in this study to generate the various degrees of intra-monthly scarcity in financial resources. Using two million observations on daily lottery revenues that cover more than 2,500 lottery outlets in Israel over two years (2015–2016), the empirical analysis suggests that gambling revenue spikes at social security paydays. The estimation results imply that on income support payday aggregate lottery revenues are higher by 5% after taking into account potential determinants of gambling such as day of week, holidays and outlet characteristics. However, the calculated aggregate reaction of lottery revenues on income support payday is quite small and equals 0.5% of the total monthly payments deposited into the bank accounts of income support recipients. In addition, the other social security and salary paydays induce a trivial impact, relative to total monthly payments deposited into the bank accounts of the respective recipients. The findings presented here provide a valuable contribution to gambling studies that examine the relationship between economic conditions and lottery.

Are “Education Lotteries” Less Regressive? Evidence from Texas

With little exception, research has shown that state‐sponsored lotteries are regressive in the aggregate, in that lottery sales do not increase proportionately with area income. We test whether the purpose of lottery revenues mitigates this spatial regressivity. In August of 1997, the statutory earmark for Texas Lottery proceeds moved from the General Fund to the Foundation School Fund, which supports K‐12 education. Beginning in 2000, the lottery was increasingly marketed as a funding stream for public schools. Drawing on a content analysis of lottery commission press releases from 1993 to 2006, we find that Instant game sales were modestly responsive to education messaging, in that sales became noticeably less regressive in the wake of more intense reminders of the education component of the state lottery. It is likely that unobserved heterogeneity in local sales factors played a much bigger role than education marketing.

Poverty and Economic Behavior: Gambling at Social Security Paydays

The goal of this research is to explore whether actual lottery revenues are sensitive to scarcity, as measured by intra-monthly variation in financial resources. Exogenous paydays of social security benefits are employed to generate the intra-monthly variation in financial resources. Using two million observations on daily lottery revenues that cover more than 2,500 lottery outlets in Israel for two years (2015-2016), I find that gambling revenue spikes at social security paydays. The estimation results imply that on Income Support payday aggregate lottery revenues are higher by 5 percent after controlling for outlet, weekday, holidays, month and year fixed effects. However, the calculated aggregate response of lottery revenues on Income Support payday is quite small and equal 0.5 percent of the total monthly payments deposited to the bank account of Income Support recipients. In addition, the other social security and salary paydays induce a trivial impact relative to total monthly payments deposited to the bank account of the respective recipients. These results survive a list of sensitivity analyses and pass a placebo test.

Revealed Political Favoritism: Evidence from the Allocation of State Lottery Grants in Israel

This paper offers a complementary empirical approach that might be better suited to identify the extent of political favoritism in a multi-decision-maker institution than the standard identification strategy. The typical diff-in-diff identification strategy to estimate political favoritism, which rests on a comparison of two decision makers that allocate public funds to two groups, seems inadequate in a multi-player setting due to the multiple and conflicting political interests and social affiliations. To illustrate how our approach uncovers the degree of political favoritism, we use a policy change in allocating state lottery revenues to Israeli municipalities from discretion-based allocation to rules-based allocation. We find significant political favoritism under the old regime relative to the new one toward Jewish (versus Arab) and affluent (versus less affluent) municipalities. Our results suggest that adopting rules-based allocation might be effective in coping with political favoritism.

The New Jersey Pension Crisis: Flailing in Deep Waters

New Jersey has a deep pension-funding crisis. It has made excessively generous pension promises without funding them; simultaneously, it has run up some of the highest debts, lowest credit ratings, highest tax rates, lowest citizen satisfaction rates, and highest out-migration rates of any state. Its responses have proven futile or counterproductive. While the pension crisis has arisen largely from a lack of citizen oversight, the state has recently increased government-worker control. While it has failed to fund its pensions, it has recently made a cosmetic dedication of lottery revenues that will only serve to hide—not correct—underfunding. And while the state already shows signs of tax-base flight, it contemplates enormous tax increases. New Jersey’s future likely requires its officials to reduce pension promises for work not yet performed and to trim some already-granted pensions that run in excess of earnings during working years and reasonable New Jersey compensation levels.

Public Interest in Veterans’ Lottery Tickets

While many states earmark lottery proceeds for education programs, a few states have started allocating portions of lottery revenues toward state-provided services for military veterans. The decision to shift funds toward veterans’ services and away from other programs creates an opportunity to study society’s willingness to help veterans when faced with real trade-offs. Using county-level data from three states, I examined public interest in veterans’ lottery tickets by analyzing consumer and voter behaviors. In two states that sold veterans’ tickets, IA and TX, a similar set of county-level variables explained variation in both veterans’ and nonveterans’ ticket sales. However, there were a few cases in which sales patterns differed across ticket categories. Election results from a statewide referendum in MO to create a veterans’ lottery ticket suggested that opposition came from counties with a large proportion of college graduates and high population densities.

Powerball: Somebody's Gotta Win!

The case evolves around the Powerball lottery and the rule changes implemented in 2015, which, among other things, changed the chances of winning the jackpot from 1 in 175 million to 1 in 292 million. What is the impact of such rules on lottery revenues? The expected value rule is unable to explain why people play in the first place and fails to give the appropriate weight to the factors that explain the attractiveness of a lottery. This case is ideal to introduce the notion of decision weights as put forward by Kahneman and Tversky's prospect theory. By calculating decision weights, we obtain a reasonable prediction for the willingness to pay for the lottery as a function of different jackpot amounts. Using past data, we can correlate lottery revenues with predicted willingness to pay for a ticket. Quantitative-inclined audiences can then develop a simulation model of how likely it is that the jackpot grows, which, coupled with the prediction of revenues as a function of the jackpot, would give the evolution of the revenues under the new rule. The accompanying spreadsheet provides data for students to work out various scenarios to narrow objectives and maximize revenue from Powerball tickets. Excerpt UVA-QA-0857 Rev. Jul. 23, 2020 Powerball: Somebody's Gotta Win! In 2015, lottery consultant Rylee Robinson was hired to examine Powerball, an interstate-run lottery, for its value, prize structure, complexity, and disappointing ticket sales. Indeed, in 2013, ticket sales had declined in all but four states, and by 2014, Powerball sales had declined across the nation by 19%. Industry insiders attributed the decline to jackpot fatigue, which meant casual players would not purchase tickets unless a huge jackpot was up for grabs. With fewer people playing, it took more time to generate jackpots large enough to get folks interested enough to buy tickets. This meant less lottery money was going to state coffers for spending on government programs such as education, economic development, mass transit, or the environmentor whatever beneficiary each state had chosen when Powerball launched. Robinson was working with the Multi-State Lottery Association (MUSL) to address the falling revenue problems and attract new players to the game. Any rule revisions they made would affect all states that played Powerball. Several members of the MUSL committee working with Robinson believed that increasing ticket buyers' chances of winning somethingnot just the jackpotwould encourage ticket sales. A few changes to the rules would result in more prize winnersa jump from 1 in 32 to 1 in 25, but the chances of winning the jackpot would move from 1 in 175 million to 1 in 292 million. The proposed changes would make it more likely that the jackpot size increasedand history showed that the bigger the jackpot, the more tickets were sold. In a simulation run over five years, a study concluded that the chances of accumulating a jackpot worth more than $ 1 billion increased from 8.5% for the old odds (1 in 175,223,510) to 63.4% for the new odds (1 in 292,201,338). Before getting behind the suggested rule changes, Robinson wanted to run the numbers again. Would more people really buy Powerball tickets just because the jackpot was larger? Or would the changes actually decrease the popularity of Powerball? And what effect would the new rules have on revenues? . . .

Oregon's 2013-15 Budget: Pulling Out of the Recession, Winners and Losers

Author(s): Henkels, Mark; Steel, Brent S | Abstract: The 2014 Oregon Legislative short session was a highly partisan affair where majority Democrats in the House and Senate pursued contentious issues to Republicans including marijuana legalization, gun control, the Columbia River Bridge Crossing, and the huge implementation problems of Oregon’s dysfunctional health plan exchange (“Cover Oregon”). The economic picture in the state featured a modest recovery and urban job growth providing an increase in state income taxes, while other revenue sources such as cigarette taxes, estate taxes, and Oregon Lottery revenues were less than expected. Nonetheless, the legislature managed to adjust the 2013-15 biennial budget, although two issues indicate there are deeper unresolved problems remaining: ongoing public employee dissatisfaction and the impact of general fund redistribution on specific programs.

Who plays? Who pays?: education finance policy that supplants tax burdens along lines of race and class

Many Chicagoans are getting shortchanged, particularly when it comes to money exchange between the Illinois Lottery (IL) and Illinois State Board of Education (ISBE). A significant portion of lottery sales is earmarked for education in Illinois. Because these revenues are not generated equally, however, some contribute more to education via the lottery than others. When this money is distributed in a way that transfers it from one community to another, one community’s fiscal gain comes at another’s expense. So the question stands: Who plays and who pays? To answer this question, I use the city of Chicago as a case study to simultaneously compare the generation and appropriation of lottery revenues. What I found was that this exchange is inherently organized along lines of race and class. Lottery revenues disproportionately come from communities comprised predominantly by people of color and the working class, and then are redistributed across all communities through education finance. When fiscal policy of Illinois public education is structured in such a way, it inequitably distributes economic capital and preserves undeserved enrichment and unjust impoverishment. This represents a state-sponsored process that captures one mechanism for the reproduction of race and class inequality.

WHO PAYS FOR THE MARYLAND LOTTERY?: EVIDENCE FROM POINT OF SALE DATA

For 42 states and the District of Columbia, lottery games provide a steady revenue source which can bring in up to 4% of annual state revenues. Unlike other public finance tools such as income taxes, lottery products enjoy substantial popularity. A particular reason they appear to be popular among state policymakers is that lotteries are often referred to as a “voluntary tax.” Compared to income taxes, however, relatively little is known about who plays the lottery and thus who provides states with this stream of “voluntary tax revenues.” State government budgets in the US are currently under pressure for both structural and cyclical reasons. As a result, many are debating the expansion of state-sponsored gambling to enhance their fiscal revenue streams. Previous studies have presented evidence that lotteries are regressive. For the current public policy debate to be fully informed, it is important to have information about who pays the “voluntary tax.” This paper uses unpublished FY 2005 sales data, provided by the Maryland Lottery Commission, from every individual lottery point of sale terminal in the state of Maryland. Because our data include the physical addresses of the terminals, we use an interdisciplinary approach to analyze this data by incorporating some tools from contemporary economic geography into our research. First, we marry the lottery-terminal data to census tract data and examine it using geographic information system (GIS) maps. We use the GIS maps to explore the relationship between race, income, per-capita lottery sales and the density of lottery retail sites. We also use the maps to attempt to shed some light on how different racial and income groups contribute to total state lottery revenues. To the best of our knowledge, this paper is the first in-depth use of GIS techniques to explore these questions.Because the data include not only the physical address of the terminal, but sales data disaggregated by lottery game, we are able to show the geographic distribution of the sales of particular lottery games, offering insight into how different games are played by the populations in different areas of the state. These analyses reflect new directions in the study of the lottery as a public policy issue, offering insights beyond the usual research on income and demographic effects.Finally, we present the results of a regression analysis of the effect of various social and economic factors on per-capita lottery sales. Our results confirm the findings of many previous studies, but also demonstrate that the nature of the demographic “burden” of the lottery may not be the same in Maryland as it is in other states where studies have been conducted.We are grateful for the assistance of Joe School and Anthony Dowell, for research support provided by the Special Research Initiative Fund at UMBC, to the Maryland Lottery Commission, and to participants of the Symposium on Gambling, Prediction Markets, and Public Policy hosted by Nottingham-Trent University. The opinions expressed in this paper are solely those of the authors.

Running the Numbers on Lotteries and the Poor: An Empirical Analysis of Transfer Payment Distribution and Subsequent Lottery Sales

State lottery revenues are shown to increase during the week transfer payments are distributed. The timing of the increase in lottery purchases suggests a portion of the transfer payments is used to purchase lottery tickets. In addition to providing information on the timing of lottery purchases, this study finds sales of Pick 3 and Pick 4 tickets increase during the period, while sales of Pick 5 and Pick 6 games do not, suggesting a general preference for the relatively higher probability, smaller jackpot games for the group.

The Impact of Lotteries on State Education Expenditures: Does Earmarking Matter?

In this paper, we estimate the impact of earmarking lottery revenue to education as opposed to filtering lottery revenue through a state’s general fund. A unique facet of this investigation is the comparison of states with lottery revenue earmarked for spending on K-12 education and states with lotteries for general funds. This approach enables us to investigate the effect of state lottery revenues on education and other budgetary components in a more controlled environment by mitigating lottery preference differences across states. Consistent with previous research, we find that earmarking lottery proceeds for K-12 education has little or no impact on actual state K-12 funding. We also find that lottery revenue does seem to increase K-12 funding in states that deposit the revenues into their general funds .

The Impact of Earmarked Lottery Revenue on K–12 Educational Expenditures

Of thirty-eight states with lotteries, sixteen earmark lottery profits for primary and secondary education. In this article, we use a panel data set of states with lotteries to examine the impact of earmarking lottery revenues on state educational spending. We can reject the hypothesis that spending increases dollar for dollar with earmarked profits, but there is a high likelihood that earmarking increases school spending more than non-earmarking. We find that 50–70 cents out of an earmarked dollar finds its way to local school districts. In contrast, each dollar of lottery profits increases state revenues to schools by about 30 cents in states that deposit profits into the general fund. Of the lottery dollars that reach local school districts, we find that at least 80 percent of it is spent on schools.

The State and the Cinema in the United Kingdom: Evolving Relationships (1979-2005)

A government can adopt two different stances regarding its domestic film industry. It may choose to support and protect it because of its cultural remit – or it may treat it like any other industry and adopt a laissez-faire attitude and let market forces determine its fate. The latter stance was adopted by the Thatcher government, which abolished the support system and protectionist measures from which British film had benefited for decades and granted it only few subsidies. The government severed almost all the existing links between the film industry and the State. These non-interventionist policies undoubtedly contributed to the dramatic drop in the number of British films produced and the chronic difficulties which the film industry experienced in the 1980s. The relationships between the government and the film industry have since changed considerably. The creation of the Film Council and the existence of a Film Minister within the government have definitely contributed to reinstating a dialogue between the industry and the government. State support in favour of film has increased dramatically in the past decade, with the introduction of tax incentives and new subsidies, which mostly derive from National Lottery revenues. The State’s investment in film is thus mainly indirect and it is clear that the government, by supporting British cinema, has in mind not only its contribution to the country’s culture but also to its economy. By changing the legal definition of a British film in order to entice into the UK foreign investors who want to benefit from attractive tax incentives, the government triggered an increase in the number of co-productions and foreign films shot in the UK – at the risk of undermining the identity of British cinema, and thus, the country’s culture.

Measuring the Impact of Lotteries on State per Pupil Expenditures for Education: Assessing the National Evidence

AbstractState‐operated lotteries have recently been asserted by public administrators and academicians as panaceas for eradicating revenue disparities existing across public school districts in the American states. The purpose of this research project is to empirically test the hypothesis that lottery revenues raise the state expenditures for public education. A state‐level national dataset, which includes fifty American states over the period 1977–1997, was used for the analysis. Pooled time‐series cross‐sectional and ARIMA modeling was employed to test the hypothesis. This study finds that lottery revenues had a positive influence on state per pupil expenditures for education. The evidence for the impact of lotteries on state per pupil expenditures for education was robust and statistically significant.