State Lotteries Research Articles

Where the money goes: the role of funding allocation in lottery markets

ABSTRACT A key characteristic of state-authorized lotteries is that they are required by law or through their licenses to make payments to society (in the form of taxes paid to the treasury, duties, funds to sports, or funds for other good causes). So state lotteries serve to some extent as a public finance tool. This paper aims to study how lottery markets around the world respond to different funding allocation strategies, but also how lottery sales respond to the macroeconomy. These are crucial issues to enable these markets to confront future challenges and to maintain lottery payments for society. Consequently, an economic-related approach is taken to investigate the role of funding allocation in lottery markets from an international perspective using panel data information from The WLA Global Lottery Data Compendium. The empirical findings show a negative relationship between lottery sales and financial contributions to society. However, relevant differences exist depending on the funding strategy adopted, and a positive link between sales revenue and allocating funds to education or social purposes is observed. Overall, it is found that lottery is a normal good and as an implicit tax, regressive.

Thrice‐beloved Belly of Naples: Nostalgia and privation in George Gissing and Matilde Serao

AbstractDuring visits to Italy between 1888 and 1890, George Gissing immersed himself in fictions by Matilde Serao, a journalist, editor, and leading practitioner of verismo (Italian realism), whose stories focused on the travails of the poor of Naples. Partly as a means of practicing his Italian and partly for his own pleasure, Gissing read serial installments of her novels Addio, Amore! (1890) and Il Paese di Cuccagna (1891). The latter novel, translated into English as The Land of Cockayne (or, The Land of Milk and Honey) in 1901, dramatized the damage wrought upon Naples' social and economic life by its state lottery. Swept up by lottery fever, locals forfeit their savings, exploit each other for loans, and ruin one another's lives. Cockayne invites comparisons with Gissing's The Whirlpool (1897), which captured a culture preoccupied with precarious financial investments, and In the Year of Jubilee (1894), which famously satirized the frenzy of the crowd. Yet, upon closer look, these comparisons do not fully hold. Serao's characters are city people, but they are strongly imprinted by a lingering peasant consciousness. Earnest in their domestic roles, these wives and daughters feel none of the troubling temptations of modernity. All of Serao's men and women hold an enduring folk belief in dreams and premonitions, the means by which they choose their lottery numbers. This was likely the source of Gissing's pleasure in the book. While aspects of Cockayne mirror the modernity of his fictions, Serao's Neapolitans evince an older worldview that intrigues him.

Impact of Legalized Gambling on Gambling Behaviour and Monetary Benefits to the State Government : Evidence of Trade-off from Sikkim

A high rate of prevalence of problem gambling represents an urgent public health issue in many countries. Excessive gambling behaviour of a gambler not only affects the gambler, but it also affects and influences his/her family and the life of the people living around him/her. This paper aimed to identify the prevalence of problem gambling among the gamblers of Sikkim and highlight the amount of revenue generated from the casino industry and the state lotteries in Sikkim. The prevalence of problem gambling was identified using the Problem Gambling Severity Index. Based on the scores of the Problem Gambling Severity Index, 26.3% of the gamblers in Sikkim were categorized as problem gamblers and 47.5% of them were categorized as moderate-risk gamblers. In terms of revenue generation, from the period between 2011–12 and 2017–18, the Government of Sikkim generated revenue of about ₹2,274 million from its state lottery and ₹350.46 million from its casino industry. Although the revenue generated from the gambling industry in Sikkim is increasing, the high rate of prevalence of problem gambling is a matter of great concern.

DISCUSSION OF THE LOTTERY COURIER SPACE AND JACKPOCKET'S FOCUS ON COMPLIANCE: AN INTERVIEW WITH JACKPOCKET CEO PETER SULLIVAN

DISCUSSION OF THE LOTTERY COURIER SPACE AND JACKPOCKET'S FOCUS ON COMPLIANCE: AN INTERVIEW WITH JACKPOCKET CEO PETER SULLIVAN

Economic shocks and lottery sales: an examination of Maine State lottery sales

ABSTRACT Most U.S. states earn significant amount of revenues from lottery sales. However, they are also criticized for promoting the lotteries because they have been seen as taking advantage of poor populations. The purpose of this study is to identify the impact of various economic factors on lottery sales by using zip-code level sales within the state of Maine. The results show that an increase of 1% in unemployment rate results in a 0.38% increase in draw lottery sales, but it has no significant impact on instant lottery sales. This highlights the importance of differentiating between two major types of lotteries.

Supplement or Supplant? Estimating the Impact of State Lottery Earmarks on Higher Education Funding

In the wake of declining state support for higher education, many state leaders have adopted lottery earmark policies, which designate lottery revenue to higher education budgets as an alternative funding mechanism. However, despite the ubiquity of lottery earmarks for higher education, it remains unclear whether this new source of revenue serves to supplement or supplant state funding for higher education. In this paper, we use a difference-in-differences design for the years 1990–2009 to estimate the impact on state appropriations and state financial aid levels of designating lottery earmark funding to higher education. Main findings indicate that lottery earmark policies are associated with a 5 percent increase in higher education appropriations, and a 135 percent increase in merit-based financial aid. However, lottery earmarks are also associated with a decrease in need-based financial aid of approximately 12 percent. These findings have serious distributional implications that should be considered when state lawmakers adopt lottery earmark policies for higher education.

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.

All In: The Spread of Gambling in Twentieth-Century United States

At the beginning of the twentieth century, gambling existed largely as a popular, if illegal, activity. Antigambling groups won the political battles, but those seeking opportunities for risk taking were nonetheless readily accommodated. Horse racing was permitted in a few venues, but telegraph wire networks made action on the sport of kings accessible nationwide. Gambling on baseball existed in urban areas, largely the province of bookmakers who operated with the tacit blessing of law enforcement. Runners for numbers rackets were part of the daily scene in working-class neighborhoods of major cities, and on autumn Saturdays college football fans challenged the skewed odds offered by syndicate-sponsored parlay cards. Dice and card games flourished openly in western mining towns, less obviously in other regions of the country. At midcentury, Senator Estes Kefauver's committee focused attention upon gambling's ties to big city machines and organized crime. By this time, however, casino gambling was firmly established in Nevada, and in 1963 the establishment of the first state lottery by the New Hampshire legislature changed forever the ongoing national debate: gambling had become a state government–sponsored legal enterprise. At the start of the twenty-first century, forty-four state lotteries flourished, and full-service casinos—in cities large and small, on riverboats, and on isolated Indian lands—had opened across the nation. The last gasp of opposition occurred in 1999 with the tepid final report by the National Gambling Impact Study Commission, which gave lip service to traditional antigaming arguments but in effect raised a white flag of surrender.

Individual Preference for Longshots

AbstractResults from studies on risk taking behavior suggest that people tend to be risk seeking when making choices over lotteries that involve longshots: small probabilities of winning sizable payoffs. To investigate preferences over longshots systematically, we conduct an incentivized experiment using state lotteries in China, each involving a single prize and fixed winning odds. This enables our construction of single-prize lotteries involving winning odds between 10-5 and 10-1 and winning prizes ranging from RMB10 (about USD1.60) to RMB10,000,000 (about USD1.60 million) across different expected payoffs. For lotteries with expected payoffs of 1 and 10, subjects exhibit heterogeneous preferences for longshots: some prefer the smallest winning probability whereas others favor intermediate winning probabilities. As the expected payoff increases to 100, subjects become predominantly risk averse, even for the lowest winning probability of 10-5. Our findings pose challenges for utility models of decision making under risk.

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 World According to Fannie Davis: My Mother's Life in the Detroit Numbers by Bridgett M. Davis

Book Reviews 157 Bridgett M. Davis. The World According to Fannie Davis: My Mother’s Life in the Detroit Numbers. New York: Little, Brown, 2019. Pp. 308. Bibliography. Illustrations. Cloth: $28.00. The World According to Fannie Davis: My Mother’s Life in the Detroit Numbers chronicles the Davis family’s involvement in “The Numbers,” or underground lottery, in Detroit from 1950s to the early 1990s. The author, Bridgett Davis, is both a novelist and Fannie Davis’s youngest daughter. The World According to Fannie Davis is her first memoir: a highly engaging, well-researched page-turner that diversifies our understanding of black social history and labor by moving beyond the auto industry. The book details Bridgett Davis’s mother and father’s postwar migration from Nashville to Detroit, her mother’s subsequent multidecade career as a black female numbers runner and banker, and the author’s coming-of-age story. A cross-generational “love letter” to her mother that, Davis explains, tells “her story, and mine,” Bridgett Davis stresses and chronicles her mother’s fearlessness, determination, and willingness to transgress the narrow boundaries placed on black women and families to “make a way out of no way” and provide her family with “a good life at great expense” (p. 14). As the book makes clear, Fannie Davis, one of only two black women numbers bankers in Detroit, commanded respect rather than respectability. While the author’s detailed account of her mother’s career in The Numbers is both well-crafted and fascinating, her ability to weave this story within the broader historical context of structural racism, black class identity and formation, and black history and culture stands out, providing a rich social history of postwar black migrants and black Detroit, particularly of the non-autoworking and non-professional segment of the black population that Davis refers to as “blue-collar bourgeoisie” (p. 94). The World According to Fannie Davis is divided into three sections. The first, “Hitsville, USA,” refers to the centrality of The Numbers to black life, culture, and survival in Detroit during the economic downturn of the 1950s and early ’60s and is told through the lens of the Davis family’s migration to Detroit from Nashville. The second section, “Hey, You Never Know,” explores rising black political consciousness, luck, prosperity, and spiritualism in working-class culture; Mrs. Davis’s economic success and the growth of her business; black economic nationalism; and backlash from the police and state as black Detroit and black numbers operators rose in prominence during the late 1960s and ’70s. The third and final section deftly documents Fannie Davis’s ability to adapt and maintain her business—which remained active but slowed 158 The Michigan Historical Review in the 1980s—despite law enforcement crackdowns, inflammatory, and racialized depictions of the illegal “Numbers racket,” and the legalization and expansion of the state lottery. This section, told through the author’s perspective, is interlaced with a discussion of her school years, burgeoning career, and her relationship to her mother’s secretive life story before and after Fannie Davis’s death in 1992. The World According to Fannie Davis sheds important new light on the history of black Detroit. While not a formal work of history, it uses the Davis family’s story to discuss how structural racism impacted black Detroiters’ daily lives and struggles as well as their multi-varied efforts to transcend these imposed limitations. The World According to Fannie Davis should appeal to anyone with an interest in Detroit, urban history, and African American history, and is perfectly suited for classroom use. David A. Goldberg Wayne State University James Berton Harris. Once upon a Time at the Opera House: Drama at Three Historic Michigan Theaters, 1882-1928. East Lansing: Michigan State University Press, 2019. Pp. 240. Appendices. Bibliography. Illustrations. Index. Cloth: $54.95. The golden age of American opera houses wasn’t really about opera, James Berton Harris reminds us in Once upon a Time at the Opera House. Using the performance facilities in three small Michigan cities as a template, Harris recalls a time when a municipality’s “opera house” was merely its main theatrical space—a home for nonmusical plays, band...

Advertising as a Reminder: Evidence from the Dutch State Lottery

Advertising as a Reminder: Evidence from the Dutch State Lottery

Calculation and Conjuring: John Molesworth and the Lottery in Late Eighteenth‐Century Britain

AbstractThroughout the 1770s John Molesworth repeatedly, spectacularly and notoriously offered for sale tickets in the British state lotteries that he claimed were more likely than others to win prizes. In this article I tell his story and explore how he defended his claim against attacks that it was ‘absurd’ and an ‘imposition’, and how he persuaded adventurers in the lottery to purchase his tickets. He drew on a wide range of knowledge‐making and trust‐promoting techniques from natural philosophical, corporate and legal contexts, but at the heart of the strategy was his own status as a gentleman.

Union College, Schenectady and the New York State Lottery in the 19th Century

This paper details the history of the workings of the New York State lottery in the 1st half of the 19th century, especially how it affected the operations of Union College in Schenectady, New York.

Advertising as a Reminder: Evidence from the Dutch State Lottery

We use high frequency data on TV and radio advertising together with data on online sales for lottery tickets to measure the short run effects of advertising. We find them to be strong and to last for up to about 4 hours. They are the bigger the less time there is until the draw. We develop the argument that this finding is consistent with the idea that advertisements remind consumers to buy a ticket and that consumers value this. Then, we point out that in terms of timing the interests of the firm and the consumers are aligned: consumers wish to be reminded in a way that makes them most likely to consider buying a lottery ticket. We present direct evidence that this does not only affect the timing of purchases, but leads to market expansion. Then, we develop a tractable dynamic structural model of consumer behavior, estimate the parameters of this model and simulate the effects of a number of counterfactual dynamic advertising strategies. We find that relative to the actual schedule it would be valued by the consumers and profitable for the firm to spread advertising less over time and move it to the last days before the draw.

Lottery Adventuring in Britain, c.1710–1760

Abstract The state lottery in eighteenth-century Britain was mostly a striking success, bringing in ready money to the Treasury, supporting public borrowing, and rapidly attracting a wide spectrum of investors—or ‘adventurers’, as they were known. This article explores the reasons behind this success, but also seeks to understand the character and nature of lottery adventuring. To this end, it exploits various pieces of data about lottery ticket purchasers, focusing firstly on the Queen Anne lotteries of 1710–14, and then several lotteries from the early Hanoverian period. Lotteries were often portrayed simply as symptoms of a supposed contemporary ‘gambling mania’. This article presents a more complicated picture of a lottery marketplace that was driven by both rational calculation and fantasy.

Advertising as a Reminder: Evidence from the Dutch State Lottery

We use high frequency data on TV and radio advertising together with data on online sales for lottery tickets to measure the short run effects of advertising. We find them to be strong and to last for up to about 4 hours. They are the bigger the less time there is until the draw. We develop the argument that this finding is consistent with the idea that advertisements remind consumers to buy a ticket and that consumers value this. Then, we point out that in terms of timing the interests of the firm and the consumers are aligned: consumers wish to be reminded in a way that makes them most likely to consider buying a lottery ticket. We present direct evidence that this does not only affect the timing of purchases, but leads to market expansion. Then, we develop a tractable dynamic structural model of consumer behavior, estimate the parameters of this model and simulate the effects of a number of counterfactual dynamic advertising strategies. We find that relative to the actual schedule it would be valued by the consumers and profitable for the firm to spread advertising less over time and move it to the last days before the draw.

Testimony on the Department of the Interior's New Policy on Off-Reservation Acquisitions of Land in Trust for Indian Gaming, before the United States House of Representatives Natural Resources Committee, 110th Congress, Second Session (February 27, 2008)

The Department of the Interior's New Guidance on Off-Reservation Acquisitions of Land in Trust for Indian Gaming assumes that the principal value of Indian gaming is reservation employment. Although this assumption is mostly incorrect - Indian gaming operations, like state lotteries, are about public revenues, not jobs - off-reservation gaming can dramatically increase the number of public service jobs on Indian reservations. Indian gaming revenues are mostly expended on tribal services to tribal members, creating numerous public service jobs in tribal government. Off-reservation Indian gaming can also provide revenues for restoration of lands on Indian reservation, making up for limited public appropriations for land restoration. In many ways, off-reservation gaming is better for tribes than on-reservation gaming because it provides revenues but does not interfere with tribal culture and tribal communities. Interior's new policy is off base for these and other reasons explained more fully herein.

The legalization of dangerous consumption: a comparison of cannabis and gambling policies in three US states

Gambling has been legalized due its capacity to provide tax revenue in times when additional tax revenue is difficult to collect from large corporations and wealthy individuals. Especially state lotteries have been introduced on the premise that they provide additional funding for “good causes”. Given the harm that potentially results from gambling, it is possible to question whether education or other “good causes” truly form a ground for governments to align themselves with the gambling industry. There is no agreement on values in a modern pluralistic society, and although the purpose of education is used in legalization campaigns, after legalization it is possible to derive funds for whatever governments deem appropriate, or where there is a lack of public funds. In the US legalization of marijuana has been accomplished by using gambling as model how to gain acceptance for addictive product, and use of tax revenues seems to follow at least first the pattern developed for lottery proceeds. There is still a lack of research regarding gambling-related harm and the resultant social costs, and the situation is even more pressing with research dealing with harms and costs related to use of cannabis. The legalization of the use of recreational cannabis has occurred on basis that cannabis is relatively harmless, and after using cannabis for relatively limited medical purposes. The harms resulting from the use of cannabis do not necessarily diminish after legalization, and public officials will again face a conflict of interest similar to gambling, when collecting taxes from cannabis industry.

Already at the Table: Patterns of Play and Gambling Involvement Prior to Gambling Expansion.

During 2011, the Governor of Massachusetts signed a bill to allow casino gambling in the state (Commonwealth of Massachusetts 2011). As a result, two resort casinos will begin operations during 2018 and 2019; a smaller slots parlor began operations during June 2015. Prior to this expansion, gambling was widely available in Massachusetts, through the state lottery, off-track betting, and gambling opportunities available in neighboring states. Within this context, it is important to understand the patterns of gambling involvement in the population prior to gambling expansion. The current study examined gambling involvement, patterns of play, and gambling-related problems prior to gambling expansion among a sample of 511 Massachusetts residents who were members of a statewide Internet panel. To measure patterns of play, we asked questions about past-year games played and frequency of play. To measure breadth of involvement, we assessed the number of different games played. To measure depth of involvement, we measured time spent gambling, amount wagered, and amount won or lost. Principal component analysis revealed four play pattern components accounting for more than 50% of the variance in game play frequency. Multiple regression analyses revealed that component scores composed of casino gambling and skill-based gambling (e.g., poker, sports) variables uniquely contributed to the prediction of gambling-related problems, even when depth of involvement was controlled. However, the addition of breadth of involvement to the model resulted in a model where no set of variables contributed significantly, suggesting a complex relationship among play patterns, depth, and breadth of involvement. The study established discrete and distinguishable gambling play patterns associated with gambling-related problems and identified groups of individuals potentially vulnerable to the effects of gambling expansion.