Rebroadcast: The real winners and losers in America's lottery obsession

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The lottery ticket display behind the counter at College Convenience on Huntington Avenue. (Jesse Costa/WBUR)
The lottery ticket display behind the counter at College Convenience on Huntington Avenue. (Jesse Costa/WBUR)

Americans spend almost $100 billion on state lotteries annually.

That's more money than you spend on books, sports tickets, video games, music and movie tickets combined.

A few big winners, a lot of losers. Including every state that relies on lottery revenue.

So where does the rest of the money go?

Today, On Point: The real winners and losers in America's lottery obsession.


Jonathan D. Cohen, historian. Author of For a Dollar and a Dream: State Lotteries in Modern America. Program director of American Institutions, Society and the Public Good at the American Academy of Arts and Sciences.


Part I

MEGHNA CHAKRABARTI: There's a company called Scientific Games, Incorporated. It's a soothingly benign corporate moniker that invokes, I don't know, maybe a modern-day app maker, but Scientific Games Inc. is so much more than that. So very much more. Scientific Games, in fact, is one of the reasons why Americans spend almost $100 billion on state lotteries every single year.

That's more than we spend on coffee, cigarettes or smartphones. It's also more than we spend on books, video games, sports, and movie tickets combined. How and why did that happen? And with such spectacular rapidity that when the first scratch game was introduced in 1974 in Massachusetts, a mere two years later, every state lottery that existed in 1976 had adopted scratch tickets, and soon many more states jumped on the lotto bandwagon.

So where is all that money going? Jonathan Cohen answers those questions in his new book. It's called For a Dollar and a Dream: State Lotteries in Modern America, and he joins us today from Fairfield, Connecticut. Jonathan Cohen, welcome to On Point.

JONATHAN COHEN: Hi. Thanks for having me.

CHAKRABARTI: Okay, first of all, just for the spirit of total transparency, do you play the lottery?

COHEN: It depends who you ask. I would say very rarely. My wife would say more often than I ought to. But she hasn't met as many lottery players as I have in the course of my research.

To whom I have a comparison point, of these are people who play every week, every day. In states like Massachusetts, you can play every hour on a Keno game. No, I very infrequently play the lottery. But even that is too much for some people, apparently.

CHAKRABARTI: Yeah. I will subject myself to the same scrutiny and say that I almost never play.

But I will admit that I have fantasies about winning the lottery. And when Powerball gets in that, $1 billion range, I might buy a ticket or two. But that's about it. So your book, I just think that it's utterly fascinating. Because it really goes into how in this narrow window of American history, even though lotteries had been played for quite a long time, centuries even, there's this rapid expansion of state-based lotteries.

Take us back to the precipitating events here, which don't have anything to do with lotteries, but have more to do with taxes in the 1960s. What's important about that period of time?

COHEN: So in the immediate post-World War II period, the United States is in this sort of perfect storm economically where because of its post-war dominance, the nation can, and the states in particular, can offer increased array of state services without raising taxes.

And this arrangement is possible, again, through this sort of unique confluence of international and internal factors. And it really starts grinding to a halt in the 1960s with inflation, with increased spending on the Vietnam War. And that is what, for states, is creating this shortfall, budgetarily and also creating these problems of these voters who want all the services they've gotten used to, but also don't want higher taxes.

And have gotten used to this low tax environment and don't know what else to, and the states don't know what else to do. And there are very few ways for states to raise money without raising taxes other than through these sort of creative means of a lottery.

CHAKRABARTI: But why the lottery though?

COHEN: It's a fair question. So I think as you alluded to, lotteries have been used for raising money for civic purposes as far as I can tell back to the 15th century in Genoa. Some scholars say as early as the construction of the Great Wall of China was funded in part through monies raised for lotteries. I haven't seen the evidence on that.

But as a result, the lottery is not legalizing marijuana, which actually does happen very briefly in a couple states in the seventies, but it's not this out of left field idea. It's known as a practice, as a way of raising money for government. And we can get into this in more detail, they're also in these states that have the first lotteries in the Northeast and the Rust Belt.

There is this huge operation of illegal numbers games, of illegal lotteries, that show voters and legislators how profitable these games are. And lead folks to reason that if people are already gonna gamble, they might as well legalize and make money for the state rather than through racketeers or organized crime.

CHAKRABARTI: Yeah. So we will get into that a little bit later, but let's now get into some specifics here. You write that the modern state lottery system began in New Hampshire.

COHEN: Live free or die.

CHAKRABARTI: (LAUGHS) Live free or die. Or, bet $10, $20, $30, $40. Who knows? But tell us the story about how New Hampshire got started.

COHEN: Yeah. So New Hampshire, famously tax averse. One of only three states in the 1960s without a sales or an income tax. So really heavily reliant on property taxes, and willing to take a chance. And the New Hampshire lottery, I can't even describe how insane it is compared to what we have today. But they really try to create these legitimacy for the games, where all these fears in the 1960s that the games are gonna be corrupt and infiltrated by organized crime.

So the first head of the New Hampshire Lottery, it's called the New Hampshire Lottery Sweepstakes. Is a former FBI agent. Because that's the only way that they could garner the sufficient trust that the games were gonna be on the level.

And the games themselves are insane. It's basically a raffle, but you're not really buying a ticket for a numbers drawing. You're buying it for a horse race and there's going to be a separate drawing to see which horse race ties to which prize. And then a third drawing. It's really complicated and not worth getting into.

But again, it's just emblematic of the fears at the time of corruption, how sort of small enterprise this was, compared to the multi-billion-dollar industry we have today. And also the need for legitimacy that was so important culturally in order to enable the legalization of gambling at a really, really tenuous point in American history.

CHAKRABARTI: Okay, so this is an important sort of prelude to what I really want to spend some time with you discussing. And that is the companies that are behind then the very rapid spread of state lottery systems across the country. Which, check me on something, Jonathan, right now. I think it's every state, but five.

COHEN: That's right.

CHAKRABARTI: Have the state lottery. Okay. So what happens in Massachusetts in 1974 with those scratch tickets.

COHEN: Right. So Scientific Games who you alluded to at the top is a creator of Scratch tickets, instant tickets as we know them today, which are introduced at a $1 price point in Massachusetts in 1974.

And the premise here is that the games that existed at the time, they would take like weeks or months to have a drawing. It wasn't like, we didn't have Lotto, Powerball Mega Millions where you have a couple drawings a week, you have to wait a while for the drawings. And the creators of Scientific Games had worked on, I guess, whatever the 1960s equivalent of the Shaw's and Star Market, Albertsons Monopoly game.

Like when you go to the grocery store and they have those promotions. They had developed those first and they adapted them into lotteries and into again what we know as scratch tickets. And as you alluded to at the top, they sell like wildfire, starting in Massachusetts and then spreading to every other state.

The problem for Scientific Games is that there are only 14 state lotteries by the end of 1977, and they want to keep selling tickets and they want to keep adding markets for their tickets. But to their mind there's no place else to go.

CHAKRABARTI: And so what do they? By the way, first before I was going to ask you what do they do?

I just want to say the first scratch ticket you said in Massachusetts sold cost a dollar, right?

COHEN: That's right.

CHAKRABARTI: Okay. The Massachusetts State Lottery Commission, but at the very end of last year, so just a week or two ago, announced that the state will be introducing a $50 scratch ticket soon.

COHEN: And Texas already has a $100.

CHAKRABARTI: A $100 scratch!

COHEN: And as folks may know, if anyone has ever been to a convenience store, there are the variety and the colors and the types of games and the crossword games and the mix and match, the variety has just completely exploded. As has, even in 1974, states would have one type of scratch ticket at a time.

So you wouldn't even have multiple scratch tickets on sale. You'd have to wait for the first run of scratch tickets to go out. Then there might be like a week or two break where there's just no lottery tickets available. And then the new type of scratch tickets would come in. It would be like a new album dropping like, 'Oh, the new scratch tickets are in. Everybody rushed to the 7/11 and pick one up.'

CHAKRABARTI: Okay. Oh my God, a $100 scratch. That. Just, it boggles the mind. Okay. Yeah. So what does scientific games do? Because in what, how many state lottery systems were in existence by 1976 in that first flush of states picking up scratch tickets?

COHEN: So there's 14 by the end of 1977. And again, so Scientific Games wants to expand the market for its tickets. So it starts by supporting initiatives in the District of Columbia. And then it does engage in this hyper intensive astroturfing campaign in Arizona, in California, in Oregon, Missouri, Colorado, and Iowa. And by astroturfing I mean what they are doing is creating the illusion of grassroots support for a corporate funded campaign, where they are paying signature collectors to put bills on the ballot. They are drafting the legislation that is going to enact a lottery. They're paying for advertising to convince voters to enact a lottery.

And again, all this done under the guise of citizens groups that are meant to create the illusion that these are popular programs, but really it's just a one self-interested company trying to expand the market for its lottery tickets.

CHAKRABARTI: And you write that they were remarkably successful in that. You write in the book that between 1980 to 1984, Scientific Games facilitated the passage of lotteries in California, huge state, Arizona, Oregon, Colorado, Missouri, Iowa, and Washington, D.C. just in a period of four years.

That's right. And just for reference, as you alluded to, we now have 45 lottery states all only five have passed lotteries through initiatives. And all five were passed in that particular period between 1980 and 1984. So really the only way a lottery's going to pass through an initiative process was when it had a giant corporate backer. In this case, Scientific Games.

CHAKRABARTI: Okay. And then the others were passed because legislatures just decided to adopt state lotteries?

COHEN: So this is a really important point. I think there's this longstanding argument both on the state side and for players that gambling is this inevitable pastime, that people just gamble and it's fine.

And what that does is resigns folks, I think, to this inevitability that's not really true. So, in this case, what I mean is that Scientific Games creates this illusion through the passage of lotteries in all these states that a lottery's going to come for you anyway. So you might as well get on board early.

And that's not necessarily true. It takes a lot of money to lobby for lotteries and draft a bill and such. But Nebraska may well have waited years and years or decades. But Scientific Games, through this blitzkrieg from 1980 to 1984, creates this illusion that a lottery is inevitable and that it's going to spread across the American commercial landscape very quickly.

 Part II 

CHAKRABARTI: Jonathan, we were talking about the company Scientific Games before the break here, there are a couple more companies in the lottery business or that help run state lotteries now.

But Scientific Games remains a really big player here. I'm looking in your book and in the 1980s, you say that the company produced 85% of all instant tickets sold in the United States and had what, 96% of the early private market for lotto and numbers games, and someone had called them the McDonald's of lottery companies.

Are they still that much of a giant in the field?

COHEN: So there's a little bit more competition. In the eighties is when you get a company called GTECH, now known as IGT based in Providence that sort of really competes for the lotto for Powerball, Mega Millions, those types of games.

But as of my last calculation, Scientific Games to this day has 70% of the global, so not just the U.S., but the global market share for instant tickets, and is the instant ticket provider for at least 30 of the U.S. State Lotteries. So yeah, they're doing just fine.

CHAKRABARTI: Okay. We actually reached out to Scientific Games to see if someone from the company would want to join us today.

They declined, but they did send us a statement here. Okay. And I'm gonna read it in full because it's quite interesting. So the statement from Scientific Games is quote:

"Since the mid-1960s, U.S. lotteries have provided entertainment for millions of players while returning billions of dollars in funding for vital public programs and services such as education, health and welfare.

Transportation, and the environment to benefit the quality of life for residents in their states. As a trusted partner of lotteries around the world, Scientific Games proudly supports their missions to maximize revenues returned to good causes through the sale of lottery games. And we do so with the utmost level of transparency, integrity, and government compliance.

We are committed to our lottery partners in helping responsibly grow proceeds for their important beneficiary programs and propelling the industry ever forward."

CHAKRABARTI: End quote. So it's that first paragraph about the billions of dollars in funding for vital public programs. How does that land with you?

COHEN: So of course, on paper they're right. I believe the number, since 1964, is that lotteries have raised roughly $252 billion for states, which is a lot. But the question that stands out to me at the heart of Scientific Games' statement is, I have no doubt, and for the most part, Scientific Games has been above board and lots of states use lots of contractors for lots of different things.

And I think that's okay. But the real heart of this question is, are lotteries actually a good thing that should exist? And, you know, how socially conscious can the most socially conscious lottery provider actually be? That to me is the elephant in the room, so to speak, of yes, they are helping states make this money, but is this money that states should be making and are they making it in the way that they should be?

CHAKRABARTI: Okay. We are, this program is heard across the country. But I'd actually like to use my home state of Massachusetts as an interesting case study here, Jonathan.

COHEN: My home state as well.

CHAKRABARTI: Okay. Because we have this, the Bay State has this kind of dubious distinction of being a state that really loves the lottery. (LAUGHS)

We have the highest per capita spend rate on state lotteries of any state in the whole country. So the rest of America, look to Massachusetts to see both the good and the bad of state lotteries here. So let's dig into some numbers, Jonathan. I was looking up contracts that were handed out by the State Lottery Commission in Massachusetts, and the last public one that I could dig up in short notice was given out in 2012.

And it had those names that you mentioned in it. GTECH Printing Corporation, Scientific Games, and Pollard Bank Note Limited. And that is for the running of the instant ticket game design and marketing services in Massachusetts. The contract was $51 million. Okay. So they're still doing quite well in terms of how much the companies earn from the states.

But, again, every time we speak to state representatives, lawmakers, cabinet members, there's always this sense that it's a net positive for the people of Massachusetts. Back in 2013, I spoke with the state treasurer then, Massachusetts treasurer Steve Grossman. And here's how he described the importance of the state lottery.

STEVEN GROSSMAN: Remember, this is a $4.75 billion business, that as you shed generated almost $1 billion in profits last year. It is the single most important source of unrestricted local aid for every city and town of Massachusetts.

CHAKRABARTI: Okay, so that was in 2013 and he said it was $4.75 billion revenue generator for this state.

We looked up the numbers in 2022 and revenues for this Massachusetts state lottery topped $5.8 billion. That sounds pretty good, Jonathan.

COHEN: It sounds really good. And as does, just to update the number on the unrestricted transfers to local cities and towns, is over $1.1 billion by my estimate.

Sounds really good on paper.

CHAKRABARTI: But that $1.1 billion, at least I can say that the state lottery does say where that money goes. Okay. For example, we looked at the city of Boston, obviously the biggest city here. And in fiscal year '22, Boston received $208 million in lottery revenue.

The city's operating budget for the same fiscal year was $3.76 billion. So the lottery provided what, 5.5% of the city of Boston's revenue. Again, doesn't sound too bad.

COHEN: Yeah, it's not nothing. Again, and I think just to Steve Grossman's comment, it's a little bit of a sort of a sleight of hand because there aren't many other sources of unrestricted local aid.

So it doesn't take much for the lottery to be the largest. But yes, as we said at the top, there are so few ways for governments to raise money without taxes that it's easy for the lottery to stand out. But again, 5% is not nothing, but it's still just 5%. And I would love to put that in perspective. And I don't see why you don't see state treasurers out there promoting people to pay property taxes, but that's really where the bread-and-butter money for government is going to come from.

But they seem to be stuck on promoting the lottery which is never, ever going to get to more than 5% to 6%. And if we did ever get more than that, then we'd have a real hard problem. Ethical, moral, political, economic, you name it, with all these people who are not spending money on other goods and are buying lottery tickets instead.

CHAKRABARIT: Yeah. So we're going to talk about who's buying tickets in just a second here. I think something that perhaps is even more relevant to listeners outside of Massachusetts, but again, we'll use the Massachusetts example is overall, in terms of a state budget. Because, again, the promise is that there's all this money going to schools and transportation and parks and what have you.

But the state budget in Massachusetts last year was $47 billion. And as we heard, it was $1 billion that came from lottery revenues. That's just 2%. Now how common is that percentage when compared to other state lotteries across the country?

COHEN: Yeah, that's more in line. The 5% to local cities and towns is high.

2% to 3%, maybe even I've seen 1% is more in line with what I've seen. And just for reference, most states, there's this association, Massachusetts is actually unique for giving its lottery money to local cities and towns. Most states, there's this association that it supports education, but there's this bizarre scheme where for every lottery dollar that goes into the education budget, $1 from the education budget comes back out into the general fund.

So you end up just robbing Peter to pay Paul kind of thing. It doesn't actually add additional money to these causes that lotteries market themselves as helping.

CHAKRABARTI: Okay. So say that again and then explain it more in a way that people who aren't familiar with how state budgets work would understand, because you're essentially saying that the promise is there's going to be surplus money for important things in a state.

But that in truth, it's a wash.

COHEN: Right. So I guess the simplest way is, let's say there's a hundred dollars allocated for the education budget, we hope, and it's marketed as, oh, we're going to make $10 in the lottery, and now that will be $110 for education. But in fact, you put those $10 into the education budget and you take $10 back out. So education still only has a net of $100, and now there's just an extra $10 floating in the general fund for legislators to play with. So it supplants rather than supplements lottery money that's already allocated for education.

CHAKRABARTI: And yet people are told constantly though that the state lottery is basically a way to help increase funding for important state services.

COHEN: That's right. And because lottery commissions who are not beholden to these budgetary problems, lottery commissions have every incentive to market and advertise themselves as agents for the public good. And it doesn't matter, they don't need to say, "Oh, by the way, we're only providing 2% of state revenue."

They say, "No, we are doing so much good for Massachusetts, for Iowa, for California, wherever you should buy more tickets and you should feel good about doing so because of all the good you're doing for your community every time you gamble."

CHAKRABARTI: But you're saying that's just not true.

COHEN: It's either not true or it's a very, they're really stretching the bounds of truth.

CHAKRABARTI: Okay. Let's talk about who's playing, right? Because, right now, we're just talking about money, but it's coming from somewhere and someone in particular, and unlike taxes, which have a pretty straightforward way of figuring out who pays what. The picture is more interesting when it comes to this magic money that's coming from lottery revenues.

So again, I'm going to return to the Massachusetts example here, because I would say we have the dubious distinction of being the state that has the highest per capita spending on state lotteries. In Massachusetts, according to an analysis using. 2020 census data, individual Massachusetts residents on a per capita basis spent $805 annually on the lottery.

Now, the per capita figure, I think is a little bit misleading. Because the state itself says only about 70% of people in the state play and 30% of people in Massachusetts don't play at all. It's actually probably higher than $800 per person for those people who are playing. Now, who are the bulk of the people, whether it's Massachusetts or anywhere else, who plays the lottery?

COHEN: So for reference 50% of Americans buy the lottery ticket at least once a year. One in eight do so at least once a week. And that group, that one in eight and maybe the folks who are at the 800 number or above in Massachusetts, that is a group that is disproportionately less educated, lower income and non-white. Studies indicate that as much as 50% of total national lottery sales come from the top 10% of players, and the top 20% to 30% of players might account for as much as 70% or 80% of sales. And again, those are the groups that I mentioned earlier.

CHAKRABARTI: Okay. And that note, those numbers hold true in, again, our case study of Massachusetts. Because according to a state analysis from back in 2016, the top 10% of players accounted for 40% of sales in just this state. And we, again, back in 2016, I actually spoke to the person who did this study.

She's the professor at the University of Massachusetts. Her name is Rachel Volberg. And here's what she told us about who those top 10% of players are.

RACHEL VOLBERG: We found in Massachusetts that men are three times more likely to have a gambling problem than women, in terms of race and ethnicity, Blacks or African Americans are four times more likely to have a gambling problem than someone who has a Caucasian ethnicity.

And then we found that people who had low education that is who only had a high school diploma or less, were quite a few times more likely to have a gambling problem than people with a college degree.

CHAKRABARTI: Jonathan Cohen, this question of state lotteries and race actually goes all the way back to the beginning of the state lottery system in this country. Does it not? You tell that story in the book.

COHEN: It does. And one of the reasons that Massachusetts and other states in the Northeast were the pioneers, the lottery pioneers, was because in many of these states there were ubiquitous, and I really mean ubiquitous, more so than lotteries are today, illegal number games, illegal daily lotteries. Particularly in urban, Black and Latino communities. And to a somewhat lesser extent in white working-class communities. And these are people, these games you could play for as little as a few cents.

But basically, everyone was involved in this underground gambling economy in some way. And the ubiquity of these games in these non-white communities really shaped public perception about lotteries as a way of raising money for government services and how profitable they could be.

And really helped set the stage for the rise of state-run games in the '60s and '70s.

CHAKRABARTI: But the implication of that, in your book you write that when the state lotteries were set up, was there some sort of organized attempt to put easier access to the lotto in those very communities?

COHEN: Yes. It took a little while, but it did. These FBI agents who ran the first lotteries, they just assumed that all gambling was the same without paying attention to the fact that the games that they were offering were totally different from these games that were popular in Black and Latino communities.

But what you get is a cyclical process where once states start introducing their own numbers games and their own sort of daily lotteries, you get a cyclical process where states assume that poor and Black and non-white communities are going to play the lottery disproportionately.

So they put more outlets in those communities, they advertise in those communities, and then lo and behold, sales are high. So they use that, those data to justify increased advertising, increased concentration of retailers, which leads to an increase in sales and so on. And this is where you get to the problem that we've touched on a few times, of whether states should be in the gambling economy and whether they are serving the public good by doing so.

CHAKRABARTI: So that takes us back to this question of, are they serving the public good? Are those communities, where we have a disproportionate number of players, of lottery players, are they getting a proportionate return in those state lottery revenues?

COHEN: Yeah. It's hard to tell. In many states it is actually unambiguous that the answer is no.

And we've been talking about Massachusetts. But let me just take another example of the state of Georgia, and many other southern states actually that modeled their lottery off of Georgia. In Georgia, the lottery funds two programs. One is a voluntary pre-kindergarten program, which is great and is universally accessible.

The other is a merit scholarship, what's called the Hope Scholarship. If you've ever met anyone from Georgia, I promise you they know about this. And the premise of the Hope Scholarship is that if you get at least a B in high school, as your average GPA, you can go to any in-state college or university for free.

Funded by lottery money as long as you maintain that grade point average when you're in college. The problem is that because it is a merit scholarship it is disproportionately used and available to richer, whiter suburban students. When it is, of course, poor, non-white, less educated households that are playing into the lottery in the first place to fund the college scholarships of these richer, whiter urban students.

So here we have a case where the lottery is regressive on the player side, and then is even more aggressive on the backend in terms of how the money is being used.

CHAKRABARTI: Huh. An analysis from the Howard Center for Investigative Journalism supports your findings, Jonathan Cohen. They said that in neighborhoods with lottery retailers, the percentage of the population that lives in poverty is much higher than in neighborhoods without lottery retailers.

And we see a similar pattern for neighborhoods that are predominantly people of color. So we'll talk a lot more about that dollar and a dream that Jonathan Cohen writes about in his new book when we come back.

Part III

CHAKRABARTI: Jonathan, we're talking about who plays, and where the money goes. You write in the book, quite interestingly, that there's something about the status of lotteries. Because they're run by states, that allows them to be exempt from Federal Trade Commission rules.

And how does that play into this trend that you're talking about that lotto sales are disproportionately in lower income communities and communities of people of color?

COHEN: Yeah, so what you're alluding to specifically is a federal trade commission truth and advertising law, which lotteries as state-run agencies are exempt from and are not subject to.

And for a long time, it actually, I will say, has gotten better. But for a long time, the advertising that you referenced, that Howard center for Investigative Journalism, their report, which I'll also find, as others have, a disproportionate concentration of lottery advertising, in addition to retailers in these poor communities and in poor communities of color.

And for a long time, what that advertising looked like, because states are exempt from this FTC regulation, is basically promising a jackpot. Your money can go farther. Become a millionaire today. Those kinds of things. Those kinds of things, inculcating the desire, the belief in instant wealth and in the prospect that the infinitesimal odds of a lottery were the surest way of getting that wealth.

CHAKRABARTI: So you're making the argument that a private company would not be able to do what these state agencies are doing.

COHEN: That's right. And if you've ever seen or heard, I guess, on the radio, raffle giveaway promotions, there's always some fine print at the end that they have to read through.

Lotteries don't have to do anything like that. The other important thing that they're exempt from is in the financial services industry, you can suggest that you're offering folks wealth, but you can't outright promise it in the same way that a lottery can, because they aren't subject to these regulations.

CHAKRABARTI: I am only pausing Jonathan, because this is being done by governments to the people in their own states.

COHEN: Yes, unfortunately, you're right.

CHAKRABARTI: I don't even know what to say. Okay. I actually, I do know what to say, which is, then this, to me, it seems wrong. I'll just obviously be transparent about it.

It seems wrong. But is there something intrinsic to states, what's the argument that states would make that they need to remain exempt from these FTC rules in order to successfully run their lotteries for, again, for that dream, for the good, the public good of the 1% or 2% of state rep of state budget revenue that would come from lottery sales?

COHEN: Yeah. It really is, it comes down to money. It comes down to the argument that, and I've seen iterations of this argument made in the '60s, in the '70s, in the '80s, in the '90s, in the early 2000's. 2010s. 2020, you name it.

'Oh. These are tough economic times and states need every dollar they can get. And the lottery is providing, even if it's a small percentage, the lottery is providing money for the state. And we don't want to hamper, we don't want to stand in the way of getting those sales.' And I'll say, just to tie this all together also, it really helps.

And just to give legislators a benefit of the doubt. I think a lot of them don't think about the lottery. They just see a billion dollars come into the state coffers or into, their cities and towns budgets and they don't even think about it. And the lottery's really out of sight, out of mind.

And that is facilitated, that is helped by the fact that these lottery players are, as we've discussed, less educated, lower income and non-white. And it's really easy, as a result, to overlook the $800 on average per year that these folks spend on the lottery, probably more for some of these folks.

And it is really easy to basically pretend that the government isn't really doing this, when in fact it is the No. 1 way that many people interact with the government every single day, is at their 7/11 buying a lottery ticket.

CHAKRABARTI: Just to remind folks, cause again, we have listeners across the country. That $800 per day is the per capita spend rate in the state of Massachusetts, it's almost $400 more than the second highest spending state, or per capita spend rate, which is I think in New York state. So other states, you folks are spending a lot less on a per capita basis.

COHEN: I did the math. It's $295 per person in the entire country.

And I have to say that includes children. And my 11-month-old isn't exactly a prolific lottery player. So you can do the math as to what that average is out to for adults.

CHAKRABARTI: Point taken. Yeah. When you said that maybe legislators aren't really thinking about who's playing or how they're being induced to play, because they're just seeing that like extra billion dollars for their state budgets.

I'm going to posit something. Obviously, I'm not in the mind of any particular state legislator anywhere in this country, but it seems to me that if they do think about who's playing. They're thinking the following, because it's being mirrored on social media. On our social media right now, we're getting these messages from listeners.

Someone says, 'Years ago I had a professor call lotteries a tax on fools. Obviously the thought has stayed with me.' Another listener says, 'State lotteries are just another tax on the poor. They play because they think they're due, and it's legitimately the only way they'll ever stand a shadow of a chance of ever having that much money.'

Now I'm going to say that I think these listeners are sending these messages to us, messages to us in with a sense of compassion, but the point being that if state legislators are thinking about it, they're thinking these are people who want to play and if they're willing to take the chance, so be it.

It's their loss. And the state's gain, no big deal.

COHEN: And this is where the inevitability argument is really important and is really important to see how it falls short. There's this belief, 'Oh, these people are stupid.' Or the other phrase that folks might know is that it's a tax on people who are bad at math.

Oh. These people are, they don't understand probability. We should just make any money, all the money we can, except that there is no world in which we could get an almost $100 billion industry without the cooperation of a state government and these massive corporations that we've already talked about.

Even if we were returned to this world of illegal lotteries. For example, yes, there would still be attacks on the poor, on the fools who would continue to play. And we can get into why I think that's a problematic and not useful phrase. But it would not be to the scale that it is today.

And it is only because of state's participation that so many of these, quote-unquote fools are able to lose so much money on the games.

CHAKRABARTI: But at the same time, you also spent quite a bit of time talking to people who are regular or even major players as individuals in state lotteries. What's the mindset that shapes their willingness to take chances with their money?

I'm trying to think of one, Leo McCord. Did you talk to him?

COHEN: Yeah. So, he's the opening, my sort of opening character and he's a great example of why I personally don't use the phrase, a stupid tax or lottery is a game for fools, in part because he knows full well what his probability is. He's not playing because of some mathematical misunderstanding and statistical.

It's not like he failed the stats scores in college and therefore he is going to get interested in playing the lottery, because he doesn't know how these numbers work. He sees the lottery, and I am extrapolating to many of these other lottery players who we've already discussed, he sees the lottery as his last, best or only chance at the American dream.

To put it bluntly. And he knows that the odds are bad. He knows that he's spending a little bit more money than he should. But it is really hard for someone who isn't a lottery player, and as we both discussed at the top, I think neither of us count as a lottery player.

It is really hard for people who aren't regular lottery players to enter the mindset and see what value people like Leo McCord, what value lottery players get, even out of losing tickets, and even just out of the experience of playing. And how many of them equate the lottery and equate playing the lottery with, 'Oh, instead of buying movie tickets, I play the lottery.'

And they really do see it both as a means of social mobility, and upward mobility and the American dream, and also in the short term as a form of entertainment. That will get them through the day. So again, I don't think this is the sort of lack of statistical understanding holds weight.

I think people are getting a lot out of these tickets, even ones that don't give them, that don't make them multi-millionaires.

CHAKRABARTI: But, so tell me more about the mindset of people like Leo, because he's been buying tickets for 50 years, right?

COHEN: Yeah, that's right. And again, I think a lot of it comes down to changing cultural expectations and statuses of wealth.

Whereas in the 1950s, in the immediate post World War II period, the sort of definition of the good life, so to speak was, a white picket fence in the suburbs. Obviously, a lot of people were excluded from that world and from that economy, but that was the vision of the good life.

And then around the 1980s, 1990s, that vision of the good life morphed into one of uber wealth and becoming a billionaire. I don't think it's a coincidence, for example, that around the time billionaire entered the American Lexicon was around the same time we got billion-dollar lottery prizes for the first time.

And so because our goal posts, our standards, our expectations of wealth have shifted so much what it means to get the American Dream through the lotter has changed too. Leo McCord won a couple hundred thousand dollars in, I think it was 2007, and he still plays, that for him just wasn't enough for this life changing sum, that he continues to chase to this day.

CHAKRABARTI: We have a comment here from another listener on Twitter who says, 'Some people feel that the chances of improving their lives via the lottery are greater than the odds of improving their lives by other means. That says a lot about the conditions they are living in and their feelings about those conditions.'

Let me play, I was about to say the devil's advocate, but I'll be the state lottery commissions across the country. Their advocate for just a moment here. Because another thing that you touch on early in the book is that there have been lotteries around forever.

Back to the Roman times even, or that lotteries were involved in the colonization of this country. So people like to gamble. Let's just put it this way. People like to gamble. And if that is, let's say a basic sort of human trait, they're willing to take risks, it's helping to pass the time, it's fun, whatnot.

Then why shouldn't states use this fundamental human pastime as a means to raise revenues?

COHEN: I'm actually not against gambling as a means of raising revenue in principle. I'm against the sort of shoving advertising down folks' throat and making lotteries available on every street corner and then adding $100 scratch tickets.

That seems to be just unnecessary and beyond the bounds of where the state's role should be as an agent for the common good versus as a agent for raising money to fund said common good. Let me play devil's advocate to your devil's advocate. Surely it is in states' short-term economic best interest for people to buy more cigarettes, because states make money on cigarette taxes.

So why shouldn't states advertise cigarettes? And help the cigarette industry by promoting cigarettes and making them more available and fight to deregulate the cigarette advertising the packaging with the skull and bones on it, right? Why shouldn't? People are going to smoke anyway.

So why shouldn't states make money off of cigarettes more than they already do?

CHAKRABARTI: I would say, again, to me the answer is that's what they were doing until the cat was out of the bag regarding how dangerous and terrible cigarettes are for your health.

I don't that those changes didn't necessarily come from generations of state legislators. It came through litigation. And the revealing of what the tobacco companies knew, but I take your point. I really do. So let's look at though, I mentioned at the beginning of the show there were five states that don't have state lotteries.

Alaska's one of them, right?

COHEN: That's right.

CHAKRABARTI: Okay. Now I'm going to put Alaska aside because they have that oil dividend essentially for Alaskans there. But the four states that don't have state lotteries, are they hurting? Are they doing worse? Are their budgets under proportionately more strain than the states that do have lotteries?

COHEN: Well, there are a couple stand outs and they're all sort of unique cases, but I guess that's what you get when you get five out of 45 states. So one of the states that does not have a lottery is Nevada.


COHEN: Which, yeah, I think I would say that doesn't count.

If anyone's ever been to a convenience store in Nevada, you know that there's plenty of gambling to be had. It's just not a state lottery.

CHAKRABARTI: What about Utah?

COHEN: So Utah, right, Utah and Hawaii, which neither of which have a lottery, are two of the only, are the two, only two states in the country without any form of legalized gambling.

Utah, I think it's obvious because of the large sway of the Mormon population in the state. And I actually don't know, I'm certainly no expert, and if someone wants to pay me to come visit, I'd be happy to. I don't know why Hawaii politically has been so averse to gambling for so long.

CHAKRABARTI: Okay. We're running out of time here, Jonathan, and I want to hear from you, obviously you're calling for reforms here because of the predatory nature. I haven't used that word yet, I should have used it earlier. The predatory nature that you're arguing state lotteries behave with. So what are the reforms that you would suggest?

COHEN: Sure. And so there are a couple, and they're all actionable at the state level. Or most of them are. And I will say all of them have precedent. These are all things that have been part of the lottery industry or were part of the lottery industry going back a couple decades.

And that states gradually just got rid of because they were tired of interferences in making money and they just wanted to make money and didn't care as much about the social good. I'm talking about things like putting caps back on scratch tickets. I don't think we need to return to just the $1 scratch tickets that we had in 1974, but maybe Massachusetts should stop at $25, $30.

Maybe we don't need that $50 or $100 scratch ticket. Ditto with the cap on rollover prizes for Mega Millions, Powerball, reduce the odds they will create rollover media frenzy that will attract more people to play and that those frenzies offer essentially gateway drugs for people to get in and to start playing the lottery, and they get hooked.

And so on. Another big one would be, as we've discussed, advertising. Both on the congressional level, and this is the only one that would require congressional intervention, would be the closing of the Federal Trade Commission loophole that exempts lotteries from truth and advertising law. But also states like Texas, Missouri had one, but they got away with it.

They did away with it, Minnesota have restrictions on lottery advertising, both how much of the state's lottery revenue can be spent on advertising, the specific sort of tone and content of that advertising. To your point, I don't know. I have not seen any studies that show, 'Oh, the Texas lottery is 5% less harmful, for example, because of these regulations.'

But they are a good way to start, a good place to start in terms of at least trying to reign in this industry and reign in something that has become a totally normal but yet bizarre part of the American commercial landscape.

This program aired on July 25, 2023.


Jonathan Chang Producer/Director, On Point
Jonathan is a producer/director at On Point.


Meghna Chakrabarti Host, On Point
Meghna Chakrabarti is the host of On Point.



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