Didn't see that coming, again
The New York Times reports on the introduction of the $50 scratch off lottery ticket in Texas:
I figure we'll see these games in North Carolina within 24 months.
Because it's so much easier to do than a responsible tax policy that raises enough revenue to educate our children.
UPDATE: We've already got a $20 ticket game. The drawing is today. There's 500,000 tickets available. If all tickets were sold, that would be a pool of $10 million.
But they weren't. Last week, the N&O reported that only half the tickets had been sold, and the lottery needed to sell 290,000 just to break even.
Today they're saying that a total of 368,462 tickets had been sold, generating a total of $7.37 million in revenue. Since there are 4 $1 million prizes, and 5 half million dollar prizes, that leaves, at best, about $800,000 for "education," assuming that the raffle cost absolutely nothing to stage.
You know, education is really too important to be run like a VFW lodge in the state of North Carolina. Considering that the entire program was only approved as a result of the corruption of folks like former state Senator Jim Black, maybe it's time to start thinking about scrapping this piece of shit and replacing it with a sane revenue policy.
As for the criticism from legislators and others that such games appeal most to compulsive gamblers or low-income players, a spokesman for the Texas Lottery Commission, Bobby Heith, said, “We value and respect those concerns very much but our job is to run the lottery, to generate as much revenue as possible, as responsibly as possible.”
I figure we'll see these games in North Carolina within 24 months.
Because it's so much easier to do than a responsible tax policy that raises enough revenue to educate our children.
UPDATE: We've already got a $20 ticket game. The drawing is today. There's 500,000 tickets available. If all tickets were sold, that would be a pool of $10 million.
But they weren't. Last week, the N&O reported that only half the tickets had been sold, and the lottery needed to sell 290,000 just to break even.
Today they're saying that a total of 368,462 tickets had been sold, generating a total of $7.37 million in revenue. Since there are 4 $1 million prizes, and 5 half million dollar prizes, that leaves, at best, about $800,000 for "education," assuming that the raffle cost absolutely nothing to stage.
You know, education is really too important to be run like a VFW lodge in the state of North Carolina. Considering that the entire program was only approved as a result of the corruption of folks like former state Senator Jim Black, maybe it's time to start thinking about scrapping this piece of shit and replacing it with a sane revenue policy.
Labels: lottery
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6 Comments:
As one who has experienced the brain's ability to turn off of the Reason Switch when standing in front of a $5 slot machine in Las Vegas (where you've got to play three lines if you want the big payout, so it's a $15 bet), it saddens me to know how many people who can't afford to blow $20 or $50 or $100 in three minutes will ruin their lives getting hooked on these lotto scratch-offs.
I'm not against gambling...I say put a full-fledged casino in Cherokee...at least that's way out-of-the-way for most. But having the government stick what amounts to a mini-casino in every supermarket and convenience store is just vile. I imagine the net social benefit for our education lottery is negative. But I'm not a sociologist or public policy expert.
Growing up in NJ, I thought Lottos were the norm, that every state probably had one. Now I think they're poision.
By
toastie, at 12:12 PM
While taking money from people who are bad at math is a questionable business for the state to be in - especially since the state has granted itself a monopoly by prohibiting anybody else from engaging in the business - it's hard to dispute that it's very good at raising money. Note that I can't say whether or not it's raising enough money to meet its stated goals, but it's definitely doing better than you imply in your post.
Consider that lottery winnings, as advertised, are paid off over time. People who select the "lump sum" option normally receive only about half of the stated winnings. Since the money is paid out over a period of years, the state pays less than it seems - money now is worth more than money later, and since the payout is not adjusted for inflation over time it's worth less and less. I would assume that these options are configured so the state ends up spending the same amount of "real" money in either case, about half of the stated winnings.*
Consider, also, that the winner pays both federal and state taxes on the lottery winnings. I don't know what chunk of the payout the state gets back, but it's not insignificant - probably about 10-20%*. Plus, the fed gets its cut too, so everybody is happy.
If you account for both of these factors, the state ultimately ends up paying about 40%* of what it seems like it's paying out.
Unlike their intended audience, the guys behind the lottery are good at math. Don't think they're going to fail to take their cut.
* I can't find specific information on how NC handles this process, so don't trust my numbers.
By
Anonymous, at 3:27 PM
North Carolina's highest marginal income tax rate is 8.25%.
i would imagine that a big prize winner who chooses the long term pay out may not even end up in the highest tax bracket.
i don't dispute that lotteries make money for someone.
that someone, however, is seldom the educational system under which lotteries have traditionally been sold to the taxpayers.
the math for today's big prize drawing is pretty simple. Assuming 0 expense in running the game, there's roughly $800K left after the prizes are paid out to put towards the "educational fund," or whatever the hell we call it. Every penny of expenses in running that game, whether it's printing & distirbuting the cards, marketing the game, paying commissions on the sale of tickets, conducting the drawing, etc., comes directly out of that bottom line. I wouldn't be surprised if, after all is said and done, that the state ends up netting less than $250K from this particular drawing.
Out of the $6.5 million prize distribution, the state's maximum share is about $560K in additional tax revenue, assuming everyone takes the lump sum. So all in all, less than $1 million total. Under the best of circumstances.
To put that in perspective, if the state could help create 500 jobs paying 30,000 a year, the tax revenue at 6% would be the same, and you'd be helping to put people to work at a decent salary.
From a ROI perspective, i think the state is almost better off giving tax breaks to Google than sponsoring a lottery.
And giving tax breaks to Google is, in my mind, a tremendously stupid idea.
By
Barry, at 3:56 PM
From what I know of most lotteries, those who take the "lump sum" option only get a fraction of the marginal payout - generally about half of it. If that's true here, you're talking a payout of only 3.25 million for all the winners.
Since the NC lottery web site is useless, I honestly can't verify that this is true here, so I might just be completely wrong.
Whether it's profitable or not, it's still moronic. Conning people who can't do math is not a business that the government needs to engage in at all, much less have a monopoly on.
By
Anonymous, at 5:53 PM
Well, extracting money from those who are bad at math (or simply don't have the time to do their taxes, and/or can't afford a CPA) is precisely how the current federal income tax system is set up... Additionally, any system that purports to reserve money for a specific field is a total snowjob where the legislature can just reduce general fund expenditures toward that field by an equivalent amount.
By
Unknown, at 8:26 PM
Any time I'm tempted to buy a lottery ticket, I think of two words: voluntary taxation.
At least in Vegas, you can get a free drink while you're playing.
I don't think the "it raises money" argument holds water. With that argument, the government should also get involved in prostitution and selling crack.
By
Anonymous, at 9:28 PM
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