Soundings : The tax on desperation
By Nis Kildegaard
Published: October 16, 2008
The economic outlook lately is bleak, but for one Massachusetts business, bad times only mean more profits. The Massachusetts State Lottery is setting new records this year peddling its little packets of hope.
On the Vineyard we have our own giant economic sucking sound, the sound of $12 million leaving Martha's Vineyard each year. That's our share of betting contributions to the state lottery, whose most powerful, most addictive pocket-picking tool is the scratch ticket.
In fiscal year 2007, scratch tickets accounted for nearly 80 percent of all the Vineyard's spending on state lottery products. Edgartown outlets sold more than $2.5 million worth of scratch tickets, Oak Bluffs almost $2.5 million, Tisbury more than $2.6 million, and West Tisbury more than $129,000. Chilmark and Aquinnah had no sales outlets, so players from there had to cross town lines to contribute to the hemorrhaging.
I needn't tell you here about the occasional winners: Newspapers can reliably be counted upon to write about them. They're so much more interesting than that steady sucking sound.
Meanwhile, in the fiscal year that ended this June, the six Vineyard towns received - insert sarcastic drum-roll here - less than $320,000 in state lottery aid.
The Massachusetts Lottery gives back about 70 percent of all wagers in the form of winnings, a much higher percentage than in many other states. But don't kid yourself: This isn't about generosity. The lottery's slogan may be, "You can't win if you don't play," but for the state, it's all about tweaking the game to maximize the amount the scratchers lose.
On Martha's Vineyard, the state's array of lottery products has been wildly successful. Lottery sales here, calculated against our year-round adult population of about 12,000, average $820 per person, per year.
Sadly, the best studies have found that lotteries extract most of their money from those who can least afford to lose it. Low-income households spend a significantly greater proportion of their wages on lotteries than do wealthier households. In New Bedford, with its median household income of $39,000, lottery sales in fiscal 2007 averaged $875 per person. In Newton, the median income was $121,000 and the average person spent $279 on the lottery. In the even pricier suburb of Lincoln, median income was $149,000 and the annual lottery spending - just $18 per person.
The dynamic is clear: the lottery begins to look like a better deal as people grow more financially desperate. A scratch ticket may be a sucker's bet, but it's the only investment that has any chance, however slim, of yielding a big payback for a small expenditure.
You'd think the state might be satisfied with raking in $820 per person on the lottery, but in fact Massachusetts has a problem: Lottery profits aren't growing as fast as they did in the early years.
The state's desperate dependence upon growth in lottery revenues was reflected this September in the play given to a lottery story by the Boston Herald. The Herald's headline declared, "Lottery Sales Slump," while the story reported, "Final figures for last fiscal year, which ended June 30, showed sales of lottery tickets and scratch cards increased by 5.6 percent, to $4.7 billion, an all-time record." (This month, the state reported that lottery income jumped again, by $14.5 million, in July, August and September.) Mark Cavanagh, director of the lottery, was quoted as lamenting these results and promising to redouble his agency's efforts to entice gamblers across the state.
We've come a long way since 1971, when the Massachusetts lottery was created. The argument back then was that people are going to gamble anyway - so why not accommodate that impulse in a way that benefits the Commonwealth? Since then, the lottery has gone from accommodation to massive marketing campaigns designed to stimulate gambling.
One of the state's most successful recent initiatives shamelessly steals a page from the literature on gambling addictions.
The Massachusetts Council on Compulsive Gambling, funded with a pittance of guilt money by the state lottery agency (a measly 12 cents for every resident of the state), notes that one symptom of a gambling addiction is "needing to gamble with increasing amounts of money in order to achieve the desired excitement." Last year the state lottery introduced a new product custom-made for all those under-stimulated players: The first $20 scratch ticket. It's been a huge success.
(Mr. Cavanagh told the Boston Globe this spring that the lottery "has no plans to go higher than $20 because it could encourage people to gamble irresponsibly." Big, bad Texas sells a $50 scratch ticket. Even as Massachusetts spends millions of advertising dollars promoting what it calls "jackpot awareness," it must be nice to have a state lottery you can feel holier than.)
We've all lived with the lottery so long that it's hard to summon up the appropriate sense of outrage at a program that, from a functional standpoint, is the most regressive tax in the history of this state. It's past time for Governor Patrick to pick up the phone, call the gambling hotline at 1-800-426-1234, and say, "Hello, I'm calling for the Commonwealth of Massachusetts. We need to talk. I think we're addicted to gambling."
