The lottery isn’t as pure as its advocated would have South Carolinians believe, and the red flags should be taken seriously.
Back in 2009, we said that, “few issues in South Carolina politics have been as contentious as legalized gambling, and perhaps no facet of legalized gambling has been more contentious than the ‘State Education Lottery.’” But after 15 years of the lottery’s existence, the fireworks seem to have passed.
On its website, the South Carolina Education Lottery shares inspirational stories of how the scholarships funded with lottery money helps those in need through school and places them on the path to a better life. It’s difficult to argue against a mechanism that funnels millions of dollars into South Carolina’s anemic education system; however, the lottery isn’t as pure as its advocated would have South Carolinians believe, and the red flags should be taken seriously. Time to set off some more fireworks.
On October 2nd, the Post and Courier published a story showcasing how much money was spent per capita on the lottery in each South Carolina county. Using a Duke University study as the springboard, the Post and Courier determined that, just like in the rest of the United States, South Carolina has a noted connection between low-income households and higher lottery sales. This Duke study also found “that the poorest third of households purchased more than half of all weekly lottery tickets.”
This declaration wouldn’t be such a terrible revelation if only a small amount of money was spent on the lottery. Unfortunately, though, the opposite is true. Here are some of the most poignant spending statistics in South Carolina determined by the Post and Courier:
“In Allendale County, where the Census Bureau reports that 41 percent of residents live below the poverty level, spending on the lottery was $819 per capita. Some 33 percent of Williamsburg County residents were considered impoverished and the county per capita lottery spending was $820. Bamberg County residents spent $999 per capita in a community where 32 percent of residents were impoverished.”
Americans spent more money on lottery tickets ($70.1 billion) in 2014 than they did on sports tickets, books, video games, movies and concert tickets combined ($63 billion). Keep in mind that the households with the lowest income levels spent more than half of that $70.1 billion.
Why People Play
Advocates of the lottery will explain that people play just for fun – as a cheap form of entertainment. Though that may be true of higher-earners, it’s not the case for those with low incomes. Derek Thompson in the Atlantic explains that the authors of the study “Hitting the Jackpot or Hitting the Skids” found:
“Local lottery ticket sales rise with poverty, but movie ticket sales do not. In other words, lotto games are not merely another form of cheap entertainment. They are also a prayer against poverty. This fits what the researchers call the ‘Desperation hypothesis’: States are making their most hopeless citizens addicted to gambling to pay for government services.”
In almost every case, the lottery does exactly the opposite of what the South Carolina Education Lottery proudly expresses on its website. By dangling the ever-elusive chance of hitting “the big one,” South Carolina capitalizes on the desperation of its citizens by tempting them to spend their money on the nearly-impossible chance of a truly life-changing win. All in the name of education.
For every success story, there’s the sad story of the person funding the success story. Perhaps an addicted gambler ruining his life and the life of his family all as a last-ditch effort to provide them a better life.
South Carolina Education Lottery “Oversight” Committee
A little over a week after the Post and Courier ran the story mentioned above, the South Carolina Lottery Oversight Committee met to receive an update from W. Hogan Brown, the interim Executive Director of the lottery.
The committee meeting lasted close to an hour and a half, and only a single question was asked about the dangers the lottery might present. The question was quickly dismissed.
Instead, the focus of the committee meeting was to discuss the business side of the lottery, a job seemingly more suited for the Ways and Means Committee. With discussion centering on the bottom line, payouts and marketing, it became abundantly clear that the lottery is a business whose entire purpose was to make as much money for the state government as possible. To drive this point home, Mr. Brown said that the lottery:
“Really, really is a business. You have to treat it like a business.”
The House Wins Even When It Loses
The emphasis on profitability becomes evident when winning odds and payout taxes are placed under the microscope. Because the purpose of the lottery is solely to make money for the state government, games are designed for max profitability, meaning extremely low winning odds. Games are constructed to create enough excitement for ticket sales, but to pay out as little as possible.
Even winning isn’t as good as advertised. Prizes of $600 or more face a 45 percent tax. The state government always finds a way to recoup its money.
If it were revealed that a corporation made a profit by preying on the poor all in the name of funding education, the streets would be full of rioters. That’s bad business in the private sector and in the public sector.
The South Carolina Education Lottery is also not subject to truth-in-advertising laws, meaning they don’t answer for their marketing practices. The lottery could exaggerate chances of winning and not have to answer for it because – as mentioned above – the state government only cares about the lottery’s profitability.
The Lottery is Wrong for South Carolina
No matter how important or daunting the task of funding education in South Carolina, the lottery should not be the answer. The South Carolina Education Lottery can only be described as state-sponsored predatory gambling.
Predatory gambling is different than social gambling events like March Madness bracket pools or a poker night with friends. Instead, predatory gambling “is when state governments partner with powerful corporate gambling interests and use gambling to exploit and defraud citizens and their communities.” That’s exactly what’s happening in South Carolina, and it’s time for change.
South Carolina’s bottom line should not be placed above the interest of its citizens.
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