Racist Claims About Lottery a Losing Wager, by Stephen Roberts, M.Div.

roberts_smTake out a coin and flip it in the air five times.

Unless it’s a trick coin, there will be an uneven number of heads or tails.  Is the coin – and the government that minted it – biased?

Of course they aren’t.  It’s a game of chance.     

In Buffalo, however, there are charges that the New York Lottery is cheating the poor and minorities.  Those making the charges are not concerned about gambling, but that the most popular games aren’t paying enough.

Rather than condemning gambling, complainers want the games to be more enticing to make things right.

Like private casinos, government-run lotteries are run to make money.  New York Lottery director Gordon Medenica told the Buffalo News: “Fundamentally we want to finance education in the state.  So we run the lottery as a business.”

Payout rates vary by game.  For numbers games, in which a random number drawing determines winners, state lawmakers set the payouts, with LOTTO, for example, paying out 40 percent and Mega Millions paying out 50 percent of what it collects.

Scratch-off games offer a 65 percent return.  One in five plays can yield at least another free “scratcher,” but rarely offer the large payouts of numbers games.  This low yield dissuades people such as Raymond Jones, who plays in Buffalo’s East Side neighborhood.  Jones told the Buffalo News: “There’s not enough money in scratch-offs… I could win $500 [on a scratcher], or – with four numbers – I could win $5,000.”

Chasing the quick buck makes numbers games more popular and, by Jones’ admission, “addictive.”  In 2007, the New York Lottery’s statewide rate of return was 60 percent – with 59 percent of winnings coming from scratchers and 41 percent from numbers games.  In Buffalo’s East Side, where the numbers games are popular and scratchers don’t sell well, the overall rate of return is 54 percent.

This disparity ignited a furor among Buffalo’s black leaders.  Assemblywoman Crystal Peoples (D) believes it is “incumbent that the state correct this.  You need to get some equity.”  Brenda McDuffie, president of the Buffalo Urban League, wants state officials to “even the playing field.”  Pastor Darius Pridgen of Buffalo’s True Bethel Baptist Church said giving the most popular games the least payout is “a travesty.”

In 2007, people in East Side spent $23 million on the lottery and got back $12.3 million.  But that doesn’t seem to enrage Peoples, McDuffie or Pridgen as much as the fact that – in a more equal world – they would get back $13.7 million.

Even with “equity,” what about the $9.3 million lost?  Peoples figures: “You can’t tell people what to play.  But you can decide what the odds are.”

It’s all a red herring, distracting the public from the greater problem of the false hope of gambling.

New York households earning less that $30,000 a year are twice as likely to play the lottery than those making more than $50,000.  Those outraged in Buffalo don’t seem concerned by this fact.  Their cure is to offer a bigger enticement to gamble.

The poor and minorities are overrepresented among lottery players.  In Illinois, for instance, $23 million in lottery tickets were sold in the predominantly black and poor 60610 zip code in 2002 – the highest for any zip code in the state.  The second highest was $21 million in sales in zip code 60628, just to the south and containing a similar demographic.

“Lotteries are, in essence, a form of regressive taxation that distributes resources and wealth away from those who can least afford to pay,” said Paul Street of the Chicago Urban League.  Mark Thornton of the libertarian Ludwig von Mises Institute agrees: “The lottery tax is regressive.  It takes a higher percentage of a poor man’s wages than a rich man’s.  Every study has shown this to be the case and there has not been one published study that contradicts this finding.”

Thornton compares lotteries to Robin Hood’s nemesis, the Sheriff of Nottingham.  As the government takes from the poor in Buffalo, those claiming to work in the best interests of the low income are willing to allow it as long as the government “blings up” their thievery to pad their spending.

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Stephen Roberts, M.Div. is a research associate for the Project 21 black leadership network and a seminary graduate.  Comments may be sent to [email protected].

Published by The National Center for Public Policy Research. Reprints permitted provided source is credited. New Visions Commentaries reflect the views of their author, and not necessarily those of Project 21 or the National Center for Public Policy Research.


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