I just thought to look to see if the Texas Observer had digitized all of its back issues and sure enough they have. So I was able to track down an online copy of the Nov. 2, 1991 issue that has my first-ever published article I did on the Connecticut state lottery in a futile attempt to dissuade the state of Texas from following suit and adopting its own state lottery. Following are the links to that issue and a pasted copy of my article.
http://archives.texasobserver.org/issue/1991/11/02#page=11
file:///C:/Users/thomasm/Downloads/ustxtxb_obs_1991_11_02_issue.pdf
Conn. Game
Another state's lottery offers sobering lessons for Texas
BY MIKE THOMAS
"Gambling is actually the most regressive form of taxation that
can be devised. It is designed to pick the pockets of the poor,"
— late Texas Congressman Wright Patman
Branford, Connecticut
ONE MORNING ON my way to work I pulled into one of
those tiny gas and food stores. At $1.26 a gallon they seemed
to have the cheapest gas in all of New England. After filling
up I walked into the cluttered little store and saw a girl behind the
counter busily scratching with a coin at what looked like a football
ticket. "What is that?" I asked. A little embarrassed, she explained
that it was an instant lottery ticket. The ticket had "Classic Connecticut"
printed across the front of it with a picture of the historic old
statehouse building in Hartford. "I never win anything," she said. "I
don't know why I keep playing, but there is another girl who works
here and she won $1,000 once." "I just moved here from Texas," I
said. "Texas doesn't have a lottery. How much are those tickets?"
"One dollar," she said. I paid for my gas and left.
Connecticut has been running its state lottery for more than 18
years now. The Division of Special Revenue, which oversees all of
the state's gambling operations, reports that the lottery has grossed
more than $4.1 billion since its inception. Approximately $1.7 billion
has been transferred to the state's treasury. But despite this "easy"
money, Connecticut faces a budget crisis even worse than the one in
Texas. Connecticut's projected budget deficit is over $3 billion.
It's hard to find lottery tickets in the wealthier parts of Connecticut,
but when you go out into the poorer areas then suddenly every
little run-down gas station, liquor store and grocery mart has a sign
in its window that proclaims, "Connecticut Lotto — You Can't Win
If You Don't Play." Of course, you can't lose either, and that is what
most lottery players do most of the time. According to ConsumerResearch
magazine, lotteries have the lowest odds of winning of any
form of gambling. State lottery officials report that the odds for winning
something in the lottery are one in 30, but these are the odds for
winning the smallest and most common prize of $3. A person who
plays the lottery on a regular basis will likely spend a $3 prize on
more lottery tickets. To win the really big money, the odds are more
like 13 million to one. Since most people can't make sense of odds
that high, lottery critics once tried to point out that by comparison
the odds of a person being killed by a bolt of lightning are only 400,000
to one. The lottery industry later made light of this information by
making a commercial in which an actor is struck by lightning right
before winning the big jackpot.
Last April a man in South Windsor, Conn., won $3,600 in the lottery.
The local media went out to interview him as they do every
person who wins a big lottery prize, but instead of finding the typical
happy, giddy winner, they found that this man was bitter and angry.
It seems that he had been playing the lottery for 10 years and he had
a habit of always throwing his losing lottery tickets into a crumpled
paper bag. This was the first time he had ever won a substantial prize
and out of curiosity he decided to go back and .see how many losing
tickets he had collected. There were 10,000 of them. He said he felt
like a sucker. Every outlet that sells lottery tickets is set up with an on-line computer
terminal, which is hooked into the main lottery computer system
and allows the state to keep track of when and where every ticket
is sold and announce simultaneously to every distributor what the
winning numbers were. These computer systems are made by companies
like G-tech of Rhode Island and Scientific Games, a subsidiary
of Bally Manufacturing of Atlanta. It is no accident that these
same companies are also the biggest lobbyists for the expansion of
lotteries into non-lottery states like Texas. Pro-lottery companies have
hired some big-name political figures, such as former Lt. Gov. Ben
Barnes and former state Sen. Kent Caperton, to press their case at the
Capitol.
In 1977, Connecticut commissioned Mark Abrahamson, a sociology
professor from the University of Connecticut, to study the state's
gambling operations. Abrahamson's study found that most forms of
legalized gambling, including the lottery, were largely ignored by
persons with college degrees and yearly incomes in excess of $25,000.
Abrahamson concluded that Connecticut's state lottery "primarily
attracts poor, long-term, unemployed and less-educated participants.
It generates revenues in a regressive manner and should be discontinued."
The study was not well-received at the state's lottery bureau, and
John Winchester, the lottery director at the time, wrote a 25-page
rebuttal that harshly criticized Abrahamson and his study, which was
for the most part ignored by the state's legislature. A few years later
a new study was commissioned, this time to be carried out by Economics
Research Associates of Los Angeles, a company which had
done many similar studies for other states with legalized gambling
operations. That study whitewashed most of the concerns
brought out in Abrahamson's study.
GAMBLING IS STILL controversial in Connecticut, but not
the lottery. The lottery has become matter-of-fact, commonplace and
ingrained into society. Lottery revenues long ago were absorbed into
the state's bloated bureaucracy and now the state is hungry for more.
The question of right or wrong has long been forgotten and the only
issue now is how much money can be made. The state legislature wants to ban out-of-state lottery ticket sales for fear they will cut into
the Connecticut lottery's gross sales. Several legislators are sponsoring
a bill that would allow a South Carolina-based company to set up
video slot machines across the state with the assurance that the state
will get a 33 percent cut estimated at $64 million per year. Several
jai alai frontons are located around the state where people can bet on
games. One in Bridgeport isn't doing well, so its owners are seeking
permission to convert it into a dog race track. There also are several
off-track betting parlors where people can go to bet on out-of-state
horse races and watch them on a large video screen. The biggest
controversy has been over the efforts of the Pequot Indian tribe to
build a gambling casino on their reservation in Ledyard.
In 1989 Duke University economists Charles Clotfelter and Philip
Cook, in a book entitled Selling Hope, criticized the lottery as an
inefficient way to raise revenue. They pointed out that while traditional
taxes cost only one or two pennies per dollar to collect, lotteries
can cost up to 75 cents per dollar of revenue raised. For each
dollar spent on a lottery* ticket, 40-50 percent goes to prizes while
10-25 percent goes to administrative costs, vendors' fees, advertising
and promotional campaigns.
Lottery proponents argue that the lottery is a form of entertainment
and not a tax, and therefore should not be judged on that basis.
However, state governments usually begin to rely on lottery revenues
as a substitute for other forms of taxation and thus its fairness
and efficiency as a tax merits serious attention.
THE BIGGEST PROBLEM WITH the lottery from the state's
point of view is that people tend to lose interest in it after a while.
They require constant prodding by slick advertisements and promotional
campaigns to continuously support the lottery at the level required
to keep it profitable. This means that the state cannot simply
make the lottery available to people who would be likely to gamble
anyway. Instead it must aggressively market the lottery to people
who otherwise would not normally choose to gamble. Connecticut
now spends more than $12 million on its lottery ads, and the figure
continues to climb every year. The 33 states with lotteries as of 1990
were spending more than $600 million a year combined on lottery.
promotions.
The state of Connecticut, like most states with lotteries, hires major
advertising and marketing firms to push its lottery. The same
people who normally sell soft drinks and laundry detergent become
pitchmen for the government. They know who their potential customers
are and the ads are targeted accordingly.
A recent TV ad featured two elderly gentlemen sitting in a diner,
drinking coffee. The first man has a pile of instant lottery tickets and
is busy scratching them off while the second man acts uninterested.
The first man then asks his friend if he plays and the second man
replies "no" with just a hint of disdain in his voice. So the first man
gives his friend one of the tickets from his pile, saying, "Here, try
one of these. It's the new Classic Connecticut Instant Game." The
second man scratches the ticket as the first man gets excited and
says, "See there, we have a winner!" The second man replies, "What
do you mean, `we?"' as he tucks the ticket into his shirt pocket. Besides
promoting greed and selfishness, the ad implies that finding a
winning ticket is very common. Nowhere in the ad are the odds displayed.
A survey conducted by Clotfelter and Cook found that only
12 percent of lottery radio and TV ads reveal the true odds of winning.
The underlying message of the ad is that people who do not
play the lottery are missing out and therefore are behaving foolishly.
As a state's need for more revenues increases, the ads for lotteries
become more desperate. One Connecticut TV ad showed an elderly
gentleman explaining that he had won a million dollars by investing
his money into lottery tickets rather than saving for his retirement.
An ad for the New York lottery showed a woman telling her daughter
she would not have to worry about getting a scholarship for school
because Mom was going to win her college tuition money by playing
the lottery. There was even a protest in a Chicago neighborhood when
a billboard was put up urging the poor, black residents to get off of
Washington Street and move up to Easy Street by playing the Illinois
lottery.
Without these advertising blitzes lottery sales tend to drop off
sharply. Thus states that rely on lottery revenues find themselves
trapped in a paradox pointed out by Clotfelter and Cook: "Here you
have the same outfit that is trying to educate our children selling
images and hyperbole rather than factual information and telling the
public: 'Play your hunch, you could win a bunch.'" While the states
might be desperate for the revenues lotteries can produce, the people
on whom they prey are often even more desperate, down to the
homeless people who collect and sell bottles and cans to make
money to purchase lottery tickets.
LAST YEAR, CONNECTICUT'S lottery produced a record
$525 million. Sales are down slightly for this year, which a state
gambling official blamed on the recession. "The average person who
plays our lotto products is a blue-collar worker," said Bruce Cowen,
chairman of the state Gaming Policy Board, in a recent newspaper
interview. "When they're collecting unemployment checks it's a little
tougher to get people to buy lottery tickets." But he predicted another
record-setting year in 1991.
People who believe the lottery is the best way for Texas to solve
its budget problems and avoid an income tax should take a close
look at Connecticut. Here you have a state suffering through one of
the worst recessions in years, struggling to pay off the biggest budget
deficit in the state's history at the same time the lottery is raking
in more money than ever. But it has not helped the state avoid a
major budget crisis. On Sept. 1, 1991, Connecticut began levying its
first-ever personal income tax.
Former Texan Mike Thomas is a writer who lives in Connecticut.
MIKE THOMAS Bushy Hill Market in Branford, Conn. — one of about 2,600 lottery agents with an on-line system
