Do state lotteries take advantage of gambling addicts?

Jake Grovum, Pew/Stateline Staff Writer

2:01 p.m. EDT April 4, 2015

Foryears,lotterieshavebeenalucrativeenterpriseforstates,reliablybringinginhundredsofmillionsof
dollarstofundeverythingfromeducationtoenvironmentalpreservationtohomelessshelters.
Butnowsomelawmakersandantigamblingadvocatesarepushingback.Recentforaysintoonlineandmobile
lotterysales,alongwithlongstandingconcernsaboutaggressivemarketingandproblemgamblers,are
promptingmanystatestoquestionwhetherlotterieshavegonetoofarintheirquesttoraisemoney.
(Photo:SkipForeman,AP)

Theproposalstoreininlotteriescomeasmanystatesarestartingtoembracenewtechnologyandnew
games.Someofthenewruleswouldtouchonhowticketsaresold,whileotherswouldregulatewhatcanbe

onbillboardsadvertisingthegames.Insomestateswithbillstoexpandlotteries,theproposedlimitshavesparkedfierceopposition.
FortythreestatesandtheDistrictofColumbiaoperatetheirownlotteries,upfrom37statesplusD.C.in1999.Intimesofshrinkingrevenuesand
yawningbudgetgaps,stateshaveturnedtolotteriestostaveoffspendingcuts.
Thereisasimplereasonfortheirgrowth:Theypay.Twentyoneofthestateswithlotteriessawmorethan$1billioninsalesinfiscalyear2014,withNew
Yorkleadingthewayat$9.2billion,accordingtotheNorthAmericanAssociationofStateandProvincialLotteries.Altogether,salestopped$70billion.
That'smorethan10percentofthetotalstaterevenueinstates'collectivebudgetsforfiscalyear2014.Salesaveragedabout$1.6billionperstateand
D.C.
Butmanyantigamblingadvocatesandskepticallawmakerspointtothestaggeringsumsnotasmeasuresofsuccess,butassignsofadeeperproblem.
Theyarguethatlotterieshavegrownsobigthey'repreyingonproblemgamblersandworseningsomeofthesocialillspoverty,homelessness,and
moretheyweredesignedtoaddressthroughnewrevenue.Expandingthebusinessintonewsalesavenuesisthelastthingstatesshouldbedoing,
theysay.
RELYINGONPROBLEMGAMBLERS?
"Statelotterieshaveabusinessmodelthat'sbasedongettingupto70to80percentoftheirrevenuefrom10percentofthepeoplethatusethelottery,"
saidLesBernalofStopPredatoryGambling,whichadvocatesanendtostatesponsoredgambling."Theycantalkalltheywantabouthowmuchthey
careaboutcitizens,butstatelotteriesaretheposterchildfortherisingunfairnessandinequalityinourcountry."
AStatelineanalysisofstatesalesdatashowshowmanystatesrelyheavilyonlottery"superusers."Threestates(RhodeIsland,SouthDakotaand
Massachusetts)had2014lotterysalesthattopped$700percapita.While10stateshadpercapitasalesbelow$100,percapitasalesforallstate
lotteriesaveragedalmost$250.

TABLEAUPUBLIC

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(https://public.tableau.com/s/prole/the.pew.charitable.trusts)
Salesnumberslikethoseandconcernsaboutproblemgamblershavefueledlegislationtolimitcreditcardticketpurchases,andtobeefupwarningsand
addictivegamblingservices.ProposalstoallowcreditcardsalesinKentuckyandNewMexico,forexample,drewaharshrebukefromlawmakers.And
lastyear,Ohiopouredmillionsintoacampaigntoraiseawarenessaboutproblemgambling.
InMinnesota,abipartisanbillfromRepublicanstateRep.ChrisSwedzinskiwouldrequire25percentoflotterybillboardstobededicatedtoawarning
abouttheoddsofwinning,cautionsaboutaddictionandinformationonwhereproblemgamblerscanseekhelp.Atahearingonthemeasure,Swedzinski
saidhisbillwouldhelpeducategamblersaboutthepotentialdownsideofthelottery.
Butthemeasurefacedquestionsandoppositionfromotherlawmakersandstatelotteryofficials.Somequestionedwhythelottery,butnotNative
Americancasinos,forexample,wouldbeforcedtoincludesuchwarningsintheirads.
"Anumberofthelegislatorskindofrealizedquitehonestlythatit'skindofabsurdtorequiretheleastproblematicgamingthereistogomilesbeyondthe
mostaddictiveasfaraswarnings,"saidEdVanPetten,executivedirectoroftheMinnesotaLottery."Dowerequireeverybusinessthathasadownside
tohavewarningssuchasthat?"

Thebillboardsbillwassidetrackedbyquestionsandamendmentsaboutwhetheritshouldbeexpandedtoincludeothergamingenterprisesandwas
senttoanothercommittee.ButitcouldresurfacebeforelawmakersadjourninMay.
MORETECHNOLOGY,MOREISSUES
Amorepressingissueiswhetherlotteryticketsshouldbesoldonlineandviaavenuessuchasmobilesales,videoslots,oratgaspumpsandATMs.Pro
andantigamblingforceshavefacedoffoverthenewavenues,whilelotteryofficialshavebeguntoembracethemasawaytoensuremuchneeded
revenuecontinuestoflowtostatetreasuries.
Ahandfulofstateshaveconsideredmeasurestoallowonlinesalesorexpandgaming,accordingtotheNationalConferenceofStateLegislatures,while
othershavesteppedintopreemptivelyblockthepractice.Lastyear,forexample,Oregonconsideredencouraginglotteryretailerstoembracevideoslot
machines,anewandpotentiallylucrativerevenuestream.Atthesametime,ColoradoandMarylandmovedtooutlawonlinegaming.
Antigamblingadvocatesdecrythemovetoonline,mobileandothernovelsalesstrategiesasanattempttosqueezeevenmoreoutofgamblers.But
lotteryofficialsdefendthemasstepstoensuretheirbusinessesstayrelevantinthedigitalage.
"Ultimately,wedon'twanttobethepostoffice,"saidTerryRich,presidentoftheNorthAmericanLotteryAssociationandheadoftheIowaLottery.
"Gaming,andespeciallythelottery,isoneofthelastthingsyoucan'tdoonyourmobilephone."
ButasBernalofStopPredatoryGamblingputit,"Theirbusinessmodelisbasedongettingpeopletospendmore."
LOTTERY'GONEWILD'
Minnesotahasemergedasabattlegroundovernewsalesstrategies,inpartbecauselotteryofficialstherehavedecidedtopressaheadwithticketsales
atgaspumpsandATMsoverobjectionsfromthelegislature.
"Wehaveanobligationasthelotterytokeepupwiththetimes,"VanPettenoftheMinnesotaLotterysaid."Todothat,youhavetohaveapresenceon
theInternet."
Thedebatepromisestobefierce.DemocraticGov.MarkDaytonlastyearvetoedabillthatwouldhaveblockedonlinescratchoffsandticketsalesatgas
pumpsandATMs.Butasimilarmeasurehasresurfacedthisyear,andlawmakersareeagertoaddressit.
"It'skindoflikethelottery'sgonewild,"saidRepublicanRep.GregDavids,chairmanoftheHouseTaxesCommitteeandadrivingforceineffortstorein
inthelottery."Thisiswayoutofcontrol.They'retryingtogetanothergenerationhookedongaming."
Stateline(http://www.pewtrusts.org/en/researchandanalysis/blogs/stateline)isanonpartisan,nonprofitnewsserviceofthePewCharitableTruststhat
providesdailyreportingandanalysisontrendsinstatepolicy.
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