Italian Town Bets Budget on Lottery to Raise Revenue, Cut Taxes
A southern Italian town is betting part of its budget on weekly lottery tickets, arguing that the strategy is no more a crapshoot than investing on Wall Street.
If Melito, near Naples, hits the jackpot, the town will become “a little tax-free haven,” Mayor Antonio Amente said in an interview on Aug. 31, after the city council unanimously backed his proposal. “We’ll be like Monte Carlo!”
The town of 35,000 plans to make its first wagers this week when the jackpot of Italy’s Superenalotto game approaches 127 million euros ($163 million). Administrators will spend 15 euros a week, or 800 euros a year, on trying to guess the correct six- number combination, using funds destined for the mayor’s salary.
With city councils in Italy and abroad selling bonds and buying derivatives to rustle up cash, Amente says the lottery is a better bet -- and much cheaper. Nor will he leave everything to chance, basing number choice on age-old Neapolitan traditions for calculating the winning mix.
“It would be easier for me to guess a stranger’s phone number,” said Gennaro Olivieri, a professor of financial mathematics at Rome’s Luiss University, who estimates the chances of winning at about 1 in 622 million. “It shows how desperate local administrations are.”
Spending Cuts
Italian cities and towns are struggling after Prime Minister Silvio Berlusconi’s government reduced regional funding as part of 25 billion euros in spending cuts aimed at lowering the budget deficit and stopping contagion from Greece’s debt crisis. Attempts by some municipalities to raise money by investing in derivatives in recent years have led to 1.1 billion euros of losses and only 100 million euros of gains, Bank of Italy data show.
“With all the waste we see in public finances, why not try our luck, it’s an opportunity for the town,” said Giovanbattista Pelecchia, one of Melito’s residents who supports the mayor’s move.
“If you invest recklessly, it’s almost like gambling,” said Olivieri, who has been researching cities’ use of derivatives. “But people who play the markets are supposed to make informed choices, whereas the lottery is just chance.”
For many in the Naples area the lottery is not only about chance, it’s considered an art form. Ritual and legends have developed around the game, including a centuries-old manual called “La Smorfia,” or “The Wince.” It translates elements of dreams and real-life events into numbers from 1 to 90 to play at lotto.
Melito’s administrators say they have made an “informed choice” of a lotto combination based on the Smorfia manual. Every week, they will play the same numbers including number 33, which stands for the mayor, 42 for city hall, 72 for “wonder,” and 90 for “the people.” The remaining two numbers are a secret, Amente said.
Centuries-Old Tradition
The Smorfia tradition is so well known that the website of Italy’s national lottery has an online version where lottery players can insert key words and see what numbers correspond to their dreams.
More than 30 million Italians participate in public lotteries, according to a report by the Rome-based Censis research institute. Last year, an average of 7.8 million euros a day was spent on tickets for the draw, according to the report.
Outside Melito’s city hall, townsfolk play numbers of their own, vividly recounting dreams and consulting each other and the Smorfia catalogues.
“I dreamed that I won the lottery,” said Italiano Nunzi, a pensioner who regularly plays his favorite numbers at the local tobacco shop. “I hope that means something too.”
To contact the reporter on this story: Alessandra Migliaccio in Rome at amigliaccio@bloomberg.net; Flavia Rotondi in Rome at frotondi@bloomberg.net.
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