By Kirsten Salyer
Forget the three hedge fund managers who beat the odds to score the latest Powerball jackpot of $254 million. Increased sales of lottery tickets make states the real winners in this game of chance.
In the last fiscal year, total lottery ticket sales increased 3 percent to $56 billion, and 26 of the 43 states with lotteries saw a growth in revenue, Bloomberg News reports. Ticket sales in at least 17 of those states set records, according to Bloomberg calculations.
Extra income from lotteries gives states much-needed cash to fund programs and support losses in tax revenue. In 2009, lotteries and other kinds of gambling activities accounted for an average of 2.4 percent of state revenue, according to a report from the Nelson A. Rockefeller Institute of Government. New York took the lead in gambling-related revenues, followed by Pennsylvania, Florida and New Jersey.
Facing high unemployment and a dragging economy, more states are increasing efforts to encourage people to play lotteries and are looking for ways to capitalize on other forms of gambling, such as expanding casinos or legalizing online poker within their borders. (We’ve argued one solution would be to rethink the federal law banning interstate gambling online.)
But lotteries are still the primary source of state gambling revenue, according to the report. The draw to play is especially huge for low-income people desperate for a chance to win it big; those who can least afford it are often the most likely to play, according to a 2008 study by Carnegie-Mellon behavioral economists.
The game for the states is simple -- the more people play, the more they win. But with odds for an individual like that of Powerball jackpot’s 1-in-195,249,054, is it worth the gamble?
(Kirsten Salyer is the social media editor for Bloomberg View.)-0- Nov/30/2011 21:07 GMT