MEDILL NEWS SERVICE
Numbers game: State lotteries fund worthy causes, but who foots the bill?
By CHARLIE CRAIN and JAMES FISHER
MEDILL NEWS SERVICE

WASHINGTON -- In New Hampshire, where America's first modern state lottery has been running for nearly 40 years, Jim Rubens considers the lottery a part of the landscape.

"Lotteries are everywhere. They're for everyone," Reubens said. "They're small-d democratic." Rubens' vantage point on the issue? He leads the Granite State Coalition Against Expanded Gambling.

Lotteries many not be everywhere yet, but Tennessee recently became the 39th state to authorize a state-run lottery since New Hampshire voters approved the country's first one in 1964. And other states facing fiscal crises also have been considering lotteries despite a scathing 1999 report by the National Gambling Impact Study Commission denouncing lotteries as preying on vulnerable populations, specifically youth and the poor. The commission recommended that states "curtail the growth of new lottery games, reduce lottery advertising, and limit locations for lottery machines."

While Rubens said his group adamantly opposes casino-style gambling like slot machines, he's "declared a truce with existing forms of gambling in New Hampshire," including bingo and the lottery.

Reuben's "truce" with existing forms of gambling came after the issuance of the national commission's report, which also concluded that state lottery boards concealed the odds of winning in their advertisements. For the most part lottery managers have shrugged off the commission's criticism and recommendations, but they strongly deny that the lotteries target vulnerable populations or that they conceal the odds of winning.

Rick Wisler, director of New Hampshire's lottery board, said the odds of winning prizes are printed on every lottery ticket sold in the state. If the lottery ever ran less-than-upfront advertisements, he said, "it happened many, many years ago." Now, he said, "when we run a television commercial, we don't advise that every ticket you buy is going to be a winner, because that's not accurate."

Meanwhile, New Hampshire can't think up instant-win games, its biggest-selling tickets, fast enough. "We're introducing 50 games a year - one a week," he said.

The lottery is the most popular way to gamble in America. According to a 1999 Gallup poll, 57 percent of adults had bought a ticket in the past year. But many players don't really consider their chance at fortune a gamble. A 2001 study asked people to check a box if they did not gamble, and then asked them about specific kinds of gambling. The result: 65 percent of those who claimed not to gamble admitted they had bought an instant-win scratch ticket from a state lottery in the past year.

"The lottery has really been around for so long that everybody's used to it," said Andrew Smith, director of the University of New Hampshire's Survey Center, which has done polling for the state's lottery board. "But we haven't seen the strong support for [casino] gambling that you'd expect to see."

New Hampshire's governor proudly bought the first lottery ticket in 1964, after voters approved the creation of a "sweepstakes commission." Voters in New York, New Jersey and other states quickly voted to legalize lotteries, making the 1960s a turning point in the public's attitude toward gambling. Today, lotteries are legal in the District of Columbia in addition to 39 states.

Years of advocacy paid off for state Sen. Steve Cohen when Tennesseans voted for a lottery in 2002. The appeal, he said, was obvious in a state with a high sales tax and where attempts to raise the income tax proved politically impossible.

"We're basically stuck with the regressive tax system we have that weighs heavily on the poor," Cohen said. The lottery, he contends, is a fairer and less painful way to raise money.

"People do it voluntarily," he said. "People like it."

Cohen said opposition to the lottery came from the far ends of the political spectrum: religious conservatives who think gambling is immoral- "the Jerry Falwell/Pat Robertson-type ilk," in Cohen's words-and paternalistic liberals who believe they know better than minorities and the poor how to set purchasing priorities.

The opponents "got beat pretty good by the middle ground," Cohen said.

Cohen recognized that some people have a problem with gambling, but said government disapproval isn't an effective solution and that the lottery only created a public benefit out of an activity Tennesseans engaged in anyway.

"The laws don't necessarily stop people from gambling," he said. "It may be tied for the world's oldest economic activity. You're not going to stop people from doing what they want to do."

The idea that lotteries fund worthy programs is a crucial part of their popularity, but one that has not always been realized. When Tennessee lottery supporters looked for a model that would inspire public confidence, they turned to Georgia.

Rebecca Paul, who has been president of the Georgia Lottery since its advent in 1993, said the Georgia lottery initiative passed by a razor-thin margin. There was some opposition on moral grounds, but mostly voters feared that lottery funds would be misused.

Paul said when Georgians were considering a lottery they looked to states like Florida, California and Ohio and didn't like what they saw. Those states, she said, promised to spend lottery revenue on programs like education but instead funneled the cash into their general funds.

"They became replacement dollars rather than enhancement dollars," she said.

To combat those fears, Gov. Zell Miller proposed a Georgia lottery whose funds would be earmarked for specific educational programs, not simply collected on the promise that the money would be spent wisely. In 1998 the Georgia constitution was amended to designate pre-kindergarten programs and HOPE college scholarships the top priorities for lottery revenue.

The pre-K program serves 65,000 children each year, and HOPE pays full tuition and some other costs for any Georgia high school graduate with a B-average who attends a public university in the state. Paul said Georgians now trust that lottery revenue benefits people who need it, and polls show support for a lottery that barely passed in 1993 is over 80 percent ten years later.

Cohen said Tennesseans were wary that the state would engage in "budgetary shenanigans" with lottery funds, and were won over by a Georgia-style proposal. An increasing number of states are changing their constitutions to ensure that lottery revenue is well-spent.

But with HOPE grants taking the lion's share of the $2.6 billion in revenue last year, David Mustard, a University of Georgia professor, questions whether the money is well-spent. Mustard, who conducted a study of the lottery, said while Georgia has had more success than most other states in increasing educational expenditures, HOPE scholarship funds are often going to students who don't need them.

He said parents of middle-class students in his courses used promises of cars and apartments to persuade them to stay in Georgia and get a free college education rather than go to an out-of-state school. Even with Hope scholarships, Mustard said, "Very few new people go to college who otherwise would not have gone."

Mustard also disputed contentions by Paul and Cohen that the wealthy spend more than the disadvantaged on lottery tickets. The professor cited 25 academic studies disputing that contention and points to a study of his own that correlated a county's lottery sales with its demographic profile to determine who plays the lottery.

"The overwhelming result is: lower-income, minority, and poorly educated," he said.

Sen. Cohen may be right that lotteries are popular because most people believe individuals should be allowed to spend their money as they choose. But Mustand suggested another reason for its popularity -- that those who don't play the lottery benefit from the state revenue it produces.

"It's politically very popular," Mustand said. "A lot of people who vote wouldn't play the lottery, and they enjoy the benefits. The money isn't directly coming from me, but my kids get the scholarships."

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