Sunday, January 30, 2011

The Lottery and Advertising

I'm totally outraged at the way state lotteries are managed, specifically the massive advertising campaigns they run. There's an excellent article from the Washington Monthly about it that basically explains what I'm so angry about. I'd really encourage you to read the whole article, but I'll summarize the main points I got from it:
  • lottery programs are hugely successful marketing machines that rake in billions of dollars nationwide, and it's illegal for free-market businesses to compete directly with them
  • the marketing campaigns are misleading, intentionally exploit vulnerable people in moments of weakness, and don't even comply with the FTC's truth-in-advertising standards
  • it's by-and-large the poor that end up pouring their money into the lottery machine
  • lottery campaigns claim that the money goes toward education, or some noble cause ("right back into your pocket", according to the Indiana lottery), but this is just an "accounting trick": According to David Gale,
    "What happens is, the legislature budgets this much for education. They see the lottery will contribute this much. So they take the money they would have spent on education and put it to other uses."
It might sound like I'm going back on some of my libertarian principles here, but it's a confluence of things that bother me: we're talking about a government business that outlaws competition, gets its money from the poor, and goads them on with beautiful fictions about all the good their wasted money is doing.

Let me clarify a few things I'm not claiming:
"The lottery is evil because it steals money from people."
People voluntarily participate in the lottery, albeit under false pretenses and coercive tactics.
"The lottery is a tax on the stupid. People who play it don't understand probabilities and don't realize that they're throwing their money away."
The big product people pay for when they gamble is not the money they hope to win, but the excitement that comes with a chance of winning big. If they have the money and desire to gamble responsibly, it's not something that they need to be "saved from".

But advocates of lottery programs claim that they are only providing a constructive outlet for people to do what they would be doing anyway. They claim that if our state doesn't provide a lottery, people will go across state borders and pay into other states what they should be paying into their own. That might justify the mere existence of the lottery, but it just sounds ridiculous in light of the oppressive radio, TV, and billboard advertising campaigns they launch. If the advertising isn't netting customers, stop doing it! If it is, stop doing it! You can't claim that gambling is an unfortunate vice that you're just making the best of while you're spending public money to promote it!

I've come to the conclusion that if I'm concerned about the gap between the rich and the poor, and want to support some government policy to do something about it, the most effective option would be to hamstring lottery advertising. If the lottery is a hidden tax, it's an obscenely regressive one. Furthermore, I will flatly ignore anyone's crusade for wealth redistribution or an even more progressive tax structure if it doesn't make a priority of hamstringing lottery advertising.
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