No one wins Lottery as funds vanish

by Gus Lubin

Desperate times call for desperate measures. That’s the justification behind Gov. Beverly Perdue’s recent reappropriation of $87.6 million from lottery funds that were allegedly reserved for educational funding. Allegedly, as in the website,, still writes, “100 percent of the net proceeds of the North Carolina Education Lottery go to education programs.” Allegedly, as in the lottery was marketed, sold and named as an education lottery. Perdue said, “There was a pot of money sitting there and it’s my constitutional responsibility to balance the budget and pay the bills.” But while Perdue treats the lottery pot of money like a godsend, it remains that it is filled by North Carolina residents. The lottery acts like a tax on everyone who plays — except for the marginal percentage of winners — and the most active players often come from groups that have little money to spare, like the unemployed and the elderly. During desperate times, the government should protect these desperate people, not itself. Let’s consider the reasons that the lottery was unpopular from the start — never supported by a majority of state residents and opposed by 24 against 25 votes in the NC Senate. First of all, the lottery is a regressive tax, because it has a proportionally higher cost for low-income players than high-income players. Second, the lottery is an oppressive temptation for the poor. Third, the lottery is less efficient — though trickier — than a direct tax, because it has high organizational costs. Fourth, the lottery is treated as gambling and therefore decreed as sinful by many religious groups. Fifth, the lottery is recognized as a potentially addictive activity by the lottery administration itself, which posts on every scratch ticket a hotline for gambling problems. Faced with these complaints, lottery proponents led by Perdue and former Gov. Mike Easley insisted that the lottery would serve an exclusive and valuable purpose of raising money for education. Both governors talked about passing a law to prohibit the use of lottery money for anything but education, although the law was never passed. The benefit for education, they claimed, would outweigh the moral concerns of the program.

Now, as the lottery celebrates its three-year and $3billion anniversary, we recognize that the lottery did not produce any kind of special or sacred money, just money. It is, as John Hood of the John Locke Foundation observed, a “no kidding moment”: The state raises money however it can and spends it however it needs. (Pardon me if that sounds Marxist.) Perdue’s recent defense that much of the $86.7 million will go to education anyway — since education accounts for over half of the state’s general spending — only emphasizes the fluidity of government accounts and the meaninglessness of the lottery lockbox. By funding education, the lottery allowed the state to devote more of its normal revenue to costs other than education. In other words, the lottery has always supported more than education. And we still have all those moral concerns. If you don’t play the lottery, you may be amazed by the amount of people who do. With approximately $1 billion in yearly lottery sales, and a state population of around 8 million, the average North Carolina adult spends almost $125 on the lottery per year. And considering that many adults don’t play, many must also spend far more than $125 a year. That much money is an immense burden for most, and it can be crippling for some. I almost never play the lottery. The game strikes me as a guarantee for disappointment, preceded by a fleeting moment of excitement. It also seems too complicated, whether I have to keep and check my Powerball ticket, or I have to decipher the flashy game on a scratchcard. For this article, I went to the local convenience store to play the lottery. A $2 scratchcard called Rake It In — top prize $15,000 — appealed to me, as I thought back on the autumnal chores of childhood. None of the 10 colored leaves hid a winning number. Then for $1 I bought a 7- 11; no good. Then for $1 dollar I bought a Double Dough; no good. I asked the lady behind the counter if she thought the lottery was good for education. “We’re being educated all right,” she said. “If you play the lottery, you lose money.” But now that we have the lottery in North Carolina, it would take an act of Congress to get rid of it, and that would take an act of God. The best we can hope for is that state will recognize the lottery as a form of taxation, and then take action to protect the unwitting victims of this tax.