Margolis: Lottery survey lacks telling numbers

Jon Margolis is VTDigger.org’s political analyst.

Ah, Vermont. So urbane, so cultured, so enlightened that folks with advanced academic degrees play the lottery.

At least according to a survey the Lottery Commission had done by the Center for Research & Public Policy, a polling firm based in Chester, which found that almost 20 percent of the Vermonters who buy lottery tickets have post-graduate or professional degrees.

Of course, that means that more than 80 percent of the lottery players have not reached such lofty levels of learning, but the commission was accentuating the positive. Noting that 22 percent of the ticket buyers came from households with annual incomes of more than $95,000, Lottery Commission Chair Martha O’Connor told the Burlington Free Press that the survey results should prove that the Lottery is not “preying on the poor and uneducated.”

It shows no such thing.

Not that the Lottery Commission is trying to prey on anybody. But as O’Connor acknowledged in a later interview, the survey measures only the people who play the lottery, not how much they spend. In this survey, the $100,000-a-year professional who buys one ticket a week is indistinguishable from the $35,000-a-year waitress who buys 10.

Jerry Lindsley of the polling firm said the survey could have determined the lottery spending habits of Vermonters by where they stood along the income spectrum.

“That’s something we can do,” he said. “You just look at players within the population by income levels and how much they spend.”

But the Lottery Commission did not ask for that information, he said, and O’Connor said it never had. Nor, she said, has the Legislature, which directed the commission to take this survey and an earlier one in 2008, ever asked for that kind of economic breakdown of ticket buyers. Lawmakers, she said, just want the lottery to sell more tickets.

“They’re looking at different avenues to raise money,” she said. The lottery’s profits all go into the Education Fund, reducing the amount the state has to raise from taxes.

It’s possible that the commission and the legislators simply never thought of trying to find the economic demographics of their customers. But it’s also possible that they don’t want to know. Because it might turn out that the hypothetical example cited above is not so hypothetical, that Vermont is chock-full of affluent professionals who buy a ticket a week and lower-income workers who buy several, making the lottery in effect a regressive tax.

In fact, that’s precisely what such a survey would show if Vermont is like the rest of the country, and there appears to be no convincing evidence to the contrary.

“Every state is necessarily different from every other state,” said Gregory Smith, the commission’s newly appointed executive director. But he acknowledged he had no data that would indicate Vermont’s lottery-playing habits differed from the national norm.

And the national norm is that lower-income people buy many more tickets than do the more affluent. According to the National Gambling Impact Study Commission report of 1999, “Participation rates do not differ much by education, but spending by players drops sharply as we move up through the education categories. The result is that the education category with the highest per capita spending is those who did not complete high school, and the college graduates have the lowest. With respect to household income, we see that participation rates increase up to $100,000. But players with incomes less than $50,000 spend more than others, and the lower-income categories have the highest per capita spending.”

The study also found, as analyzed by a 2007 report by the Tax Foundation, that “in 1997, although people at all points on the income spectrum played the lottery, players with household incomes under $10,000 spent almost three times as much money on lotteries as those with incomes over $50,000. Not only did the poorest participants spend a higher percentage of their incomes on the lottery, they also spent more as a dollar amount. Those with household incomes under $10,000 spent more per capita ($597) than those with incomes from $10,000 to $24,999 ($569) and considerably more than those with incomes of $25,000 to $49,999 ($382), $50,000 to $99,999 ($225) and over $100,000 ($196). Other studies show that the poor do not spend more as a dollar amount, but they do spend more as a percentage of income.”

These conclusions, based on extensive investigation, would seem to leave little doubt that – at least at most times and in most places – low-income people spend a lot more of their income on lottery tickets than do their wealthier neighbors.

They do spend it voluntarily; unlike paying taxes, buying a lottery ticket is not mandatory. This doesn’t mean spending the money is the unbidden, spontaneous impulse of the ticket buyer. The Lottery Commission spends millions of dollars every year on advertising and marketing to persuade Vermonters to play the lottery.

On its face, this appears to be a difficult task. According to the National Gambling Impact Study, state lotteries have the “worst odds of any common form of gambling.” But the advertising might be working. Almost half (45.5 percent) of all Vermonters play the lottery at least now and then, a slight increase over the figure of four years ago.

Whether less affluent, less educated people are more vulnerable to commercials is open to debate. But the National Gambling Impact Study Commission was troubled by what it called the “contradictory role of state government as an active promoter of lotteries while imposing a heavy ‘sin’ tax on the lottery buyer.”

In Vermont, the lottery fulfills its assigned task of easing the tax burden. In the 12 months ending June 30, Smith said, Vermonters spent $100.9 million buying lottery tickets. After expenses, the commission turned over $22.3 million to the Education Fund.

That’s a lot of money. But it’s a small percentage of the $1.313 billion Vermont’s public school’s cost the taxpayers (in Fiscal Year 2011, according to Vermont Transparency, the most recent figures that could be learned as state officials were off celebrating Bennington Battle Day). Still, it does mean lower taxes. If that $22.3 million had to be raised by the statewide school property tax, with every penny raising about $8 million, the tax rate would have to be increased by almost 2.8 cents per hundred dollars of assessed value. For a home assessed at $100,000, that could be a $280 increase.

Not a huge jump, but a political hard sell. The lottery is here to stay.

Those figures from the Gambling Impact report are 15 years old, and it’s possible lottery-buying behavior has changed since then. It’s also possible that Vermonters – by and large better educated than their counterparts in other states – have really different lottery-buying habits.

Apparently, though, nobody wants to know.