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Most voters don’t think of the lottery as a state-run casino, though. That’s because the lottery advertising presents the lottery as some kind of charitable enterprise. In fact, the advertisingwould have you believe that every penny you spend on the lottery goes toward educating the state’s students.
But that ain’t what happens.
Obviously, the states have to buy advertising. That’s $500 million of lottery money that isn’t going toward education right there.
The states also have to pay winners. Luckily, the payout percentage for the lottery is abysmal at 50%. So even if you assume that they’re paying out half of that $68 billion in prize money—andthey’re not—that’s another $34 billion that’s not going toward education. Administration and overhead eat up some of that money, too—after all, the government officials running the state gamblingbusiness have to eat, too. I don’t have access to statistics about how much that costs, though.
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The big fallacy is that the states have a way of earmarking this money toward education. In other words, if a state launches a lottery, and it sells $2 billion worth of tickets, that money issupposed to be spent on education. But it doesn’t. It just goes into the state treasury.
Sure, some of it is spent on education.
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But if you look at the before and after stats for states which have launched lotteries, you’ll see that most of them spend no more on education after launching a lottery than before.