What Are The Odds: Will A National Lottery Cure What Ails Us?

Many Bahamians think it is time to change the laws and create a National Lottery in The Bahamas. They eagerly await Perry Christie’s promise to hold a referendum.

I might be putting myself out on a limb here but I believe that using a national lottery (aka the decriminalisation of the numbers industry) to fund education, roads or other public services is bad policy for several reasons.

Mind you, I am not against gambling or legalizing numbers for religious reasons.

I am not even going to talk about the religious or moral implications of a national lottery.  The Christian council can do that all by themselves.

In fact, I am not against gambling. I am against a national lottery for ethical, financial and societal reasons.

Do you think a national lottery will help solve – or add to – problems in The Bahamas? – Leave your comments below.

First, let’s not confuse legitimate gambling with the illegal numbers racket.

Gambling is a legal activity that, unfortunately, Bahamans are not allowed to participate in.

However, I think Bahamians should be allowed to gamble in the casinos of The Bahamas.

Let’s face it, the law against Bahamians gambling is discriminatory. I think it may have been created “back-in-the-day” to stop the “riff-raff” of locals from entering the foreign-owned hotels.  The law is as outdated as segregation.

But I do not think a national lottery will solve the problem of discrimination against Bahamians gambling in the casinos.

I’ll bet that allowing locals into the casinos to gamble probably scares the bejeebers out of Atlantis and Baha Mar, and maybe for good reason.  They certainly do not want the mob thugs who shot up eight people in a bar on Bay Street recently, to be holding those kinds of wild west shootouts in their casinos.  It is bad enough that type of activity occurs just down the street, or over the bridge, but in their own casinos?  No way!  It would expose their hotel guests to the rapidly growing, uncouth, uncivilized portion of the Bahamian population.

That’s obviously bad for tourism.

Not to worry. I don’t think our crafty Bahamian politicians have any intention of letting ordinary Bahamians into the palace-like foreign-owned casinos.  The national lottery is a way to make Bahamians forget they are being discriminated against in their own country.  But would Bahamians be clamouring for numbers to be made legal if they could gamble in casinos?  After all, casinos have much better odds of winning.

So, what the government will probably do, is keep the laws prohibiting Bahamians from engaging in casino gambling and, instead, appease them with a national lottery.

And who would be in charge of running the national lottery?  I understand it would be the same people who run the illegal numbers rackets.

Ya mussy jokin!

Social problems

This would create social problems similar to the “legitimization” of the drug industry in the 1980’s.

More money, more power for people who make money illegally.  Do you think these people will sprout a new set of ethics once numbers is made legal?  You know the old saying… leopards don’t change their spots.

Would the end of prohibition have made Al Capone a better man?  Did legalized gambling make Meyer Lansky a model citizen?

If we want to change the laws, fine, but we should not do it because we can’t enforce the law. By admitting that, we further destroy the moral fabric of our society.  Not because gambling is morally “wrong”, but because condoning illegal activities is.

In the 80’s, we reinforced the concept of easy money via drugs.  We legitimized “businessmen” who were little more than drug runners. We undermined the work ethics of Bahamians by allowing them to think (rightfully so at the time) that smarts and hard work weren’t necessary for success.

This is how we got into the predicament (rampant social ills) that we are in. We basically legitimized drug sales in the 80’s.

Kevin Mitnik was a notorious hacker in the United States during the 1980s.  He created all sorts of havoc in the IT world and cleverly evaded law enforcement officers for years.  He was finally captured in 1995. At the time of his arrest, he was the most-wanted computer criminal in the United States.  Today, Mr Mitnik is a well-respected computer security consultant.  But he did not achieve that status until after he was convicted and served five years in prison, including eight months in solitary confinement.

If government wants to exploit the numbers bosses for their knowledge and experience in the management of a national lottery, then perhaps it should be done only after it is established that they broke the law, and they are properly punished.  That includes stripping them of the assets they amassed through their illegal enterprises.  But to suddenly say their activities are no longer illegal, let them keep all the booty they’ve made, and allow them to become respected members of the business community – and get even wealthier – is a slap in the face to ethics, the law and law abiding citizens.

What are we teaching young Bahamians by setting such a bad example, by reinforcing the fact that crime pays in The Bahamas?

This sort of nonchalance towards the law perverted our society in the past and we are still paying for that.

Yet, we are set to do it all over again.

No financial panacea

“Gambling: The sure way of getting nothing from something.”
Wilson Mizner (1876-1933)

Legalizing numbers will not significantly help the budget or advance education. It would do little for the economy, except give politicians more money to squander.

But, you might say, the country is in dire financial straits and we need to increase government revenue.

Well, until our government learns to spend our money wisely, why on earth would we give them more money to spend (er, waste)?

Nathan Tabor, writing for Renew America says, “Funding necessary public services from gambling revenues is the antithesis of responsible fiscal management of public resources. Politicians who don’t want to make hard choices about balanced budgets love to hide behind the lottery.”

Forbes’ John Tamny also hit on this when he said, “If tax rate cuts are the gift that keeps on giving, then lotteries are the hidden theft that keeps on taking.”

Tamny says that is because lotteries are “disingenuous ways that governments, unable to live within their means, raise extra revenue.”

California has a lottery, as do 43 other states in the United States.

One of the big selling points in winning votes for the lottery in California and many other states was the promise to provide more funding for public education without raising taxes.

But do lotteries really solve the problems of education or public funding?

Valerie Strauss, in an article for the Washington Post, shines light on the topic. She says if you look at the payouts from lotteries to schools, you might initially be impressed by the numbers. In California, for example, lottery donations to public schools from kindergarten through college have totaled billions of dollars.

“It makes you wonder how so many California public schools have had to hold bake sales to keep the lights on, doesn’t it?” Strauss asks.

Maybe it is because, as an article in Forbes asserts, that lotteries have no benefit to the states, pointing out, “although we’ve recently seen the largest lotto jackpots in history, the total financial contributions did not equal 0.1 percent of any state’s annual budget.”

The New York Times reported that, while the California lottery has created many big winners, the public school system has yet to hit the jackpot.

“Educators are grumbling that the lottery has failed to meet expectations and has had a minimal impact on the schools. Some even say the schools are worse off than when the lottery began,” the Times reports.

Educators say the figures tell only part of the story.

“A lot of people think [the California state] lottery provides more revenues than it does,” said Margaret Weston, an expert in K-12 school finance for the Public Policy Institute of California.

“The public thinks the schools have this tremendous amount of money.  Education was used to get the lottery passed, but education hasn’t benefited from it,” said the State Superintendent of Public Instruction, Bill Honig, who opposed the lottery when it was first introduced, and still has doubts, the Times reported.

“The lottery has never really provided as much money to schools as what was sold to the public when it was implemented. If you look at all 6 million students in California, an extra $100 million will only give you a few extra dollars per student,” Orange County Superintendent William Habermehl said.

“The lottery money is basically supplanting what we already had,” said Steve Lustig, a member of the Berkeley (California) Board of Education. He originally supported the lottery but now calls it a “statewide tragedy.” Mr. Lustig said the lottery had undermined a statewide effort to set aside a fixed percentage of the state budget on education.

That view is shared by many educators in other states.

Strauss, from the Post writes:

“In fact, in state after state, where lotteries send millions of dollars to public education, schools are still starved. Why?

“Because instead of using the money as additional funding, legislatures have used the lottery money to pay for the education budget and spent the money that would have been used, had there been no lottery cash, on other things. Public school budgets, as a result, haven’t gotten a boost because of the lottery funding.”

She says, according to the Virginian-Pilot, the lottery money is used by Virginia state lawmakers to cover education expenses, rather than extra money. And when it is time to cut budgets, education doesn’t get spared.

“That’s been a slow and insidious movement that’s been going on for a few years now,” Kitty Boitnott, president of the Virginia Education Association, was quoted in the Virginian-Pilot, as saying. “It’s a big ruse, and I don’t believe Virginians, in general, are aware of it.”

The Post article highlights similar problems in other lottery states:

“In Maryland, more than $519 million of lottery proceeds was contributed to the state in 2011, and that was used for programs including education, public health, public safety and the environment, according to the Maryland Lottery Web site. The lottery has given more than $12 billion to the state since 1973. Yet, still, the state government is considering raising taxes in order to keep the public education system funded at the necessary record levels.

“In Washington D.C., the lottery since 1982 has contributed more than $1.6 billion to the city’s general fund for programs including schools, recreation and parks, public safety, housing, and senior and child services. Still the city can’t meet its education needs.

“In Texas, the lottery was sold to the public, as in other places, as a fun game that would reap big rewards for public education. According to the American-Statesman, in 1996, “lottery proceeds paid for about two weeks of schooling for Texas students.” By 2010, the money covered barely three days.

“Forty two states plus the District of Columbia and the U. S. Virgin Islands participate in the Mega Millions game. So, yes, a lot of money goes to public schools from the lotteries. But no, the money doesn’t do what it was promised it would by any means.”

For years, states have heard complaints that not enough of their lottery revenue is used for education. The New York Times examination of lottery documents, as well as interviews with lottery administrators and analysts, finds that lotteries accounted for less than 1 percent to 5 percent of the total revenue for K-12 education last year in the states that use this money for schools.

In reality, most of the money raised by lotteries is used simply to sustain the games themselves, including marketing, prizes and vendor commissions.  A privatized national lottery, as is being suggested in The Bahamas, would leave even less money for education, as the companies running the operation would also get a cut.

Again, Forbes’ Tamny sums it up:

“Some will say that lotteries have historically funded education, but that’s a false argument on two counts.

“For one, money is money, and extra revenues enjoyed by governments – even if earmarked for education – ensure that other non-educational programs will have more funds to consume (the definition of capital destruction) thanks to a larger revenue intake overall.

“Second, investment in education has soared in modern times, far outpacing GDP growth in percentage terms. Much as politicians on the left and right might wish otherwise as they naively talk up the “correlation” between education and economic growth, the simple truth is that “smart” and “hard work” – the two essential success inputs – cannot be taught.”

We are aspiring to be a first-world developed nation. Yet, we are trying to fund education with a lottery.   Have we gone mad?

Education should be the number one priority for our nation to stay competitive in a world that is passing us by as we bicker about Nellie Day.

We subsidize straw market vendors and guarantee pension funds for foreign-owned hotels, whose wealthy owners flee the country, but we have to run a numbers racket to make sure our schools have enough money to hire teachers?

Considering that we’ve already learned that casinos won’t save our economy or our schools, should we really expect a national lottery to magically solve our budget problems?

Forbes’ John Tamny again:

“Looking ahead, it would be wholly naïve to assume governments used to the revenues lotteries bestow on them will ever cease dipping their greedy hands in our pockets. Still, the economics of lotteries are bad for all concerned even if we leave out the horrendous odds, so voters should seek their abolishment with economic growth in mind.”

Taxing the poor

Another reason I am against a national lottery is because it unfairly “taxes” the poor.  Low-income families would bear a higher proportion of lottery tax and see less benefit.

“Lottery: A tax on people who are bad at math.”
Author Unknown

“Those who fund the system, with virtually no chance of winning, are those whose families desperately need the money for basic necessities of life and can least afford to lose it,” says Tabor from Renew America.

“A lottery is really a hidden and regressive tax on those least able to afford it: “inner-city” people of a lower socio-economic status. These are the people who buy lottery tickets in disproportionate numbers, hoping for a lucky bet and a big win to boost them out of poverty,” Tabor added.

In addition, an analysis by Arkansas Advocates for Children and Families, of several studies and lottery revenue in other states, showed that:

• Lotteries threaten the economic security of low-income people who spend a higher proportion of their income on gambling than do wealthier people.
• Lotteries provide unstable revenues that fluctuate even in good economic times.
• Lottery-supported scholarships tend to subsidize students who would attend college anyway and don’t create more college graduates.
• Lotteries and other forms of gambling can lead to unintended, negative social and economic consequences for children and their families.

“Most low- and middle-income families in Arkansas are struggling just to make ends meet,” said the report’s author, Ginny Blankenship, research and fiscal policy director. “A state-sponsored lottery would do far more to hurt than help the vast majority of them.”

The Consumerist recently had an interesting post about a study that shows that poor households, with annual take-home incomes under $13,000, on average, spend $645 a year on lottery tickets, which comes to about 9% of their yearly income.

“The study neatly illuminates the sad positive feedback loop of lotteries. The games naturally appeal to poor people, which causes them to spend disproportionate amounts of their income on lotteries, which helps keep them poor, which keeps them buying tickets,” the website noted.

Some suggest lotteries should be abolished for disproportionately preying on those who reside in lower economic strata, not to mention a history of lottery winners that’s riddled with addiction, divorce, bankruptcy and suicide.

As a government “you shouldn’t make losers of your own citizens,” says Tom Grey, a spokesman for national advocacy group Stop Predatory Gambling, in an article in Forbes.

What do you think?

Will legalising the numbers industry really make it “Better in The Bahamas”?  –  Leave your comments below.