Lotteries, a tax on people who are bad at math

By on April 10, 2014

The millennial generation are not buying lottery tickets as often as their parents and grandparents do. Worried about declining revenues The Interprovincial Lottery Corporation, which represents all provincial lotteries, is hiring consultants to create new games to appeal to Canadians under 35 years of age. This initiative, and state-run lotteries in general, are despicable programs and should be stopped. They are an exploitation of a small part of the populace by a hidden tax.

The lotteries, and the governments they fund, are eager to tell us how much is done with proceeds from games like the 6/49: their websites and annual reports highlight how the billions they collect ($1.49 billion net revenue in Alberta alone) are doled out to community groups, arts & culture activities, libraries and museums, and wildlife conservation. What they are less keen to talk about are from whom and how they get the money in the first place.

The American satirist Ambrose Bierce called lotteries “the tax on people who are bad at math”. It’s an apt definition, and precisely the reason governments like them. A lot of the population, like my wife and I, are not gamblers but we still get to enjoy the amenities provided by lottery funds. But Bierce’s wit covers a darker reality: unlike drinking and smoking, two other sources of government “sin” taxes, gambling knows no satiation. The only upper limit to daily consumption is the depth of the gambler’s wallet, child’s college fund, or retirement savings). A study by the University of Lethbridge in 2007 concluded that while problem gamblers are only 4.5% of the Canadian population, they contributed between 25-35% of gambling revenues.

Morally, gambling revenues are even worse than tobacco or alcohol taxes because the government, through lotteries, are the primary supplier. To give you an idea how absurd this is, imagine if provincial governments had a monopoly on cigarette production – then we would be  reading headlines that said  ”Lotteries Seeking To Make Smoking More Attractive To Under 35s”. Government ought not to be promoting vice in its citizens in order to raise revenue.

There is an argument to be made that while some people have gambling addictions all the others gamblers are just having a bit of fun. The argument can be made, but it is a bad one. I find it hard to think of a more impoverished and empty form of entertainment than throwing away money on the chance a random number will come up. Setting money on fire would at least produce warmth (and the results would be guaranteed!). I think it is an indictment of our education system that in a civilization overflowing with leisure options, with more great books and works of art than a person could experience in a lifetime, so many would choose to fritter their money away on the astronomically small chance at winning more. Twelve years of compulsory education have failed to show them anything more worthwhile to do with their time.

Promoting gambling also sets a bad precedent: it contributes to an idea that wealth is purely due to luck of the draw. This lowers respect for industriousness and self-improvement, two capacities a government should certainly want to promote in its citizens. Even worse is the fact that lotteries, and gambling in general, are disproportionately popular among the poor, those can least afford to throw away their money. Instead, the government should be encouraging the founding of small businesses which, while risky, are much more certain ways of making money (and often a great deal) than any lottery.

To be clear, I am not arguing for making gambling illegal – I think that would be an undue restriction on freedom, like prohibiting alcohol. I do, however, want the government to cease being a major provider of gambling games. If it desirable for the state to fund libraries, wildlife conservation, arts & culture, and major exhibitions it surely must be possible for the government to make its case directly to the public for marginally higher taxes on income or consumption. As worthwhile as all those things are, they are not worth funding by promoting a valueless activity and exploiting the poor and addicted.  -TroyMedia

Michael Flood is a writer and creative director at Arrowseed, an Edmonton-based marketing firm. He holds an MA in Philosophy from the University of Alberta.

You must be logged in to post a comment Login