John Oliver Weighs In On State Lotteries

By  |  0 Comments

Should state governments use gambling to raise revenue?

After last week’s episode of Last Week Tonight with John Oliver featured Rhode Island in a segment on the misbehavior of state legislatures, you might think that we’d get a week off from topics very near and dear to Newporters’ hearts. You’d also be wrong.

If you don’t feel like re-opening your wounds from the Newport Grand table-game debate, stop reading right now and whatever you do, don’t play the video, because it’s going to give you an incredible flashback to last Monday and you’ve only had five days to try to move on.

Interestingly enough, the Last Week Tonight segment doesn’t even touch on table games. It’s mostly covering the large jackpot games like Powerball and MegaMillions and slot and video poker machines, all of which have been readily available in Newport for some time now.

Now Oliver makes some great points. Lotteries are regressive and the revenues they bring in are fungible, so even if they are brought in specifically to fund education or whatever feel-good government program, the state ends up turning around and reducing the funding for those programs from other sources.

There’s also a rather large conflict of interest when the government in charge of teaching its citizens basic math benefits from its citizens not knowing basic math.

However…

The problem with having a state government as large as we do is that it requires a lot of funding. In theory, they could just get it all from one source (eg. just income tax), but that tends to be a little too painful for the citizenry, so the taxes, fees, etc. generally get spread around so that you’re always paying them…but none are quite so acute for you to quit being a productive member of society.

Historically, governments have liked to tax things that were “bad”. Unfortunately, this means that what was bad, now becomes a “good” in the eyes of the tax man. If everyone quit smoking cigarettes tomorrow, the Feds and state governments would be left scrambling to figure out how to pay for, among other things, health insurance for low-income children. Just to take a guess, we’re thinking they’d throw on a nice fat tax on marijuana and start pushing that, letting everyone know that “smoking a bowl helps children”…er, wait, that might require some clarification.

The one “more pleasant” aspect about the state raising funds through gambling is that it’s voluntary. Sure, a small segment of the population may feel compelled to do it like moths drawn to a flame, but that is not nearly as coercive as the town will be if you quit paying your property taxes for a few years.

And it all creates the contrarian incentive structures. If the government taxes something, it creates a deterrence for people to do whatever that is. Income taxes make people want to work less. Sales taxes make people want to buy less. Meanwhile, the more the government taxes something, the more they want everyone to do it. Ultimately, you don’t want your government (city, state or otherwise) to get too much revenue from gambling, drugs, cigarettes or anything else because they’ll ultimately become dependent…and then a pusher.

So just to clarify, lotteries and gambling are terrible ways for states to raise revenues…but so are pretty much all the rest.

-Tristan Pinnock, Blast Gaming Correspondent

Tristan's just this guy, ya know?