MARCH WAS “Problem Gambling Awareness Month” in Massachusetts, but for those in charge of the state lottery the gambling problem coming into the new year was that people weren’t doing enough of it.
The lottery was seeing flat or declining sales in many of its games during the last half of 2022, which represented the first half of its 2023 fiscal year. “We had a rough start to the year,” said Mark Bracken, the lottery’s interim executive director. “Almost every game or line we offer was down.”
What was keeping lottery revenues on track, he said, were the huge jackpots that built up over that time in the multi-state Powerball and Mega Millions games. But Bracken said that revenue is unreliable, subject to the unpredictable ups and downs of those prizes.
Meanwhile, the lottery had even more reason to worry about what loomed on the horizon.
Last August, then-Gov. Charlie Baker signed legislation opening the door to sports betting in Massachusetts. The first in-person sports wagers were allowed at the state’s casinos on January 31 and online sports betting became legal on March 10. Lottery officials were fretting that an explosion of sports betting, with ads for DraftKings and FanDuel suddenly everywhere, would cut into sales of their state-run games.
State Treasurer Deborah Goldberg, who oversees the lottery, said the state agency felt compelled to take action. “When we found out sports betting was hitting, we said, OK, we can’t compete with them in advertising, and we can’t compete with them online, because we’re not online,” Goldberg said. “We said the one thing we can do is to make a big splash with a new ticket.”
That big splash was a $50 instant “scratch” ticket, almost double the price of the $30 scratch ticket that had been the lottery’s highest price instant ticket. The new $50 ticket, dubbed the “Billion Dollar Extravaganza,” went on sale on February 8, with the promise of three $25 million prizes, five $2 million prizes, and 15 $1 million winners.
It led to a dramatic reversal of fortunes for the lottery, with sales taking off immediately. The lottery recorded six consecutive weeks of instant ticket sales greater than $90 million. There had only been three other weeks with scratch ticket sales over $90 million in all of the lottery’s history. The week ending March 11 saw $98.8 million in instant ticket sales, the highest weekly tally the lottery has ever recorded.
Testifying at a legislative budget hearing in March, Goldberg was positively giddy over the numbers. Sales during the first weeks of the Billion Dollar Extravaganza, she told lawmakers, made it “the most successful instant ticket per capita in the first month of sales in the history of all instant tickets in the entire country.”
Lottery profits – which have held roughly steady at about $1 billion a year over the last decade – are funneled to local aid to Massachusetts cities and towns. Goldberg said the new $50 ticket, which the lottery spent $2.8 million to develop, could alone account for $215 million in new annual local aid. “I would take those odds,” she said of the return on that investment at the budget hearing.
What Goldberg and lottery officials point to as a bright spot amid worrisome storm clouds, however, is viewed by critics of the state-run enterprise as simply the latest move to up the ante in the state’s never-ending chase for more gambling dollars.
“It’s a race to the bottom,” said Richard Daynard, a law professor at Northeastern University.
Daynard and other critics say the lottery operates as a regressive form of taxation, drawing money disproportionately from lower-income communities in order to fund services across the state, including to well-off towns whose residents tend to steer clear of the lottery.
While sales of the new instant ticket took off, there is always pressure to grow the state’s gambling receipts. Texas and Oklahoma recently launched $100 scratch tickets, resetting the bar for how high states can go with instant tickets.
While the $50 ticket is drawing from the Massachusetts lottery’s established customer base, Goldberg and lottery officials view it more as a stop-gap measure to shore up lottery revenue than a long-term fix for concerns over how much money the agency is bringing in. The answer to those worries, they say, lies in matching the explosion of online sports betting by selling lottery games online, not just at retail outlets where tickets currently must be purchased.
Whether to add an online component to the lottery is part of the negotiations now underway between House and Senate leaders over the 2024 state budget.
Les Bernal, a Lawrence resident who heads the national organization Stop Predatory Gambling, says it’s all part of a shameful, growing effort by state government to fund basic services with the gambling losses of its residents, and disproportionately those who can least afford the hit to their wallet.
“What state governments like Massachusetts are doing is turning small earners who could be small savers into habitual bettors,” said Bernal. “They’ve created an incredible, money-losing gambling habit in hundreds of thousands of Massachusetts citizens, keeping people in poverty.”
‘THE PEOPLE LIKE IT – TOO MUCH’
No one needs to show Elli Mancia the lottery sales figures to prove how popular the new $50 instant tickets have been. Mancia was working the counter one afternoon in late March at Full Moon Market, a Chelsea convenience store owned by her mother.
“People went crazy with it,” Mancia said of the recent introduction of $50 scratch tickets. “I see people come and ask for five, six, eight tickets. Just one person.”
Around the corner, Caroline Cintron, a clerk at BNC Market on Broadway, couldn’t help but evince mixed feelings about how well the store was doing with the new ticket. “It sells a lot, it’s crazy. The people like it – too much,” she said, silhouetted by rows of lottery tickets on the wall behind her.
Data from the lottery on the early weeks of sales bear out the interest in the $50 tickets in Chelsea, a heavily Latino working-class city of 39,000 just north of Boston. Chelsea, with per capita income of $26,000, recorded $1.3 million in sales of the $50 ticket during the first five and half weeks after its launch. That works out to sales of nearly one ticket (0.85 tickets) for every resident 18 and older during that span.
That rate stands in marked contrast to sales in high-income communities around Boston. Needham, with per capita income of $81,000 per year, saw sales of just 0.16 of the $50 tickets per adult resident over this period. In Lexington, with per capita income of $88,000 a year, lottery data show just 0.22 tickets were sold per adult.
The interactive graph below plots per capita sales of the $50 tickets over the initial five and a half week period and per capita income in Massachusetts cities and towns. Lottery officials emphasize that the data reflect the location of sales, not necessarily the community where buyers live. Several communities along the New Hampshire and Rhode Island borders, for example, which draw lots of spillover buyers from those states, show an especially high volume of $50 ticket sales – a pattern the lottery has seen for years with its other games. The location of sales otherwise, however, clearly bears a relationship to where buyers live.
The graph on early sales of the $50 tickets shows the state’s 26 Gateway Cities – mid-sized cities with income and educational attainment below the state average – with orange circles. The bulk of them are bunched around the area showing sales of between three-quarters and one $50 ticket per adult resident, much higher than the rate for most communities.
Gladys Vega, the longtime executive director of La Colaborativa, a Chelsea human services nonprofit, says the lottery compounds the problems her organization is working to address by appealing to lower-income residents who are “hoping that they will hit that big ticket number.”
“It’s in communities of color, low-income communities, communities that are going through drama, mental health issues, substance abuse,” Vega said of the higher lottery sales in places like Chelsea. “And here we are putting more issues for them to be tapping into,” she said of the lottery, “rather than investing in workforce development and doing a lot of those things where we can get people more skills so that they can make it in this society.”
While the state reaps lots of lottery revenue from places like Chelsea, Vega said lottery losses from lower-income residents end up costing the state money – and adding to the pressure on nonprofits like La Colaborativa – by “perpetuating the need for services.”
A 2011 national survey of lottery-playing habits sorted respondents by whether they played the lottery in the previous year and, if so, the average number of days on which they bought tickets. Those in the bottom fifth of the socioeconomic ladder were nearly 50 percent more likely to have bought lottery tickets in the past year than those in the top quintile, and they played the lottery on more than twice as many days over that span as did those in the top fifth.
“The two major risk factors that drive people from recreational stages of gambling to problematic stages are low educational attainment and low economic status,” Victor Ortiz, director of the state’s Office of Gambling Services, told the Boston Globe earlier this year.
State officials and gambling industry leaders often point to the relatively low prevalence of compulsive gambling in the population. The state gaming commission cites research showing 2 percent of Massachusetts residents had a compulsive gambling problem prior to the introduction of casinos in 2015. But that figure doesn’t capture the statistic that gambling critics say is far more relevant when considering the impact of the various forms of legalized gambling: the share of revenue that gambling operations derive from problem gamblers.
Rachel Volberg, a professor in the School of Public Health & Health Sciences at the University of Massachusetts Amherst, is among the country’s foremost researchers on gambling problems. She said studies have shown that problem gamblers account for anywhere from 15 to 50 percent of revenue in various gambling locations and sectors. “It’s certainly not the same share as it is of problem gamblers in the overall population,” said Volberg, who directs the Social and Economic Impacts of Gambling in Massachusetts, or SEIGMA, study, an ongoing research project funded by the Massachusetts Gaming Commission.
In 2016, using data from a survey by Volberg’s research team, the Pioneer Institute calculated that “at-risk” and problem gamblers accounted for 37 percent of all Massachusetts lottery revenue, and concluded that the lottery “may be exploiting residents with gambling disorders to the tune of billions of dollars.”
Bernal, the Stop Predatory Gambling director, said the large share of gambling proceeds that come from compulsive gamblers belies claims by lottery and casino officials that their target is “recreational” gamblers and that they want problem gamblers to stay away from their games.
“They are the business model,” Bernal said of the reliance on compulsive gamblers.
SELLING DREAMS
Government-run lotteries have a long history. The first lotteries used to fund government programs date at least to the 15th century in Flanders, the Dutch-speaking area of modern-day Belgium, according to a recently published history of US lotteries, For a Dollar and a Dream: State Lotteries in Modern America. Lotteries were used by Britain to fund its colonization in North America. The colonies, in turn, used lotteries to raise money to fund the war effort against British rule, and they helped fund construction of the first universities here, including Harvard. Thomas Jefferson, writes the book’s author, Jonathan Cohen, referred to lotteries as a tax “laid on the willing only.”
Because of a range of concerns, from fraud and mismanagement to their effect on the poor, lotteries began to lose favor by the 1820s, Cohen writes, and within a few decades had largely been banned in the US. He says they did not reemerge until the 1960s, when a squeeze on state finances combined with a continued demand for state services, prompted leaders to turn to lotteries as a politically painless new source of revenue.
“No one wants to raise taxes, no one wants to cut services, and the lottery or gambling is one of the few ways to fund government if you’re not willing to do either one of those things,” Cohen said in an interview.
New Hampshire was the first state to launch a lottery in the modern era, in 1964. Massachusetts wasn’t far behind, with lottery tickets going on sale in 1972. Two years later, in 1974, Massachusetts became the first state to introduce instant tickets. It has been on a lottery tear ever since, with state residents now racking up about $800 per person in annual lottery spending, “the highest per capita spending on lottery games in the United States and possibly the world,” said Volberg, the UMass gambling researcher.
The lottery had revenue of $5.9 billion in fiscal year 2022, with $1.1 billion in profit that went to state government after paying out winnings and covering costs. Instant tickets, which Goldberg calls the agency’s “bread and butter,” account for 65 to 70 percent of lottery sales.
The lottery prides itself on having the highest payout of any state lottery, with 73 cents of every dollar returned in prize money. For the new $50 instant ticket, the lottery upped that to 82 cents per dollar.
But that high payout rate reflects well-honed business savvy, not governmental goodwill.
Volberg says the lottery has been so successful, in part, because its payout rate is so appealing to players. “The lottery in Massachusetts is structured to pay out more to winners as a percentage than in almost every other state,” she said. But in the end, Volberg said, the house wins. Instant ticket winners show a high “churn rate,” she said. “They push those winnings back in” to new lottery tickets.
John Whalen was trying his luck on a $50 scratch ticket at the Stop & Shop in North Quincy on a recent Saturday. “It’s a lot of money,” he said of the pricey new instant ticket. “If I lose, I won’t buy another.” Left unsaid was what he would do if he won.
It’s no accident, says Cohen, that state lotteries took off in the later part of the 20th century, a time when the post-World War II wave of economic mobility and a growing middle class seemed to be stalling out and inequality began rising. “Lotteries serve as a barometer of the health of the nation’s economic system,” he writes. “The popularity of lottery tickets should cause reflection on the conditions that have compelled tens of millions of Americans every single week to reason that their best hope for a new life lies in the luck of the draw.”
Rev. Richard McGowan, an associate professor at the Carroll School of Management at Boston College who has done extensive research on gambling, said the lottery ultimately is drawing people in based on a dream, one that nearly always is a fantasy. “What the lottery sells is this dream that you could escape your present life and make all this money. The chances of you escaping your life are pretty damn small to be honest,” said McGowan. “People no longer think if you just work hard you get ahead. The American dream has gotten lost in all sorts of ways.”
In Chelsea, Gladys Vega said she often tries to steer people away from putting their hopes for the future in lottery tickets. “It’s the wrong way of thinking,” she said. “If you begin to gamble that way, you will be gambling forever rather than putting that money toward your rent, toward your electrical bills. Get a job, put your money into savings, and begin to structure a lifestyle that allows you to have your own financial freedom.” She said the lottery’s message has become baked into the culture. “Now the American dream is, how do I make it easy and fast.”
‘A SUCKER’S BET’
Ever since Robert Crane, a colorful, old-school pol, presided over the launch of the lottery just over 50 years ago, Massachusetts state treasurers have understood their job to include delivering the stream of lottery profits that lawmakers distribute in state aid to cities and towns.
Since 2015, that job has fallen to Goldberg, a liberal Democrat from Brookline who was elected to her third term as treasurer last year. The lottery is “a nonprofit business whose mission is to support people throughout the state,” Goldberg said, sounding the mantra of every treasurer since the early 1970s.
“The reality is when I ran for treasurer this was sitting there,” she said of the lottery. “And I have a job to do. We have done everything we can to drive profits, because we are committed to the mission.”
Meanwhile, state lawmakers tend to focus solely on the money the lottery provides for them to bring home the bacon in local aid to their districts. “Most legislators and legislative staff don’t know much about the lottery,” said Marlene Warner, CEO of the Massachusetts Council on Gaming and Health, a nonprofit agency that works to mitigate the “negative personal and community impacts” of gambling. “It’s just the cash cow that nobody wants to talk about or touch.”
Goldberg acknowledges that lottery sales are higher in less affluent cities and towns, but she’s quick to point out the corollary of that. “And a lot of people from low-income communities – their lives have been changed for the better, too,” she said of people who have won big lottery prizes.
With public information messages warning about problem gambling that accompany its ads, the lottery faces a conflict that is almost impossible to reconcile: the pressure to maximize the revenue it delivers to communities while not exploiting vulnerable residents in order to do that.
“I’m doing everything I can to balance these issues and meet my mission,” Goldberg said.
To meet that mission, lottery officials say, they need more funding to promote their games, especially with the onslaught of sports betting ads. The lottery’s advertising budget, which officials say is the lowest per capita of any state lottery, has long been the focus of jockeying on Beacon Hill.
In 2016, then-Gov. Charlie Baker cut the annual lottery advertising budget from $8 million to $4.5 million, where it has stood since. Goldberg has pleaded with lawmakers to boost funding for lottery advertising, something she says is particularly urgent in the face of sports betting.
“Additional funding for advertising will help the lottery maintain market share and attract new customers,” Goldberg told legislators in her testimony in March to a joint Ways and Means Committee budget hearing. “The ability to advertise is essential, particularly in this hypercompetitive environment. I am sure you have seen our competitors’ advertisements, which have increased dramatically, particularly since the first of the year.”
Gov. Maura Healey proposed doubling the funding for lottery advertising to $9 million in her 2024 budget proposal, an increase the House adopted in its spending plan. The Senate, however, balked at the increase, level-funding the advertising budget at $4.5 million, so the two legislative chambers will have to settle the issue in a budget conference committee.
Thirty years ago, Tom Birmingham, a liberal Chelsea Democrat who was chairman of the Senate Ways and Means Committee, slashed the lottery’s advertising budget by more than 90 percent, calling it a “very unseemly enterprise” for the state to be involved in. “We were spending over $12 million a year encouraging our own people to place what statistically is a sucker’s bet,” he told CommonWealth a few years later while serving as Senate president.
Birmingham, who died earlier this year, wrestled with the awkward position the state occupies in the era of legalized gambling. He said he had no moral aversion to gambling, but said it’s important for the state to draw a line when it comes to promoting it. There is an “intellectually defensible distinction” between “tolerating gambling,” he said, and “affirmatively encouraging with public dollars people to place what are almost guaranteed to be losing bets.”
Cohen, in his history of state lotteries, writes that the push for lottery advertising funding exposes “the contradiction inherent in the fact that lotteries are arms of the state charged with raising money by convincing people to gamble, thereby defying the nominal goal of government to pursue the common good.”
While Goldberg and lottery officials are pushing for a larger advertising budget, their biggest play in the quest to keep pace with the surge in sports betting has been a campaign to let the lottery sell its products online. An online lottery, they say, will bring their operation into the 21st century, allowing people to gamble on their phone and pay with a debit card.
“The model for how we operate the lottery is truly an old model – retail and all cash,” said Goldberg. “If we don’t invest in modernizing the lottery there will be less and less profits to distribute to the local communities.”
The House heeded the call, giving the green light to online lottery sales in its 2024 budget proposal, released in April. Healey, despite her earlier opposition to casinos, was quickly all-in.
The governor took up the argument advanced by Goldberg and lottery officials that it’s the only way for the state-run enterprise to compete with DraftKings and other online sports betting operations.
“I say this as somebody who really was skeptical about the whole thing, but I think it’s important for us to catch up there and meet people where they are, and that’s why I support the treasurer,” Healey said in a mid-April radio appearance on GBH.
Meeting people where they are, however, means drawing in a new, younger generation of gamblers.
“We’re trying to attract a new and emerging generation, and there’s a sense of urgency and a sense of immediate gratification that this emerging generation has,” Bracken, the lottery interim director, told lawmakers during an April hearing on online lottery.
That’s exactly what worries Quincy state Sen. John Keenan. The Senate did not include online lottery in its budget proposal, so that issue, like the lottery advertising budget, will have to be worked out in a House-Senate conference committee.
Concerned that online lottery could emerge from those negotiations, Keenan sought to at least put the brakes on promoting something that lottery officials readily admit will appeal to a new swath of younger bettors. He filed an amendment during the Senate budget debate that would have banned advertising for online lottery in the event that it gets approved.
“The state lottery is asking to proceed with online gaming, knowing that gambling is highly addictive. It hits the same receptors in the brain as does an opioid,” Keenan said in a floor speech on behalf of his budget amendment, which was rejected in a voice vote. “My vision of the Commonwealth does not include an increasing number of gambling products and endlessly advertising them, knowing that they lead to addiction, to bankruptcy, to divorce, and to suicide. And yet that seems to be where we’re headed.”
Keenan said he doesn’t necessarily fault Goldberg and lottery officials for latching on to new developments like online lottery to pump up revenue. “It is their mission, it’s what they’re chartered with and they do it well,” he said in an interview. “I think it’s beyond their purview to determine what role gaming should play in society. It rests more with legislators and policymakers.”
Keenan and other critics say online lottery would only compound problem gambling in the state, opening a new front among young people, a group that is particularly susceptible to addiction driven by the “immediate gratification” that is only a few taps away on their phone.
Mindful of the concerns over expanding gambling, lottery officials have offered the curious counter-argument argument that expanding lottery sales is a way to rein in problem gambling.
Unlike sales at retail outlets, which there is no way of tracking, they say online lottery players can set spending limits on their phones and track how much they’re dropping on lottery games. “People have to sign up and we have a better opportunity to address compulsive gambling,” said Goldberg.
Keenan scoffs at the sell. “None of that matters to someone who’s addicted,” he said of the gambling limits that could be set on a smartphone.
What’s more, the argument glosses over the fact that Goldberg and lottery officials aren’t claiming online lottery would enable greater restraint by existing gamblers; they are instead trying to recruit a new, younger generation of players.
Daynard, the Northeastern law professor, said the convenience of online lottery will only make it easier for people to get in trouble. “You can bankrupt yourself without ever leaving your house,” he said.
Keenan sounds a note of exasperation over the headlong rush to expand state-run gambling. “We seem to be progressively less restrictive with products that we know will be problematic for a lot of people and addictive for many,” he said. “Where does it end?”
Mahashraya (Masha) Sundararaman and Richard Parr contributed to this story with the interactive graph on lottery ticket sales.