Lottery is Robin Hood in reverse

ON FRIDAY NIGHT, Mega Millions offered a $1 billion jackpot, the second largest lottery prize in American history. Late in the evening, it was announced that no one correctly guessed all six numbers, so the jackpot has rolled over to a record-breaking $1.6 billion for Tuesday’s drawing. Though overshadowed by Mega Millions, Powerball currently boasts a massive prize as well, amounting to $470 million for Saturday night’s drawing.

Like gamblers nationwide, Massachusetts residents are lining up for tickets, playing for the distant chance of a life-changing windfall. In 2017, Massachusetts gamblers spent $132 million on Powerball tickets and another $63 million on Mega Millions, a small but significant fraction of the whopping $5 billion in lottery tickets sold statewide.

But how the Commonwealth chooses to spend its lottery riches is deeply unfair.

Massachusetts has long boasted one of the nation’s most successful and innovative lotteries. The Commonwealth was the first to introduce instant, scratch tickets (which account for most of the state’s lottery sales) in 1974 and the first to offer lotto (rollover jackpot games), starting in 1978. Massachusetts boasts the highest per capita sales of any state lottery and one of the highest sales rates worldwide.

In the Commonwealth, all lottery revenue is directed to cities and towns. Though other states devote lottery revenue to education or their general fund, since 1971 the Legislature has split the income from the Massachusetts lottery among the Commonwealth’s 351 municipal governments to spend as they see fit. About five percent of the budget for most Massachusetts cities and towns comes from the lottery.

The $5 billion in sales in fiscal year 2018 meant that cities and towns each received a share of the lottery’s $1 billion in profits. The actual distribution of lottery revenue is allocated using a population- and property values-based formula that dates back to the enactment of the lottery.

However, this formula siphons money away from low-income communities, while helping our richest cities.

The lottery draws much of its sales from low-income players, but many municipalities where residents are heavy gamblers have found themselves on the losing end of the lottery game. For instance, according to the Boston Globe, residents of Quincy bought $20.3 million worth of lottery tickets in 2013. In return, the city received only $16.1 million in lottery funds. This amounts to $4.2 million taken out of the local economy, money that could be used to improve local schools and other institutions that boost chances for upward mobility for all residents, not just the very occasional lottery player who happens to win the big one.

Other towns hit the jackpot when it comes to lottery revenue. Towns with high household incomes like Harvard and Carlisle don’t have a single lottery retailer, and residents need to drive elsewhere to buy lottery tickets. Even though these towns do not contribute to the lottery fund, they receive windfalls from the lottery, $1.4 million and $211,000 in 2017, respectively.

This formula worsens the inequity of the Massachusetts Lottery. The average Bay State adult spends more than $900 on lottery tickets every year, and while all types of people like to gamble, studies have shown that lottery playing is particularly popular in minority communities and in households with lower levels of education. Many of these bettors are certainly included in a 2017 survey, which found that nearly two-thirds of Massachusetts residents don’t have $1,000 in savings, and around half have no savings whatsoever. Lottery prizes provide obvious appeal for low-income people, but gambling inevitably worsens financial problems. It does not solve them.

To make matters worse, because towns like Harvard and Carlisle receive lottery revenue, when poor bettors buy tickets, they are effectively subsidizing property taxes and public services for some of the state’s richest areas.

The recent Powerball and Mega Millions jackpots will mean another banner revenue year for the Massachusetts Lottery. Before that money is put to use, the Legislature should undertake major steps to reform the Commonwealth’s outdated and inequitable lottery revenue distribution formula.

In particular, localities should receive lottery profits in proportion to lottery sales in their town. If residents of Quincy buy the most lottery tickets, their city should receive the most lottery revenue. And if people in Carlisle do not participate in the lottery, their town should not get any lottery funds. Of course, any change to the formula should be adopted slowly, with a phase-in process to allow local governments time to adjust their budgets.

Millions of Massachusetts residents see the lottery as a chance at dramatically bettering their life circumstances. Allocating lottery profits based on local sales will not put money back into gamblers’ pockets, but it will help communities where people have turned to the lottery as their best hope for the future. As eager bettors shell out for Powerball and Mega Millions tickets, the Legislature should take steps to make the lottery a more equitable means of raising and allocating public revenue.

Jonathan D. Cohen, a Newton native, is a PhD candidate at the University of Virginia and visiting fellow in the History Department at Harvard University. He is writing a dissertation on the history of American state lotteries.