California: Lottery Not So Hot

A few weeks ago I noted a New York Times report arguing that, during tough economic times, state lotteries do well. But now we have a report from the Los Angeles Times that suggests precisely the opposite for the state of California, where ticket sales have fallen off steadily over the last two years.

With Arkansans voting right now on a proposal to create a state lottery (which will most likely pass), this report on California’s experience is well worth considering:

Similar drops in lottery sales have been seen in other states hit especially hard by the economic downturn, including Florida, Texas, New Hampshire and Maine.

“Lotteries all over the country are down,” said Richard McGowan, a Boston College professor of economics who has written books on the gambling industry.

“The primary engine of growth for lotteries previously was instant tickets: the scratch tickets for $1, $5, $10 and even $20,” he said. “But given the price of gasoline and the state of the economy, people have stopped buying these tickets. They no longer have the discretionary income to fuel the sales of these instant tickets.”

The state is considering various measures to “modernize” the lottery, including allowing the legislature to borrow against future lottery earnings. I just do not see any way that could possibly end up being a bad idea at all.

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