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Lottery sales linked to poverty, unemployment rates

JLF analysis shows East-West split, tie to property tax rates

Contact: Joseph Coletti
919-828-3876
jcoletti@johnlocke.org

March 21, 2007

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RALEIGH – Counties with high poverty and unemployment rates tend to have the highest rates of lottery ticket sales in North Carolina. That’s a key finding in a new John Locke Foundation Spotlight report.

Click here to view and here to listen to Joseph Coletti discussing this Spotlight report.

Lottery ticket sales also fare well in counties with high property tax rates, said Joseph Coletti, JLF fiscal policy analyst. Coletti also found evidence of an “East-West divide” in lottery revenues. “Opponents of the lottery warned that it would be a tax on poor people, but it’s actually turned out worse – it is a tax on poor, unemployed people in Eastern North Carolina who already pay high taxes.”

Coletti examined county-by-county lottery sales from March 2006 through early February 2007. He found that property tax, unemployment, and poverty rates offered the best predictors for a county’s lottery sales to adults 18 and older.

“The top 10 counties for lottery sales had average unemployment rates in 2006 of 6.2 percent and average property tax rates of 78.80 cents per hundred dollars of property value,” Coletti said. “Those same counties had an average poverty rate of 17.7 percent in 2004, the latest year for which poverty statistics are available.”

The comparable statewide averages were 5.1 percent unemployment, a 65.87-cent property tax rate, and a 13.8 percent poverty rate. “Among the 10 counties with the lowest levels of ticket sales per person, the average unemployment was 4.6 percent,” Coletti said. “Their property taxes averaged 48.13 cents. Their 2004 poverty rate was slightly higher than the statewide average at 14.4 percent.”

State Commerce Department figures also pointed to a link between economically distressed counties and strong lottery ticket sales, Coletti said. “The Commerce Department groups counties by their economic performance,” he said. “The most economically distressed counties in Tiers One through Three sold $126 of lottery tickets per adult. Tier Four counties with stronger economies sold $121 in tickets for each adult. Tier Five counties with the healthiest economies had sales of $110 per adult.”

The list of counties with the strongest and weakest lottery sales showed a clear East-West divide, Coletti said. “Nash County topped the state with $227 in lottery revenue per adult,” he said. “Nash was one of eight Eastern counties ranking among the top 10. Meanwhile, Madison County collected just $28 in lottery revenue per capita. Madison was one of nine Western counties among the bottom 10 in state lottery ticket sales.”

“Saving and investment are the best ways to promote economic development,” Coletti said. “But the legislature and Governor have created a lottery that tempts people to gamble, rather than save, invest, and plan for the future. Lottery sales figures show this temptation is strongest in the very counties Down East where the government claims to want economic development.”

Joseph Coletti’s Spotlight report, "Eastern NC’s Lottery Bug: Counties with higher taxes and unemployment play more," is available at the JLF web site. For more information, please contact Coletti at (919) 828-3876 or jcoletti@johnlocke.org. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or mkokai@johnlocke.org.

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