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Education lottery

The North Carolina Education Lottery was born of corruption, from its inception as a bill, to its lobbying, to its suspiciously rushed enactment, to its false promise to and exploitation of the state's poorest citizens.

From its very beginning, lottery proceeds were predictably used to supplant rather than supplement education funds. Also, portions of lottery proceeds were taken for the state's General Fund. Essentially, the lottery benefits various public programs other than education.

Supplanting is a major problem with state lotteries. In the long run, lottery states are left with lower per-capita spending on education than states without lotteries.

Older state lotteries are also beset with what lottery researchers call lottery fatigue. Lottery proceeds flatten as their novelty fades and as residents initiated into gambling branch out into other forms of gambling offering quicker payoffs.

North Carolina's lottery proceeds have not flattened yet, but that "good news" may owe to the severe recession. Other signs of lottery fatigue are already evident: "sweepstakes café" are a fast-growing industry in North Carolina, the casino on the Cherokee reservation is expanding, and there has already been serious talk of overturning the state's nascent ban on video poker.

Key Facts

• Studies consistently find that the biggest purchasers of lottery tickets are the poor, minorities, elderly, and high school dropouts.
• A 2007 JLF study found that the best predictors of a county's lottery sales to adults 18 or older were its poverty rate, unemployment rate, and property tax rate. The recession has heightened those effects.
• In 2009, the top ten counties in lottery sales per adult had average poverty rates of 22.8 percent, average unemployment rates of 12.2 percent, and average property tax rates of 71.72 cents. Those rates are all well above the state averages.
• Those counties had lottery sales of $389 per adult — over twice the statewide average.
• The most economically distressed counties in North Carolina had lottery sales higher than the state average and much higher than the least economically distressed counties. They also had higher poverty and unemployment rates.
• The current lottery formula emphasizes class-size reduction and pre-kindergarten programs. Even according to the state's own assessment, those programs haven't improved students' performance.

Recommendations

1. End the North Carolina Education Lottery outright. Its origin is suspect, its history is doubtful, and its manifold negative effects are sure.
2. If that is not feasible: End the lottery as a state monopoly on gambling and legalize other forms of gambling that can then be taxed. This option would remove the state from endorsing and promoting an activity many North Carolinians find immoral, let alone counterproductive to the responsible message that society rewards education and hard work. It would also allow for new industries (sweepstakes cafes, video poker, horse breeding and training, etc.) to build within the state, bringing jobs and helping the economy recover.
3. If that is not feasible: End the lottery as it is, then recraft and pass a lottery bill the right way, in accordance with the state Constitution. The next recommendation will offer a reform for the lottery formula to consider here as well.
4. If ending the lottery is not feasible: Put all lottery proceeds to proven good uses of education money. A reformed lottery formula would focus especially on construction (with emphasis on high-growth school districts) and also include funding for charter schools and incentives programs to reward school districts and administrators who find innovative, low-cost solutions to facilities needs.