• Research Report

    A Costly Tax: State Lottery is Inefficient Way to Collect Revenue

    posted February 26, 2001 by Dr. Roy Cordato
    Policymakers should think carefully about the administrative costs of raising revenue through a state lottery. In effect, the state would be legalizing gambling, establishing a state monopoly on it, and then taxing gross sales at a 33 percent rate. The cost per dollar collected of this lottery tax would be 20 to 50 times greater than the cost of raising rates for other state taxes that already exist. The best course for the state is not to raise taxes at all but to reduce the size of government.

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