Experts say the lottery system is preying on poor communities

(CNN) — As lottery players across the nation accept that they didn’t win the historic $2.04 billion Powerball jackpot this week, experts are pointing to the flaws of a lottery system they say unfairly targets poor Black and brown communities.

Lottery officials say the lone winning ticket holder of the largest lottery prize ever was sold in Altadena, California. The winner matched all six numbers — the odds of which were 1 in 292.2 million.

"The lottery is possibly the cruelest way to rob poor people of their money."

— Ed Latimore (@EdLatimore) August 26, 2022

But despite the extremely low chances of anyone winning, state lotteries continue to market and sell tickets to low income communities at higher rates leading those Americans to believe it’s a quick way to build wealth, researchers say. These communities are disproportionately made up of Black and brown people. Critics say the consequence is that marginalized people will be driven into deeper debt by a system that is transferring wealth out of their communities.

Lotteries are regressive, meaning lower-income groups spend more of their budgets on lottery games than higher-income groups.

Far more money is wagered every year on instant scratch-off games, which studies show attract more low-income gamblers, than huge jackpot drawings such as Powerball.

How does the lottery prey on the poor?

Les Bernal, national director for Stop Predatory Gambling, called it a form of “systemic racism” and “consumer financial fraud.”

Bernal said poor people are being scammed into believing they will someday gain wealth from a winning lottery ticket.

“They’re hoping to pay their rent at the end of the month or pay an outstanding medical bill or put their kids through college or they just lost their job and they’re just trying to find a way to make ends meet,” Bernal said. “And here you have what is a government program encouraging citizens to lose their money on rigged games.”

In reality, lottery players are continuously paying into a lottery system that, in most cases, gives them nothing in return, Bernal said. A portion of lottery revenue goes to participating states that legislators can decide how to allocate.

“Commercialized gambling like state lotteries, like the Powerball drawing, they represent a financial exchange that is mathematically stacked against you,” Bernal said.

A study by the Howard Center for Investigative Journalism found that stores selling lottery tickets are disproportionately located in poor communities of every state. In most cases, the money these residents spend on lottery tickets does not come back to their communities but rather to colleges and wealthier school districts, the study found.

Lottery ticket sales have jumped to $82 billion from $47 billion since 2005, according to the report, which notes that lotteries generate more revenue than corporate income taxes in 10 states.

The Howard Center pointed to a 1999 report to the National Gambling Impact Study Commission that found that Black and low-income people as well as high school dropouts were the most frequent lottery players.

“Poor people are collateral damage to a cause of raising money for what the legislators feel is good purposes … public safety, local schools,” former Massachusetts inspector general Gregory W. Sullivan said, according to the Howard Center article. “State governments become dependent on the revenue and any moral considerations get pushed out of view and out of mind.”

Why is the lottery appealing to vulnerable people?

Jonathan Cohen, author of “For a Dollar and a Dream: State Lotteries in Modern America,” said the lottery represents a “mechanism of the American dream” for many people. Cohen said when the economy and unemployment rates are suffering, many lottery players see the game as a chance to get ahead.

“And for folks who, especially Black and brown Americans, maybe face discrimination in the traditional economy, well, the lottery doesn’t discriminate, anyone has just as terrible odds of winning,” Cohen said.

David Just, a professor in the Department of Economics at Cornell University, had a similar take.

Just said during tough economic times, people are more likely to make risky spending decisions. For example, Just noted that during the Covid-19 pandemic there was an uptick in lottery playing. Just called it a “setback mentality that puts them in a risk-taking mode.” He said low-income people should instead be saving money and building wealth.

“It’s an investment,” Just said. “It may not be a good investment but… to people with limited resources, this may be the only way they have to sort of dream big and think that something, something great is gonna happen, that’s just gonna change everything.”

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