It’s official: Arkansas will soon become the 43rd state to have a lottery (44th if we count DC). Voters approved the lottery in November, and legislators rushed to make it a reality. The Arkansas Lottery Commission website was unveiled a few days ago, and tickets could be available by the fall.
From the new website:
The purpose of the Arkansas Lottery Commission is to oversee the operation of a lottery whose net proceeds will provide scholarships and grants to Arkansas citizens for in-state colleges and universities. Scholarships are to be available for nonprofit, public and private, two and four-year colleges and universities. The commission may establish and oversee one or more lotteries to fund the scholarships as well as to fund the commission operations. Arkansas Code Annotated § 23-115-102 and 23-115-801(a)(2)(A).
Under A.C.A. § 23-115-102, the lotteries are to be operated and managed in a manner that:
* Provides continuing entertainment to the public
* Maximizes the revenue generated
* Preserves the integrity and dignity of the process
* Accounts to the public and the General Assembly through reports and auditA tax audit is when the Internal Revenue Service (IRS) conducts a formal investigation of financial information to verify an individual or corporation has accurately reported and paid their taxes. Selection can be at random, or due to unusual deductions or income reported on a tax return. s
We were not aware that providing “continuing entertainment to the public” was a function of state government. That aside, the lottery might well disappoint its supporters: earmarked revenue is fungible even in states with lottery “lockboxes,” and the amount of money available for scholarships might fall short of expectations. Tennessee recently discovered this, and lottery experts have long contended that earmarked lottery funds do not benefit the intended causes to the extent alleged.
Individuals who want to help students afford college can donate to organizations that offer scholarships or to colleges and universities directly. And if the lottery were offered by a private company rather than by a state monopoly, the state would gain revenue from sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. es and possibly excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. es, which could go into the general fund for general pubic services. This would be more economically neutral, less complex, and more transparent. A state-run lottery not only damages a state’s tax system by imposing a regressive, non-neutral, hidden taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. ; it also frequently sets up unrealistic expectations of pots of gold for public education.Share