How Much Bigger Can Lotteries Get?

Everyone has been talking about the enormous Mega Millions jackpot lately. Even in troubled times, people are still willing to buy lottery tickets, perhaps even more so in troubled times.

Many states have recently looked for ways to expand their lotteries to bring in more revenue—not a wise way to fill state coffers in times of recession or prosperity. And now some state lottery proponents are once again looking for ways to create larger lotteries—not state-run lotteries or even national lotteries, but international lotteries.

From Lottery Post:

Will Powerball marry up with the British lottery or even Euro Millions, creating the largest lottery jackpots on the face of the earth?

Maybe. But Charles Strutt, director of the 32-member Multi-State Lottery Association, which runs Powerball from offices in Iowa, said it was still too early to tell.

. . .

The volume ratcheted up sharply after The Times of London reported that Camelot, the company that runs the British lottery, had signed an “exploratory agreement” with Powerball aimed at launching “the world’s biggest draw, with mega-jackpots of more than 250 million” British pounds —$367.4 million at current exchange rates.

The British newspaper said the game could start as early as 2011.

“There’s lots of inaccuracies in it,” said Strutt of that Feb. 1 story. He added that he would meet next week with Camelot officials and that a statement could be issued at that time.

Camelot in 2004 helped to launch EuroMillions, which is now played in Britain, France, Spain, Ireland, Belgium, Luxemburg, Switzerland, Austria and Portugal.

This is not the first time that U.S. involvement in an international lottery has been discussed. In 2004 there were plans for an international lottery run by the American Multi-State Lottery Association, with members from Europe, Canada, Central America, Australia and the U.S. However, hopes were dashed after more than two years of planning when European lotteries began to withdraw from the International Lottery Alliance.

We have to wonder about the tax policy implications of U.S. states participating in a tax revenue-generating activity in concert with other countries. Lotteries already complicate the tax system unnecessarily; an international lottery would make things even worse. Policymakers who want to create ever larger, ever more enticing lotteries and state-run casinos to bring in large sums of tax revenue quickly would benefit from sticking to the basics: raising revenue from broad-base, low-rate taxes in a way that is economically neutral and transparent.

More on lottery and gambling taxes.