Pennsylvania Lottery Expands to Allow Betting on State Elections

April 1, 2010

As we have written before, states are relying more and more on government-run lotteries and other forms of state-run gambling to deal with budget crises. Policymakers are unaware—or unwilling to acknowledge—that lottery revenue is actually tax revenue, and they depend on lotteries to bring in more money without taking the blame for explicitly raising taxes.

Last month a Lottery Post article contained this discouraging excerpt:

Faced with a drop in gambling revenue, states are adding games, considering new casinos and increasing lottery options—anything to keep their cut of the profits rolling in.

States are adamant that they don’t want to take advantage of anyone, but with budgets in free-fall and tax increases a losing hand politically, lawmakers acknowledge they are dependent on gambling dollars.

At least 18 states this year are looking to expand games of chance because of a drop-off of anywhere from 5 to 14 percent in the money they collect from casinos, horse racing, lotteries or other gambling.

. . .

The idea of luring people to the craps tables when they are being battered by the recession is an awkward one for state governments … .But in state capitols, the urgent budget problems trump other concerns.

Given this trend of states expanding government-run gambling to fill coffers, I was only mildly surprised to see articles in several Pennsylvania newspapers today describing a controversial new plan to expand the Pennsylvania Lottery. Starting in September, the lottery will allow Pennsylvanians over age 18 to place bets on the outcomes of federal, state and local elections.

Each bet will cost $125, and prizes will be awarded based not only on the winner of each election but also on the percentage of the popular vote (and Electoral College vote for presidential elections) that each candidate wins. The state will keep 92.5% of the proceeds, 5% will cover administrative costs, and the remaining 2.5% will be divided among the winners.

When asked about the obvious ethical and legal problems with this plan, J. Smith, spokesperson for the new Pennsylvania Election Gaming Commission, replied:

Legal schmegal! The legislature needs more money! Do you want the state to go bankrupt? We gave the people a lottery, we’ve worked hard to expand and improve it, and the legislature even brought in slot machines to pay for public schools, but even with all that, people are not gambling enough. It’s not like we have the option of cutting spending or raising taxes; gambling is the only solution.

When asked if the new plan would turn the state government into a “glorified bookie,” a state senator, who wished to remain anonymous, bristled:

Absolutely not! Of course, some people who play this new game will unfortunately get carried away and bet their mortgage payments or unemployment checks, and that’s too bad, but maybe if they’d worked harder or played the lottery more before the budget situation turned so dire, we wouldn’t be in this predicament now.

A lottery spokesperson declined to comment on the rumor that plans are underway for a state-run dog-fighting facility, to be located in the Capitol.

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