Hawaii’s status as one of only a handful of states that has no lottery becomes a point of frustration for some on weeks like this, when the mainland Powerball prize is huge. For those folks, today’s drawing, with a record potential payout of $1.5 billion, is an opportunity that passed them by, a party to which they weren’t invited.
But should Hawaii residents be grateful that the party is happening without them, that our state is not only among seven that eschew lotteries, but one of only two that entirely ban all forms of gambling (the other being Utah)? After all, lotteries typically amount to a regressive tax.
The issue may not be as simple as some think. Fifty years of legal lotteries in states around the country have shown us both the potential harm that lotteries can represent for individuals and families and the potential good that can accrue from a revenue source appropriately dedicated to unmet state needs.
Lotteries are now active in 44 states and throughout Europe. Hawaii could benefit from the best practices established by others.
The biggest knock on these games of chance is that they prey upon the most impoverished. Households earning less than $13,000 a year spend an average of 9 percent of their income on lottery tickets, according to a 2008 study.
But that’s due in no small part to lottery marketing campaigns that strategically target poor neighborhoods with tantalizing invitations to take a chance on getting rich quick. That sort of predatory marketing has resulted in lottery sales that are disproportionately successful among families earning less than $25,000 a year, individuals without college educations and people of color.
People of means and college graduates play the lottery, but both in raw dollars and in proportion to their incomes, spend less than others.
A lottery organization serving Hawaii would certainly want to make participation open to everyone, but it could also be compelled legislatively to avoid cynical, disproportionate marketing to poor and undereducated consumers. In fact, such an organization might find a much more lucrative market in a thriving demographic well prepared to spend leisure dollars in our state: tourists.
It’s an approach that ought to make sense for Hawaii — a state that that sends about a quarter-million residents each year to Las Vegas to be separated from their hard-earned money via games of chance that, unlike lotteries, hold no promise of social good for such issues as education or senior programs. It’s not for nothing that the desert gambling mecca is known as the 9th Island.
But back home, where we have an opportunity to encourage our 8 million visitors to take part in a lottery and provide funding for a better future for us all, we decline to make the opportunity available. This, despite the fact that nearly six in 10 Hawaii respondents to a 2013 Civil Beat poll favored the establishment of a state lottery (though a majority did not want other forms of gambling legalized).
Responsibly marketed by a lottery organization operating in a statutory framework designed to minimize negative impacts on the poor by making tourists the primary market — a lottery could generate millions of dollars for needs in Hawaii that perennially fail to be adequately funded.
Which brings us to the second big knock on lotteries: Rather than supplementing appropriations for pressing state needs, they too often supplant some of those monies, leaving cash-starved areas like K-12 education no better off than they were without lottery support. A 2014 report in Inside Higher Education noted that after initial bumps in funding after creation of a lottery, “overall education spending decreases over time in states that earmark lottery funds for education.”
New York state breaks that pattern with a lottery — the nation’s largest — that provides about 14 percent of the state’s education budget, about $3.11 billion. State lawmakers use a weighted formula that takes into account income, property values, number of students and other factors to fairly distribute those funds. A spokesperson for that state’ gaming commission told the International Business Times that the Powerball jackpot had generated another $58 million for New York education by 11:30 a.m. Monday.
Surely, Hawaii’s leaders are smart enough to create a system that would generate similar net support for needs in our state.
Determining what those needs might be could be the basis for a rich public conversation. K-12 education, in areas ranging from school construction and maintenance to special education funding, would certainly make a short list.
So would homelessness and affordable and public housing, which got only a fraction of what they needed in the 2015 legislative session and fell further behind well-documented needs this fiscal year.
Hawaii might even take a page from Pennsylvania, where lottery proceeds exclusively benefit seniors programs. The rapidly rising costs of nursing home care and aging in place in a state with the highest housing prices in America could certainly use additional investment.
As we watch most of the rest of the country this week caught up in the fun and excitement over a potential $1.5 billion payout resulting from what is expected to be sales of more than 1 billion tickets, we shouldn’t rule out participation for Hawaii simply because of the bad choices made by other states.
One of the benefits of being late to the game is the opportunity to learn from the mistakes of others. Forty-four states now have lotteries, and there is plenty we might look to by way of both best practices and pitfalls that could help make a lottery a winner for Hawaii.
With the 2016 legislative session set to begin later this month, we can probably count on legislation allowing a lottery to be introduced, as it is year in and year out.
But let’s make this year the one in which we give that idea real consideration. In a time in which increased taxes and other new revenue sources are unlikely to be made available for a state with a growing to-do list, a properly framed lottery, with appropriate restrictions and revenue dedicated to critical needs, could represent a real win.
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