The Lottery Will Devastate SC Economy
January 8, 2002
Now that Gov. Jim Hodges has subjected the residents of the state of South Carolina to his long-awaited "education" lottery, this is the beginning of the decline for our already unstable state economy. Despite the tremendous marketing “buzz” created by the lottery ads that began a few weeks ago, the intrigue and curiosity that people have for the lottery will quickly wane. More importantly, the devastating effects on the poor and businesses in South Carolina will be too monumental to easily overcome.
Lotteries are inherently un-American. Real American ideals of working hard for your money, saving for retirement and taking care of the basic needs of your family are jeopardized by the existence of a lottery. Since lotteries promote the idea of a “get-rich-quick” scheme, they are extremely tempting to people who are struggling to make ends meet. This is evidenced in the actual sales statistics that reveal the poor spend more actual dollars on lottery tickets than the rich do. In Georgia, where the average income is under $20,000, the lottery annually sells $249 in tickets per person. However, sales of lottery tickets where the average income is above $40,000, the lottery annually sells only $97 in tickets per person. This wide disparity in actual dollars spent on lottery tickets reveals the very real potential for a massive economic devastation produced by the lottery. The poor really will become poorer with the presence of a lottery in South Carolina. It’s a dirty little secret that Jim Hodges and the lottery commission don't want you to know about!
Furthermore, the lottery has an adverse trickle-down effect on businesses in South Carolina. Many of the extra dollars that were formerly spent at grocery stores, pharmacies and mass merchandisers will now be spent on lottery tickets. Even the convenience stores that sell lottery tickets will lose revenues because their customers will purchase lottery tickets instead of the high margin items these stores have always relied on to stay in business. Lotteries literally destroy businesses because they drain the very foundation of the economy. The lottery never provides any new products nor does it ever generate any new wealth. In addition, most of the money raised from lottery sales is never pumped back into the state the lottery tickets were sold in. The only major financial winners in the lottery are the lottery administrators. And this is the legacy that Jim Hodges hopes to have from his time as governor of South Carolina.
One sad fact about an “education lottery” (as it is grossly being described by our soon-to-be former Democratic governor, Jim Hodges) is that a vast majority of the revenues from lottery sales do not actually go towards education. Under Georgia law, the lottery commission is mandated to pay only 35% of revenues to the state for education. Although the lottery administrators get to keep 65% of the revenues generated by the lottery (which raised a record $2 billion in 1999), lottery administrators have regularly struggled to find enough money in their reserve funds and in unclaimed prize money accounts to pay their small obligation to education. For the lottery to be labeled an "education" lottery, wouldn’t you think more than a third of the revenues should go to education? I guess Jim Hodges hopes you won't notice!
The greatest negative impact of the lottery is felt by the innocent children and families in South Carolina. Although he has been the chief advocate of bringing the lottery to South Carolina since his election to governor, Jim Hodges used to be opposed to the lottery because of the harm it does to families. "Gambling places hardships on families and preys on poor people hoping to get lucky," he once said when he was a representative in the South Carolina state legislature in 1993. Even Jim Hodges knew back then that the lottery would cause exponential increases in bankrupcy, debt, depression and even suicide (many of the same symptons associated with a compulsive gambler!). Alarmingly, studies have shown that 5% of all children between the ages of 12-17 have gambling problems related to the lottery in states where there are lotteries. Using these statistics as a guide, South Carolina can expect to have nearly 14,000 teenage gamblers over the next couple of years! Now that he has supposedly seen the light about lotteries, Jim Hodges doesn't see a problem with this happening in South Carolina.
Plain and simple, a lottery, whether the money goes towards education or not, makes the poor become poorer in a short amount of time. In turn, it puts an unnecessary burden on middle income families who will be forced to fund recovery programs for new gambling addicts as well as pay more taxes to cover the budgeted programs that will be depleted to cover the education obligation of the lottery. This scenario is very likely to happen within a year or two. Pretty soon thereafter, taxes will be increased for a second time to cover the decline in lottery revenues as people realize the lottery is not the answer to their struggling money problems. This won't bother Jim Hodges who will have no problem raising your taxes again and again (look for my article on Jim Hodges and his election year tax policy on the Upstate Common Voice on 1-10-02!).
There are much better ways to raise money for education without tearing down the entire economic infrastructure of the South Carolina economy. The Greenville News reported last Sunday that there will be a $30 million loss in revenue because of the problems associated with the Pick 3 game. Why must the residents of South Carolina have to absorb these costs just because a Democratic governor wants a lasting legacy? Unless the newly-elected Republican governor (who will defeat Jim Hodges in the 2002 governor's race!) repeals the lottery next year, the economy of South Carolina will be severely damaged for many years to come. And that will be the lasting legacy of Jim Hodges in South Carolina!