Calling Their Bluff

(by Jamie Dean, WorldMag.com) – Most Friday afternoons at the Petro Express gas station on the South Carolina border, two steady lines of customers form at the counter inside. Customers in the first line are paying for gas and buying snacks. Customers in the second line are buying scratch-off lottery tickets and hoping to become millionaires.

Officials in South Carolina say the state has raked in more than $2 billion in lottery sales since the games began as an education-funding initiative in 2002. They say more than half of those dollars have gone toward public schools and college scholarships.

Officials also say more than 12 percent of the state’s gaming profits come from North Carolinians who make a short trip over the border to spend millions on South Carolina’s lottery each year. North Carolina is one of just 10 states in the United States without a government-run lottery, and the only East Coast state without one.

But North Carolina’s long run as a hold-out may be nearing an end. After years of defeating lottery legislation, the state’s House passed a lottery bill to fund education by a one-vote margin on April 6. The legislation now heads to the Senate for a vote that’s likely to be close.

Four factors have recently converged to create a perfect storm for a lottery’s potential passage in North Carolina: annual budget shortfalls since 2001, the reelection of the state’s first pro-lottery governor, Democrats’ gaining control of both the House and the Senate, and a weakened Republican House caucus.

Pro-lottery legislators claim the games could generate as much as $400 million in the first year, with 34 percent going directly toward education. They say it’s time for North Carolinians to stop spending their money on lotteries in neighboring states.

Anti-lottery groups disagree and have swung into action—an unusual blend of conservatives and liberals united in a common cause. Elaine Mejia of the left-leaning N.C. Center for Justice (NCCJ) called the House’s passage of a lottery bill “a dark day.” The NCCJ is opposed to the lottery because it believes the games will exploit the poor. Ms. Mejia says legislators are caving in because they feel they have no choice: “Lawmakers feel a lottery is inevitable and they are tired of dealing with it.”

At least two House lawmakers who voted for the lottery in April expressed a sense of inevitability and characterized the legislation as a necessary evil. “Most all of us agree that having the state in gambling is wrong,” Rep. Bill Owens told The Raleigh News and Observer. “What’s more wrong is allowing hundreds of millions of dollars to flow out of the state.” Rep. Deborah Ross, a former director of the state’s ACLU, told the paper: “I hate the lottery. But I don’t know what alternatives are left.”

According to John Hood, plenty of alternatives are left. Mr. Hood is president of the John Locke Foundation, a conservative think tank in North Carolina. He says the government should focus on finding more efficient ways to raise and spend revenue. “I don’t think the government needs more money to waste,” he said.

John Rustin of the North Carolina Family Policy Council agrees. Mr. Rustin says arguing that a lottery is the only alternative for funding education “assumes that every taxpayer penny is being used as efficiently and effectively as possible. . . . I don’t think it is.”

States that voted in lotteries with the idea of helping education have found the games often don’t help education. Ohio’s 2001 state budget revealed that though the required amount of lottery funds was designated for education, an equal amount was removed from the school system’s existing budget allocation. Florida and Virginia also drew criticism when lottery funds earmarked for education ended up elsewhere.

Mr. Hood says the nine other lottery hold-out states can learn an important lesson from North Carolina about staving off lotteries: “They don’t need to make simply one argument: ‘The lottery is wrong.’ They need to make multiple arguments, like the lottery is wrong, the lottery is wasteful, and the lottery takes advantage of the poor.”

Mr. Rustin adds one more lesson: “Those folks who understand the truth about the lottery and its effects ought to stand firm.”

Reprinted here with permission from World Magazine.  Visit the website at www.worldmag.com.