Lotteries: For and Against

The UK National Lottery has generated well over £100 billion in ticket sales since being introduced in 1994. Its popularity is undoubted with around half the population buying a ticket each week. However the ‘Lotto’, as it is now known, still draws criticism in certain quarters.

Detractors argue that the game is used as a form of stealth tax, foisted upon the general public as a way of generating money for the state. There are also concerns about how funds are redistributed, the potential effects on charitable donations and whether or not the lottery exacerbates gambling addiction.

This article will attempt to examine the arguments for and against the world’s most popular game of chance in an effort to understand its place in modern society.

The Case for Lotteries

We begin by looking at the most obvious reasons why the UK lotto has a positive effect on society and why certain criticisms are unfounded.

The Lottery is Just Healthy Escapism

Lottery participation is a form of escapism that offers participants the chance to dream of a life far-removed from their hum-drum 9-5 routine. As lottery expert Edward C Devereux was quoted as saying in Selling Hope: State Lotteries in America 1989 by Charles Clotfelter:

‘…the possession of a lottery ticket gives the stamp of authenticity to the hope of escape. The lottery represents a tiny hole in the closed system of toil and budgeting…through which the repressed wishes crowd for escape’.

At some time or another, everybody seeks distraction and relief from mundane or unpleasant realities. This is especially true for people with low-to-average incomes who may be limited by their societal standing, lack of education and or other social barriers. Lotteries provide individuals within this group the chance to instantly circumvent these restrictive social barriers.

The Lottery Donates to Good Causes

The UK lottery has donated £36 billion to good causes since its inception in 1994. According to Camelot, some 500,000 projects have received funding with less than 1% of total revenue kept as profit after tax.

Sport has been a major benefactor with over £2 billion channelled into the construction of London’s Olympic Park for the 2012 games. An estimated 86% of British athletes have also received some kind of lottery support.

Other areas which have enjoyed funding include the Arts Council, the National Heritage and the British Film Institute. In addition, 40% of proceeds get distributed by the Big Lottery Fund to a wide variety of good causes around the UK.

Good for Smaller Retailers

Lottery operators, Camelot pay commission on all tickets and scratch cards sold by their chosen distributors. For smaller enterprises the rewards can be quite lucrative – in 2005 retailers earned an average of £6500 in commission.

It could therefore be argued that the opportunity to sell lottery-related products alleviates some of the financial pressures facing many smaller high-street retailers and convenience stores.

The Lottery is Sociable

The act of buying a lottery ticket constitutes a minor social activity offering participants the pleasures of participation while encouraging interaction with other ticket holders. Such opportunities can be precious, especially for people who feel isolated by society.

Consequently, the lottery could be thought of as a kind of ‘social glue’ as observed by Sue Slipman during her tenure as Camelot’s Director for Social Responsibility.

The Case against Lotteries

For all the lottery advocates, there are just as many detractors. Many critics argue that lotteries serve as a kind of stealth tax which takes money from the working classes and redistributes it among the middle classes.

There is also uneasiness about the steep odds, the impact on charities and the negative effects that large windfalls can sometimes have on winners.

People Don’t Understand the Odds

This has been an area of concern since the UK lottery began: that participants are unable to comprehend the staggering odds against them, meaning that their decision to purchase a ticket is ill-informed.

Research has indeed shown that the human brain struggles to grasp big numbers and that it takes time and effort to comprehend them.

This can be illustrated by considering the odds of both the UK and US lottery. Lotto odds stand at 1 in 45,057,474, in comparison to the 1 in 292,202,338 chances of winning US Powerball.

It’s very difficult for the human mind to grasp the the discrepancy between these sets of numbers. But when we consider the odds of say, 1 in 5 versus 1 in 300, the disparity is far easier to grasp. But there are other factors at play here too such as flawed logic.

People Succumb to Flawed Logic

The gambler’s fallacy is a prime example of this and refers to the mistaken belief that if a particular event occurs more often than normal it will happen less frequently in the future and vice versa.

So in terms of lottery play a participant might think that certain numbers are more likely to be drawn than others, merely because they haven’t appeared for a long period of time. This was painfully illustrated in Italy in 2005.

This kind of rationale is very prominent in draw-based lottery games, despite there existing absolutely no mathematical basis for such thinking. The fact that each draw is completely random and independent of previous and future results is often overlooked.

Critics claim that such an ‘ignorance’ of mathematics as well as logic, puts players at an immediate disadvantage.

The Lottery Has a Negative Effect on Charities

Because a great deal of funding is distributed to worthy causes by the UK lottery, it has been argued that people view their ticket-purchase as a kind of donation, while at the same time overestimating the actual proportion of their stake which goes to charity.

There are also a number of charities opposed to lottery funding and which refuse to take any donations. Groups such as the Quakers in Britain as well as the Salvation Army make a point of distancing themselves from lottery funding because of their stances on gambling.

The Lottery is Addictive

Some still contend that playing the lottery is addictive and that certain participants, in the act of purchasing a ticket, are exhibiting classic behaviour indicative of addition such as a lack of impulse control and obsession.

The Lottery is a Gateway to Other Forms of Gambling

This is one of the strongest arguments against lottery play, especially in the UK where most, if not all lottery terminals also sell scratch-cards. It’s the same with the official website.

While there is no significant evidence to indicate that scratch-card addiction is a major problem in the UK, there is no doubt that ‘instants’ represent a different form of gambling.

The ‘gateway’ argument was the subject of a Canadian study in the 2000s, called Lottery Participation by Youth with Gambling Problems: Are Lottery Tickets a Gateway to Other Gambling Venues? 2004.

Its findings revealed that the purchasing of lottery tickets exacerbated existing addiction problems among 10-18 year-old’s while opening up avenues to other forms of gambling.

The Lottery is a Regressive Tax on the Poor

That lotteries are used to tax the poor is an argument supported by numerous studies. In 2009, religious think tank THEOS conducted a survey of 1019 people who played the UK lottery. It was found that 49% of C2s (people in skilled manual jobs) participated compared to 31% of ABs (people in higher and intermediate managerial, administrative, professional occupations).

As part of the study, the spending habits of players were analysed according to their social standing. Although the analysis indicated that stake sizes were similar across the social spectrum, people on lower incomes spent proportionately more.

For example, frequent players in the £15,000 to £20,000 wage bracket had an average stake of £6.73, which was the same per-annum as households with an income of over £75,000. Therefore, low income households were spending over three times as much as their more affluent counterparts.

These figures attracted consternation, especially from anti-poverty groups who suggested that the poor would be better off spending their money on more important things such as food, water and heating.

The Lottery Redistributes Wealth to the Middle Classes

The distribution of lottery proceeds has been a political hot potato since the lottery began in 1994. The main contention is that most of the money doesn’t actually reach poorer communities but is instead redistributed among the middle/upper classes.

This was substantiated by the 2009 THEOS report which concluded that deprived areas received insufficient funding despite showing higher rates of lottery participation.

In 2013, a report by the Arts Council revealed that the distribution of arts funding heavily favoured London: players across the country had funded the arts at a rate of £17.41 per Londoner in comparison to only £3.90 for people in the rest of England.

These controversial findings resulted in a House of Commons Select Committee enquiry which called for changes to be made in how lottery proceeds were distributed.

The PLACE Report (Policy for the Lottery, the Arts and Community in England) followed a year later in 2014, which looked at the social makeup of people attending the most heavily funded cultural organisations.

Results indicated that a majority of attendees were members of the most privileged groups in society, namely, the highly educated and wealthy middle to upper classes.

It was also revealed that the National Theatre, the English National Opera, Sadler’s Wells Theatre as well as the Southbank Centre had received over £300 million since the lottery began on top of annual funding of £80 million. This sum was larger than all the 33 local authorities in London put together.

Lottery Jackpots Destroy Lives

For the few that do manage to win a lottery jackpot, some never adjust to acquiring such an enormous windfall. Stories abound in the press regarding major lottery winners and how their personal lives unravelled after winning – tragedy and profligacy seem to be recurring themes.

There are also numerous cases which illustrate that winning big pay-outs does not guarantee financial security – the stories about lottery jackpot winners like Michael Carroll and Callie Rogers in particular, make for particularly grim reading.

Conclusion

Some of the criticisms directed at lottery games don’t really hold water when considered in a broader context. The stealth-tax argument, for instance, isn’t quite as convincing if we compare lotteries to other popular working-class pastimes.

Take football fandom. It’s a hobby that engrosses an estimated 3.5 billion around the world. However, devotees of a particular team do not benefit materially – their stake is merely an emotional one. Just like lottery participants, don’t fans exhibit a degree of delusory thinking?

In spite of these parallels, nobody proposes that football be banned. Playing the lottery does at least offer a chance, however minuscule, of reaping a substantial financial reward.

The debate surrounding lotteries and their impact on charities is ongoing. Before the introduction of the UK national lottery, there were concerns that charitable giving would decline.

However, this was eventually refuted by a number of studies. For instance, the British Social Attitudes Survey of 1995 found that only 7% of respondents indicated that buying a National Lottery Ticket meant that they gave less to charity – 92% felt that it had made no difference at all.

Furthermore, in 2011 researchers at Bristol University released a report on personal donations which detailed trends over a 30 year period.

The New State of Donation: Three Decades of Household Giving to Charity 1978 – 2008, found that giving had doubled over that period from 98p per week in 1978 to £2.34 in 2008. The data also indicated that since 1994, observed donations among the total UK population had actually increased.

It should also be mentioned that the charity sector has to date, received more than £27 billion from the National Lottery. And those charities which reject lottery-generated donations are indisputably in the minority.

With that said, concerns surrounding the distribution of lottery funds are well-founded, as was starkly illustrated in the self-effacing 2013 report by the Arts Council of England.

The follow-up PLACE Report also indicated that, in the arts world at least, the chief beneficiaries of lottery funding were the privileged.

Recommendations have since been made in order to ensure that a large proportion of money generated from ticket sales goes back into the communities where it originated.

That lotteries are addictive is an argument that’s become rather forlorn in recent years because there simply isn’t any proof to indicate that it’s a problem in the UK.

Even a cursory assessment of most draw-based lottery formats would reveal that the game isn’t very appealing to the habitual gambler.

As well as being infrequent, there’s almost no chance of winning, no small gains to be had, nor is there a particularly high level of intensity or anticipation, save for the bi-weekly television draws. So for the hopeless addict, playing the lottery fails to provide much of a fix, if any.

As for the ‘gateway’ debate, although the aforementioned Canadian report found that lotteries did indeed act as a gateway for young people, it should be pointing out that a large percentage of the sample audience were under the age of 18. Presumably, this is one of the reasons why age-limits are imposed on playing lotteries.

In the UK, stringent rules have been put in place to ensure that minors under the age of 16 are not allowed to buy a ticket. In any case, fulminations about the lottery as a gambling gateway have become rather moot in recent years due to developments in the industry, as will be explained below.

And while lottery terminals provide access to other gambling formats such as scratch cards, there is no evidence to suggest that these games are actually that addictive either.

In concluding, many of the arguments against lotteries that we’ve discussed here seem misplaced. The gambling industry is unrecognisable to how it was some twenty-five years ago.

The rise of online casinos and sports book operations has, quite rightly, shifted the focus away from lottery games. These new forms of gambling present far greater risks that draw-based lottery games ever could.

There’s no doubt that, as a country, we could exercise more financial restraint when it comes to buying lottery tickets. And the distribution of lottery funds has to be corrected. But as it stands there are far more urgent and pressing issues to be found elsewhere in the gambling industry.