Policy Watch Investigates

Prosperity seen as a scratch ticket away in poorest counties

Lottery tickets and scratch-off instant games continue to be the most popular in North Carolina counties saddled with some of the state’s highest poverty rates.

Statewide, North Carolinian adults spent $212 per capita on the lottery in 2011, according to an N.C. Policy Watch analysis of lottery sales information as well as adult population and poverty estimates from the U.S. Census.

But those per capita sales figures more than double in places like Halifax County, a struggling Eastern North Carolina county where per capita lottery sales were $516, the second-highest in the state. The county is also one of the state’s poorest, with more than a quarter of its population living under the federal poverty line, roughly defined as a household income of $23,000 for a family of four.

More than $21.7 million was spent on lottery tickets in Halifax County in 2011, and $1.5 billion statewide.

Those sales numbers don’t sound unusual to Alvin Jones, a 35-year-old newspaper press operator in Halifax County who plunks down $100 a day on the N.C. Education Lottery and the state lottery in nearby Virginia.

Alvin Jones, a Halifax County lottery player

Jones buys tickets multiple times a day and sees nothing wrong with his $100-a-day habit, which adds up to $36,500 a year. He says he gets a steady income working, and uses the money left over after paying his bills to play the lottery.

“I play because I don’t drink, I don’t smoke, and I don’t go to clubs,” he said. “If everyone has to have a habit, that’s my habit.”

The most he’s won on a single game is $2,500, and he uses his winnings to offset what he spends on lottery tickets.

North Carolinians pinning their hopes of prosperity on the lottery is not all that unusual,  and many rushing out today and tomorrow to buy tickets before Friday night’s $500 million MegaMillions jackpot drawing will join thousands more across the country hoping to win it all.

One in every five Americans believe that winning the lottery is the most practical way to amass personal wealth, according to a 2006 study by the Consumer Federation of America and the Financial Planning Association.

That percentage was much higher for low-income people — nearly 40 percent of those with incomes under $25,000 thought the lottery was the best ticket to wealth.

Financial experts say those beliefs aren’t based in reality, but state lotteries across the country capitalize on those false hopes, said Les Bernal, the director of Stop Predatory Gambling, a national non-profit organization critical of state-run lotteries.

“For government to win, citizens have to lose,” he said.

The N.C. Education Lottery has never conducted any detailed studies on its client base, but lottery officials maintain that their goal is to have a lot of people play a little bit in order to raise needed money for the state’s education system.

“We do not target any group in our sales nor do we promise riches or the end of a person’s financial problems in our advertising,” lottery spokesman Van Denton wrote in a statement. “We are committed to the best responsible play practices.”

Sales highest in high poverty counties

In 2011, per capita sales spiked in the eastern part of the state, where $561 to $367 was spent on lottery tickets for every adult in the 10 counties with the highest per capita sales – Nash, Halifax, Vance, Wilson, Hyde, Edgecombe, Lenoir, Washington, Martin and Bertie counties.

All but Nash County had highly impoverished populations, with more than 20 percent of the total population living under the federal poverty line.

(Use our interactive graphic below to see how individual counties fared.)

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The lottery analysis was conducted by N.C. Policy Watch for the second year in a row, and used county sales data provided by the N.C. Education Lottery and compared it with adult populations poverty estimates from the U.S. Census. This year looked at sales data for the 2011 calendar year.

In this year as well as last, per capita sales were highest in counties with high poverty rates, where 20 percent or more of the population lives under the federal poverty line.

Last year’s report, “Hope and Hard Luck,” looked at lottery data from the 2009-10 fiscal year and found that out of the 22 high-poverty counties, all but two had lottery sales more than the state average of $211.

Since then, the U.S. Census has released updated data on poverty data which found more entrenched poverty in the state as a result of the lingering effects of the recession and economic downturn.

Now, 37 of the state’s 100 counties have poverty rates topping 20 percent. Of those, 26 counties, mostly in the eastern part of the state, had per capita lottery sales that topped the state average.

But not all counties followed the high-poverty, high-lottery sales formula, notably in Nash County, where per capita sales were $561 and the poverty rate only 15.6 percent. The lowest per capita lottery sales were in Graham County on the mountainous western edge of the state, where $51.32 was spent on lottery tickets and 22.5 percent of the population lived in poverty.

Proponents of the N.C. Education Lottery have held up the games as largely harmless ways to offer entertainment to residents while sending needed revenue to the state’s education system, pointing to more than $2 billion that’s gone to education since the lottery’s 2005 inception. When it first began, the N.C. Education Lottery was required to send 35 percent of its proceeds to fund education. That percentage has since fallen to 30 percent, after lottery officials said they needed to put more money into prizes in order to attract more players.

Those more critical of the state lottery, like Bernal of Stop Predatory Gambling, say the state-run lottery only offers a small portion of money for education while taking money away from those who need it the most.  Savvy marketing is used by state government to to dupe people, with games like the $20 scratch-off ticket “$200,000 for Life” or a $5 ticket “EZ Grand” enticing players to part with their money, Bernal said.

By law, lottery proceeds can’t be used for general education funding, but is slated for supplemental programs that increase school construction, teacher’s salaries, pre-K programs and college scholarships.

The lottery added an estimated 3.6 percent of funding to the $7.9 billion needed to run the state’s public schools over the last year, according to the N.C. Department of Public Instruction.

Robert Farris Jr. , a Wilson lawyer who serves as the N.C. Education Lottery Commission’s chair, said North Carolinians make their own decisions about whether to play, and when they do, a portion of the money goes to help education in the state, he said.

“It’s a voluntary contribution by all that play whether they’re poor or rich,” Farris said. “That’s the beauty of it.”

Farris’ home county of Wilson had the fourth-highest per capita sales in 2011, with $442.22 spent on the lottery for every adult resident.

The state lottery isn’t as harmful as other types of gambling, Farris says, and he’s found it to be a way to offer entertainment for players and earn some money for education.

“Nobody is forced to play, the casinos and horse races and stuff tend to be a lot more addictive,” Farris said. “Those players lose their house. Lottery buyers lose a dollar or two.”

The lottery commission recently sat through a presentation about Keno, a numbers-style game typically played in restaurants, bars and taverns where winning numbers are selected every few minutes. In Ohio, the game has new drawings every four minutes, from 6 a.m. to 2:30 a.m., seven days a week.

Farris said he expects the commission will hear more about the game, and it could offer another way for the lottery to reach new players.

“The nature of the lottery seems to be that you have to keep changing to stay the same,” he said.

Halifax schools hurting for money, while lottery sales climb

Back in Halifax County, the high per capita lottery sales also come as the county school system is trying to convince residents that they need to contribute to the local school system.

A May 8 referendum would allow the county to assess a property tax on homes in the Halifax County School District, one of the most troubled school systems in the state that pays its teachers  the lowest salaries in the state.

(To learn more about the challenges facing the county, read this report from January that looked at  entrenched poverty in one Halifax County community of Scotland Neck.)

Currently, no local property tax is assessed, and that’s made it difficult for the school district to retain teachers and pay the rising gas and electricity bills for the schools, said Donna Hunter, the chair of the Halifax school’s education board.

Hunter has been spending her evenings talking to citizen groups about how needed the education funding is, but repeatedly faces crowds reluctant to see their tax bills go up in order to better fund the county’s schools.

The Halifax school district used $909,000 in the 2011-12 fiscal year to pay for repairs to school buildings, but more money is needed to bring the Halifax county schools up to acceptable levels, she said.

She wishes her fellow Halifax citizens had as much enthusiasm about funding schools as they did about playing the lottery.

“We’re trying to do more for the generation that’s here and the generation that’s to come,” Hunter said. “To me, it sounds like instead people are spending their money on themselves with the lottery.”

Questions? Comments? Reporter Sarah Ovaska can be reached at (919) 861-1463 or sarah@ncpolicywatch.com.

 

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