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The geography, economics, and politics of lottery adoption

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Author Info

  • Cletus C. Coughlin
  • Thomas A. Garrett
  • Rubén Hernández-Murillo

Abstract

Since New Hampshire introduced the first modern state-sponsored lottery in 1964, 41 other states plus the District of Columbia have adopted lotteries. Lottery ticket sales in the United States topped $48 billion in 2004, with state governments reaping nearly $14 billion in net lottery revenue. In this paper the authors attempt to answer the question of why some states have adopted lotteries and others have not. First, they establish a framework for analyzing the determination of public policies that highlights the roles of individual voters, interest groups, and politicians within a state as well as the influence of policies in neighboring states. The authors then introduce some general explanations for the adoption of a new tax that stress the role of economic development, fiscal health, election cycles, political parties, and geography. Next, because the lottery adoption decision is more than simply a tax decision, a number of factors specific to this decision are identified. State income, lottery adoption by neighboring states, the timing of elections, and the role of organized interest groups, especially the opposition of certain religious organizations, are significant factors explaining lottery adoption.

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Bibliographic Info

Article provided by Federal Reserve Bank of St. Louis in its journal Review.

Volume (Year): (2006)
Issue (Month): May ()
Pages: 165-180

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Handle: RePEc:fip:fedlrv:y:2006:i:may:p:165-180:n:v.88no.3

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Related research

Keywords: Gambling industry;

References

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  1. Thomas A. Garrett & Gary A. Wagner & David C. Wheelock, 2005. "A spatial analysis of state banking regulation," Working Papers 2003-044, Federal Reserve Bank of St. Louis.
  2. Stephen Fink & Alan Marco & Jonathan Rork, 2004. "Lotto nothing? The budgetary impact of state lotteries," Applied Economics, Taylor & Francis Journals, vol. 36(21), pages 2357-2367.
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Citations

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Cited by:
  1. Daniel Jones, . "Education’s gambling problem: The impact of earmarking lottery revenues for education on charitable giving and government spending," The Centre for Market and Public Organisation 13/307, Department of Economics, University of Bristol, UK.
  2. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.
  3. Garrett, Thomas A. & Coughlin, Cletus C., 2009. "Inter–temporal Differences in the Income Elasticity of Demand for Lottery Tickets," National Tax Journal, National Tax Association, vol. 62(1), pages 77-99, March.
  4. Melissa Schettini Kearney & Peter Tufano & Jonathan Guryan & Erik Hurst, 2010. "Making Savers Winners: An Overview of Prize-Linked Savings Products," NBER Working Papers 16433, National Bureau of Economic Research, Inc.
  5. Peter Calcagno & Douglas Walker & John Jackson, 2010. "Determinants of the probability and timing of commercial casino legalization in the United States," Public Choice, Springer, vol. 142(1), pages 69-90, January.
  6. Humphreys, Brad & Perez, Levi, 2011. "Lottery Participants and Revenues: An International Survey of Economic Research on Lotteries," Working Papers 2011-17, University of Alberta, Department of Economics.

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