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Lotto nothing? The budgetary impact of state lotteries

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  • Stephen Fink
  • Alan Marco
  • Jonathan Rork

Abstract

Lottery revenues are often touted as an independent revenue source for states. Using 32 years of state financial data, the fallacy of such thinking is demonstrated. Being the first to control for the self-selection of being a lottery state, it is found that overall tax revenues decline with increased lottery sales. Moreover, it is discovered that this decline is driven by a decrease in revenues from general sales and excise taxes, which is only partially offset by increases in income tax receipts. Such findings are attributed to a combination of behavioural and political responses following the lottery's implementation.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:applec:v:36:y:2004:i:21:p:2357-2367
    DOI: 10.1080/0003684042000271387
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    References listed on IDEAS

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    Cited by:

    1. Di Bella, Enrico & Gandullia, Luca & Leporatti, Lucia, 2015. "The Impact of Gambling on Government Budget: A European Comparison with a Focus on Italy - L’impatto del gioco d’azzardo sul bilancio dello stato: un confronto europeo e analisi del contesto italiano," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 68(2), pages 187-212.
    2. Cletus C. Coughlin & Thomas A. Garrett & Ruben Hernandez-Murillo, 2006. "The geography, economics, and politics of lottery adoption," Review, Federal Reserve Bank of St. Louis, vol. 88(May), pages 165-180.
    3. Earl L. Grinols & David B. Mustard, 2008. "Correctly Critiquing Casino-Crime Causality," Econ Journal Watch, Econ Journal Watch, vol. 5(1), pages 21-31, January.
    4. Hasret Benar & Glenn Jenkins, 2008. "The economics of casino taxation," Applied Economics, Taylor & Francis Journals, vol. 40(1), pages 63-73.
    5. Jia Yuan & Jason Z. Gao, 2015. "What drives lottery demand? Evidence from China's lottery practice," International Gambling Studies, Taylor & Francis Journals, vol. 15(1), pages 159-178, April.
    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.
    7. Douglas M. Walker, 2008. "Do Casinos Really Cause Crime?," Econ Journal Watch, Econ Journal Watch, vol. 5(1), pages 4-20, January.
    8. Chin-Tsai Lin & Chien-Hua Lai, 2006. "Substitute effects between Lotto and Big Lotto in Taiwan," Applied Economics Letters, Taylor & Francis Journals, vol. 13(10), pages 655-658.
    9. Aurora MURGEA, 2015. "International Confidence in Italian Economy. A Spread and Gambling Analysis," Timisoara Journal of Economics and Business, West University of Timisoara, Romania, Faculty of Economics and Business Administration, vol. 8(1s), pages 70-89, February.
    10. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.
    11. Douglas M. Walker & John D. Jackson, 2008. "Do U.S. Gambling Industries Cannibalize Each Other?," Public Finance Review, , vol. 36(3), pages 308-333, May.
    12. Brown, Ryan P. & Rork, Jonathan C., 2005. "Copycat gaming: A spatial analysis of state lottery structure," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 795-807, November.

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