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The Leviathan Lottery? Testing the Revenue Maximization Objective of State Lotteries as Evidence for Leviathan

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  • Garrett, Thomas A

Abstract

Unlike other governmental units, state lottery agencies publicly acknowledge that their primary objective is revenue maximization. This claim and the inherent monopoly power of lottery agencies provides a unique arena to test for Leviathan. With data obtained from United States lottery games, I perform a Laffer curve analysis to derive the optimal lottery tax rates for different categories of games. These optimal tax rates and Monte Carlo simulations are then used to test whether the current tax structure of lottery games is indeed the revenue maximizing structure. I find strong empirical evidence for the "Leviathan Lottery". Copyright 2001 by Kluwer Academic Publishers

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  • Garrett, Thomas A, 2001. "The Leviathan Lottery? Testing the Revenue Maximization Objective of State Lotteries as Evidence for Leviathan," Public Choice, Springer, vol. 109(1-2), pages 101-117, October.
  • Handle: RePEc:kap:pubcho:v:109:y:2001:i:1-2:p:101-17
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    Cited by:

    1. George R. Crowley & Russell S. Sobel, 2010. "Does Fiscal Decentralization Constrain Leviathan? Evidence from Local Property Tax Competition," Working Papers 10-16, Department of Economics, West Virginia University.
    2. 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.
    3. George Crowley & Russell Sobel, 2011. "Does fiscal decentralization constrain Leviathan? New evidence from local property tax competition," Public Choice, Springer, vol. 149(1), pages 5-30, October.
    4. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.
    5. repec:ebl:ecbull:eb-16-00858 is not listed on IDEAS

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