Issue Number 2 – State’s Quest for Additional Revenue through the Lottery May be a Zero Sum Gain

North Carolina Citizens for a Sound Economy today released Issue Number 2 of its ongoing effort to educate elected officials and citizens on why a government-run lottery is bad business and public policy.

Evidence shows that as gambling becomes more common, the incidence of problem gambling increases.

According to Dr. Robert Goodman, Director of the United States Gambling Research Institute, problem gamblers cost the economy of the average state millions of dollars each year. The costs are not borne by the state directly, but rather by average citizens due to increased bankruptcy, theft, insurance fraud and other white-collar crimes committed by problem gamblers.

It is estimated that a problem gambler costs society between $715 and $52,000 per year. These estimates vary because they cover different scopes, but the two estimates considered most accurate are $13,200 per year (Dr. Goodman’s Testimony before the National Gambling Impact Study Commission) and a $10,000 per year figure calculated by Bill Thompson of the University of Nevada. Estimates place the number of problem gamblers at 3 percent to 5 percent of the population.

Although it is impossible to calculate the effect that the introduction of a lottery will have, to the extent that a state-run lottery expands the number of problem gamblers, the state’s quest for additional revenue through a lottery may be a zero-sum gain.