State Lotteries Transfer Wealth Out of Needy Communities, Howard Center Project Finds

State lotteries have become the engine of a multibillion-dollar wealth transfer that relies on spending by less-educated and low-income Americans, according to an investigation by data journalists and reporters from the University of Maryland’s Howard Center for Investigative Journalism and Boston University published Tuesday.

While the lottery is often seen as a harmless amusement in which people spend a few dollars on a Powerball ticket when the jackpot gets big, the team’s first-of-its-kind analysis of mobile-phone location data proves that most customers at lottery retailers come from nearby neighborhoods. Its investigation of census data found those neighborhoods are disproportionately home to Black, Hispanic and lower-income people.

The project, entitled “Mega Billions: The Great Lottery Wealth Transfer,” took an in-depth look at the lotteries in 45 states and Washington, D.C. Students traveled to Michigan, Kentucky, Texas, South Carolina, Massachusetts, Virginia, the District of Columbia and other states to do on-the-ground reporting.

“Because they’ve been around so long, most people take state lotteries for granted,” Howard Center Director Kathy Best said. “But our students’ reporting showed why we should pay attention to this growing, multibillion-dollar, state-sanctioned gambling industry.”

Lottery ticket sales have grown from $47 billion to $82 billion since 2005, according to La Fleur’s 2022 World Lottery Almanac; state-sponsored gambling is available in a majority of U.S. neighborhoods through more than 200,000 stores.

Student journalists also examined marketing and advertising documents, state spending records, legislative history, federal financial disclosures and education funding formulas to follow the money from the sale of a scratch-off ticket to show who was really benefiting from that spending.

In addition to tracking the flow of money from lotteries, it examines the factors that make it possible: increasingly sophisticated advertising that is not subject to federal regulations; a lobbying campaign to create state lotteries that billed as grassroots but orchestrated by the biggest lottery management firm; and the growing privatization of state lotteries as states turn over the running of their games to four multinational corporations, none based in the U.S.

The project was published by Merrill College’s Capital News Service and distributed nationally by The Associated Press. Portions were published by The Post and Courier in Charleston, South Carolina, and the Austin American-Statesman, which distributed Spanish-language versions of the stories to its Texas network.