Editorial: High-revenue lottery bad for Pennsylvania

Do you want your neighborhood to have a good drug dealer or a bad drug dealer?

A bad drug dealer would show up late. He would fumble his transactions and probably very poorly market his wares. It’s less likely drugs end up with children or vulnerable populations.

A good drug dealer, however, would be a master of inventory control and of good service. He would understand key players in the local market, identifying socially relevant middle schoolers and high schoolers who would best increase demand.

Most people would want the bad drug dealer in their neighborhood. The less competence, the less likely the negative effects of drug use are to compound through the local neighborhood.

With Gov. Tom Corbett’s plans to privatize the state lottery system now appearing inevitable, our state’s bad drug dealer is about to be replaced by a new, far improved lottery management service.

Camelot Global Services, a Canadian-owned British company specializing in lottery operations, promises to increase revenues. By increasing the number of vendors, more effectively marketing lottery programs and adding video lottery games to bars and restaurants, the company promises to increase yearly revenue from $1 billion to at least $1.5 billion.

We don’t know if Camelot can come through on its claims. But we don’t think it will necessarily be a good thing if it does.

Ultimately, the lottery is a tax on the poor. According to Wired.com, households that make less than $12,400 a year spend 5 percent of their income on lotteries.

It isn’t necessarily irrational for these populations to buy tickets. According to Carnegie Mellon researchers, there is a significant psychological bias toward spending small amounts of money on the prospect of “buying a dream.” The long-term certainty of loss has little effect when low-income buyers already start with so little. Lottery purchases become a legitimate form of leisure.

Yet just because lottery sales are justifiable on a personal level does not mean the state should try to expand its lottery. Ultimately, the overall economic welfare of low-income Pennsylvanians will decrease if the lottery gets larger. The state should not use psychological manipulation to fund its programs.

If higher funding is required for programs to protect the elderly, it shouldn’t be rolled into this hidden tax. The state should raise additional funds through proposals to the legislature, who should respond by raising taxes or making cuts to other programs. The purpose of our democracy, after all, is to allow voters to clearly decide how to prioritize public dollars. Hiding behind higher lottery revenues just further erodes the theoretical welfare-maximizing machinery of representative government.

These machineries are already rusted and dysfunctional enough. We shouldn’t further today’s situation by bringing a slick, new player to the community to take more money in the night.