Top Ten Myths - Transcription

Public Gaming Research Institute (PGRI)

Top Ten Myths About Lottery

(And Why They Are Not True)

By Duane V. Burke, CEO & Chairman

Public Gaming Research Institute, Inc. (PGRI)

Senator Geller, Ms. Paul, distinguished members of the Public Sector Gaming Study Commission and colleagues. Thank you for giving me the opportunity to address you today on lotteries in the United States.

My name is Duane Burke. I am CEO and Chairman of Public Gaming Research Institute, Inc. (PGRI), a company in its 29th year of providing professional information and conference services to the lottery industry in the United States, Canada and overseas. Prior to starting PGRI, I worked for The Boeing Company and Boeing Computer Services (BCS) in Seattle for many years. It was while working in new business development for BCS, that I developed an interest in the lotteries as businesses for states to raise money and hence formed PGRI as a service organization to help those in government and industry interested in lotteries.

I graduated from the University of Washington in Seattle in 1962 with a Bachelor of Sciences Degree in Electrical Engineering with Specialization in Computer Applications. From the fall of 1975 until the summer of 1980 I also served as lobbyist for the lotteries in Washington, D.C. This was during a time when the Federal Government was attempting to constrain the states in their use of lotteries to raise money for the public good. The states had some success with their lobbying efforts as evidenced by the vibrant state of state lotteries today.

There were only three state lotteries in the U.S. and one provincial lottery in Canada when PGRI was founded in the fall of 1971 (NH, NY, NJ; and Quebec in Canada). As a result, I have had the unusual and completely unique experience (among working lottery professionals today) of having seen virtually the entire lottery industry evolve in the United States and Canada. Modern lotteries in the U.S., which started in New Hampshire in 1964, are now celebrating their 35th year as a revenue raising alternative to more taxes.

You could say that I have seen it all - the evolution of lottery games from the simple monthly games of the early days to the exciting range of lottery games available to the public today; the incredible growth in revenues to the states from lotteries; the increasingly favorable attitudes about lottery by the public, even in "Bible-Belt States"; the great good that lottery funds have done for people in lottery states; the success that the states have had in driving illegal numbers games out of business; the life-changing effect that large lottery prizes have had on hundreds of thousands of families; the economic benefits that sellers of the lottery tickets have realized for their retail businesses.

I have also seen that since the beginning, in the United States, Canada and in most places in the world, lotteries have been operated in the public interest, with great integrity by men and women of talent and integrity who take their responsibilities of public trust extremely seriously. This is why lotteries have such a great reputation for honesty and respectability and why they are so successful. The first three lotteries in the United States were headed by former FBI Special Agents. Former FBI agents were chosen because of their integrity and the common fear of the infiltration of the state lottery operations by organized crime or other criminals. Several later lotteries were headed by other types of former law enforcement people for the same reason.

In time it became apparent that the strict operating procedures and associated safeguards in place in lotteries almost completely precluded the opportunity for the crooks to benefit illegally from the lotteries. Over the past 35 years there have been less than a handful of serious problems detected, and they were all dealt with by successfully prosecuting the culprits.

But what I have not seen over the past 29 years are problems associated with lotteries - no social problems, no economic problems, no criminal problems. And yet, those who oppose the lotteries on whatever grounds - moral, religious, ideological, or political - lacking facts to support their positions, tend to create and perpetuate myths about lotteries. So, in TV's "Late Show" tradition, and with the help of my assistant, Kathleen Ward, I present to this distinguished Commission the Top Ten Myths About Lotteries and why they are not true.



Myth #1

Odds of being struck by lightning are better than the odds of winning a lottery.

This myth was mathematically debunked by Iowa Lottery Commissioner Ed Stanek (who has a doctorate in physics) in an October 1997 issue of Public Gaming International magazine.

Statistics gathered by NASPL as well indicate that in one year alone (1996) 1,136 people won a million dollars or more and an additional 4,520 won $100,000 or more by playing North American lotteries. By contrast, 91 people were killed by lightning during that same year.

Also, what kind of a second prize does a lightning strike offer? Lottery players can win without actually hitting the jackpot, with lesser payouts for picking some of the correct numbers.



Myth #2

Lottery is a form of taxation.

A tax is compulsory payment to support government. Citizens have no option in contributing to state revenue with mandated levies and other tariffs. In fact, they may go to jail if they don’t pay.

Playing the lottery is entirely voluntary. Whether as a regular purchase or as an occasional play, buying a lottery ticket is an individual choice. The only consequence to not playing lottery is missing some fun and possibly a prize.



Myth #3

Lotteries prey on the poor by target marketing to those who can least afford to play.

Come on, what fiscally responsible company would focus its best marketing efforts on people who can’t afford to buy the product? This does not make good business sense.

Lottery products are marketed in qualifying retail outlets. These sites are predominantly convenience stores, gas stations and supermarkets. If zoning regulations in high-income neighborhoods prohibit convenience stores, gas stations and supermarkets, you won’t see many lottery retail sites in those areas. If there is a concentration of qualifying retail outlets in less affluent areas of a community, you will see many more lottery retail sites in those areas. This makes it appear that lottery sales sites are chosen by income level when in fact this is just not true.

Also keep in mind that players buy tickets in areas where they work and shop, not necessarily where they live. A Minnesota survey found that more than half the players bought tickets in zip codes outside their own home zip code.

Even if lottery organizations wanted to bow to this common myth and restrict the sale of products in low-income neighborhoods, they would face discriminatory charges from the qualifying retailers who are being denied a government contract. Also, citizens being denied access to lottery products based on their income would probably have as strong a case against the state as disabled people who are denied access to lottery products in retail outlets that are not ADA compliant.

Myth #4

Lottery purchases are made mostly by low-income people.

Many studies show that this myth is unfounded. Numerous surveys conducted by individual lotteries show that their players cross-section the overall population in that jurisdiction.

A 1997 poll commissioned by the Washington Post found that middle income Americans were the most likely group to play the lottery and that the wealthiest and poorest were least likely to play. The survey says:

• Two out of three Americans with annual household incomes ranging $25,000 - $45,000 played the lottery at least once a year; one out of four played monthly.

• Americans earning $45,000 - $65,000 played even more often: three-fours occasionally, one-third at least once a month.

More recently, a Gallup Poll on Gambling in America this year shows that 57 percent of American adults had bought a lottery ticket in the past 12 months and:

• Those with $45,000 - $75,000 incomes were most likely to play; 65 percent had played in the past year.

• Those with incomes less than $25,000 were least likely to play (53 percent).

• Those with incomes more than $75,000 spend about three times as much on lotteries each month as those with incomes under $25,000.

Myth #5

That billboard thing in Illinois.

This myth, like most urban legends, is perpetrated for its sensationalism and does not reflect factual accuracy about the lottery industry.

We who support the state lottery industry take every opportunity possible to correct the bad press lottery has received due to erroneous reporting about billboards placed in Illinois in 1986. Opponents charged the Illinois Lottery with targeting advertising specifically to a poor neighborhood with a billboard picturing a lottery ticket and the wording "Your ticket out of here."

In reality, the billboard read "How to get from Washington Street to Easy Street" and was only one of hundreds placed in various locations (in a variety of income level neighborhoods) with the street name changed for each. The Washington Street location was on the main access road to Chicago Stadium and was chosen simply to reach an entertainment-seeking audience.

Myth #6

You get nothing for your lottery purchase if you don’t win a prize.

Lottery is a game. Games are entertaining. The entertainment factor in lottery is multifaceted:

• With the purchase of a lottery game a player gets the fun and suspense of scratching latex squares, breaking open a pull-tab, or choosing his special "lucky" number combination for a winning sequence that may allow him to claim a prize.

• Non-winners often have an opportunity to enter special drawings for a second chance at winning prizes.

• Probability games add to the entertainment factor in that every ticket will be a winner if it is played correctly. How the ticket is played (which areas are uncovered) becomes an entertaining challenge.

• The growing number of television tie-in lottery games also adds another dimension of entertainment to lottery games with comedy, drama and suspense all rolled into the show.



Myth #7

Lottery is responsible for the growing number of compulsive gamblers in the United States.

Compulsive gambling is addictive behavior, and like other forms of pathological addiction, it involves biological and psychological factors that predispose an individual to the behavior. Providing a substance does not create an addict.

A National Survey on Gambling Behavior conducted for the National Gambling Impact Study Commission last year found there is no relationship between problem gambling rates and the presence or absence of a lottery. Survey tabulation noted that "it does not appear that the availability of a lottery has an impact on (problem gambling) prevalence rates."

Other studies indicate that compulsive gamblers choose high-excitement games filled with sensory stimulation, games that involve skill, and immediate gratification for their play. Sensory stimulation, a skill level, and immediate payout are not part of lottery play.

But lottery organizations do not bury their heads in the sand and deny that the problem of compulsive gambling exists. Most have taken a proactive approach in identifying the problem and providing avenues of help for those afflicted in their jurisdiction. Nearly all U.S. lottery organizations include a Play Responsibly message in promotion of their games.



Myth #8

Because state governments benefit from lottery proceeds, they can't be trusted to regulate their industry.

We trust states to make their own tax policy — and many other decisions regarding their citizens — so why shouldn’t states be trusted to regulate their own lottery organizations? There is nothing to hide. Lottery files are public record and open to scrutiny by the media and by the citizenry. Lottery board meetings and legislative hearings also are open to the public. And these state lottery proceedings are much more accessible than those of federal regulatory agencies.

Myth #9

There is no assurance that lottery drawings are conducted fairly.

The state lottery industry is one of the most scrutinized industries that ever existed. Security has always been of highest priority in selling lottery products and in conducting lottery drawings. A high level of security and public drawings are what separate state lotteries from, and sets them above, numbers games sold on the streets.

Using state-of-the-art draw machines and televising official drawings are means employed to ensure that every player has the same chance to win. For instant games, the lottery industry requires secure printing facilities and controlled distribution; the industry also is moving in the direction of bar coding and all electronic validation equipment.



Myth #10

Since there are relatively few payouts compared to the number lottery tickets sold, few people (only holders of winning tickets) actually benefit from lottery.

Millions of people have won thousands of cash prizes playing lottery games. But there are many more millions of people who also are lottery winners.

• Lottery retailers earn commission on the sale of lottery products, and this income contributes to the economy for everyone in a jurisdiction.

• The vendors and suppliers who provide the hardware, software, tickets, advertising services and the many other goods and services it takes to run a lottery also strengthen the economy through their enterprise.

• Lottery winnings spent on goods and services in a jurisdiction also contribute to economic prosperity for all.

• In the 37 states and District of Columbia that operate government sanctioned lotteries, a total population of more than 230 million citizens wins by benefiting from lottery proceeds that support a variety of projects.

Sharon Sharp’s subsequent presentation on Where the Money Goes will show you how lottery supports good causes in jurisdictions throughout the United States.

Ladies and gentlemen, it has been a pleasure being with you today. I will be glad to answer any questions you may have.

© 1999 Copyright Public Gaming Research Institute, Inc.



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