Games people shouldn't play; state lotteries take from the poor and give to the rich.

• Author: Luke, Peter

State lotteries take from the poor and give to the rich

In 1977, sagging sales and waning public interest in the Michigan State Lottery prompted the introduction of a new game called the Daily. Modeled after the illegal street numbers games that had flourished in the state's larger cities for decades, the Daily promised millions in instant revenue from a consumer base familiar with the rules and eager to bet.

That the players of the new game would likely be black, poor, and living in inner-city Detroit did not trouble state officials; in fact, it encouraged them. Most of the initial 300 computer terminals required to dispense the Daily tickets were installed in liquor stores in deteriorating neighborhoods. Twelve years later, the Daily is still most popular among urban bettors, accounting for 80 percent of all lottery sales in Detroit, where poverty, dropout, and welfare rates are the highest in Michigan. Daily sales are now near $500 million annually, about half of total lottery sales in Michigan. Citing the practice of grant recipients exchanging public assistance checks for lottery tickets, one Detroit minister, the Rev. James Holley said in 1988: "The state gives them money and then figures out a way to get it back. It's the craziest thing I've ever seen." Holley since has been awarded a $2 million public relations contract from the lottery bureau.

Gus Harrison, the lottery director when the Daily was introduced, said the policy implications of the new venture were clear but ignored. "You can get into a lot of rationalizations about this whole busi - That whole business is now a $15 billion-a-year operation in 37 states that have discovered that lotteries provide treasury coffers a growing stream of income with which to balance the books. It is also a business that has enjoyed a remarkable lack of scrutiny over who plays the games, how they are marketed, and how the proceeds are spent. Charles T. Clotfelter and Philip J. Cook attempt to supply that scrutiny in this book.

The two Duke economists document long-held suspicions that the poor and uneducated are state lotteries' best customers and describe how states have become architects of sophisticated, though dishonest, ad campaigns that target these groups.

These are the two aspects of state lotteries that should generate the most concern among policy makers. They deserved more attention from Clotfelter and Cook. The book lacks sufficient description of the culture of inner-city lottery...