Rhode Island called tops in the nation on per-capita lottery spending
Rhode Islanders keep winning big lottery prizes – a seemingly sunny contrast to the parade of glum headlines about the state’s many fiscal problems.
Yet the sequence of recent winners may reflect a heavy level of lottery spending in the Ocean State. Several studies by the Tax Foundation found we have the highest per-capita lottery spending in the nation (a whopping $2275 in fiscal 2008 vs a national average of $199. The foundation’s figures include spending on VLTs at Twin River and Newport Grand.)
As I noted last week, the Tax Foundation calls lotteries a hidden tax that take a disproportionately heavy bite from poor people. The foundation also finds that lotteries divert money from retirement savings:
As Table 1 shows, a person who spends $100 per month on the lottery—slightly less than the average resident of Rhode Island spends on the lottery (see Table 2)—over a forty-year period would be $144,000 richer if he instead invested that money. A lottery player who spends $50 per month—slightly less than the average resident of Massachusetts—would have an additional $72,201 if he instead invested his money, and the average New Yorker, who spends about $25 a month on the lottery, could be over $36,000 richer by retirement age if he instead invested in the stock market.
For the highest-spending lottery players, the difference is even more dramatic. A person who spends $300 a month on the lottery could instead earn nearly half a million dollars in the stock market—$433,208 more than he would win playing the lottery. According to the National Gambling Impact Study Commission, in 1998 the top 5 percent of players spent $3,870 or more annually, and the top 10 percent spent $2,593 or more. There are five states where per capita annual lottery spending exceeds $500 (Rhode island, South Dakota, Delaware, West Virginia and Massachusetts), and in the majority of lottery states, per capita spending is over $100.