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Rhode Island called tops in the nation on per-capita lottery spending

March 13, 2012

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.

2 Comments leave one →
  1. March 13, 2012 8:46 pm

    This is currently a somewhat meaningless statistic since a large number (I have seen 40% in some reports) of the customers at Twin River come from out of state (i.e. Mass). It is inconceivable that Rhode Island residents are actually spending more than $2K per capita on the Lottery per year. Since Twin River represents the lion’s share of VLT revenues and since not quite half of that revenue comes from out of state, the real per capita spending in RI is much closer to that of Mass – which makes sense.

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  1. RI Progress Report: Central Falls disagrees, lottery logic and SK’s cozy relationship w CofC

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