Governing Gambling

SELLING HOPE by Charles T. Clotfelter and Philip J. Cook, Cambridge, Mass.:,

Harvard University Press, 323 pp., $29.95

WHEN professors of public policy collaborate on a work sponsored by the National Bureau of Economic Research, the result is likely to bring on the need for a nap in most people. But this book by two gentlemen from Duke University had me grinding my teeth, muttering under my breath, underlining like crazy, and littering the margins with exclamation points.

It's not that this detailed study of the ``third wave'' of gambling in America is filled with human drama or pungent narrative or particularly forceful writing. There's hardly a colorful anecdote about a subject that is filled with drama.

Instead, good researchers that they are, Clotfelter and Cook let the specifics of their study - heavily loaded with charts and graphs and footnotes - sustain the message without sermonizing.

The message is this: State governments are encouraging millions of people - including many children - to gamble. They are running gambling monopolies that aggressively market a government ``product'' using the most sophisticated techniques, including deception and hype. They are feeding on fantasies, undermining the work and savings ethic at a time when productivity and efficiency in the United States need all the help they can get, and in the process harming the public perception of government itself.

Beginning with New Hampshire in the mid-1960s, states began to adopt lotteries for these reasons: To raise revenues for worthwhile endeavors like education and public works; to undercut illegal gambling and thereby reduce corruption; and because most citizens apparently had no objection.

Many political leaders and church officials (except the Roman Catholic clergy) argued against state-sponsored gambling on moral grounds. But when referenda and opinion polls showed lotteries had wide public appeal, the politicians - acting as followers rather than leaders - went for what many saw as a ``painless tax.'' The result: three-fourths of all Americans live in states with government lotteries.

The authors indicate no evidence that lotteries have provided a windfall for education or any other high social goal. The fact is, as a portion of state revenue, lottery income remains a small fraction (about the equivalent of a one-cent hike in the sales tax). And rather than replace illegal numbers games and other rackets, the authors conclude, ``the lottery boom is simply contributing to the general rise in commercial gambling.''

There is also evidence that all those playing the lotteries are not deciding whether or not to gamble on the basis of full information. Most state lottery advertising does not reveal the real odds against winning big. There is also ``the tendency for ads to portray wholesome surroundings and people who are younger and more affluent than the typical lottery player,'' conclude Clotfelter and Cook.

``Not only may this tendency be an attempt to recruit new players,'' the authors state, ``but it also appears to reflect the effort by marketers, first noted by Vance Packard [in his 1957 classic ``The Hidden Persuaders''], to build into products the traits consumers would like to see in themselves.''

Just as with ads for beer and cigarettes, the private firms hired to set up and run state lotteries hide their persuasive talents in other ways as well - like calling themselves ``Californians for Better Education'' and spending millions to promote their cause at referendum time.

One of the strongest arguments against lotteries is that they constitute a regressive tax and that they prey on the poor, minorities, and impressionable youth. The evidence gathered here leads to the conclusion that ``the implicit lottery tax is considerably more regressive than other widely used sources of revenue.'' Minorities - especially those of lesser means - are far more likely to buy lottery tickets. Surveys of teenagers before and after California's lottery began showed that ``gambling among high school students increased sharply over the period.''

Clotfelter and Cook see a parallel with the ``military-industrial complex'' that Dwight Eisenhower warned against. Is this the kind of activity state government should be in cahoots with?

Lottery agencies are looking for ever more attractive forms of state-sponsored gambling - like tapping into professional sports. It's not too late to head off such questionable activity. Nor is it too late to hope that the record of state lotteries to date could reverse the trend. ``Selling Hope'' should be required reading for anybody in a position to decide such issues.