Lotto: the State as Croupier?

The Lotto is in trouble again apparently. It now stands accused of hoarding monies it should have disbursed to the charities it likes to remind its critics that it supports. But what is a lottery in reality?

John Ralston Saul labels lotteries ‘stealth taxes’.

The pre-globalism era, he contends, was characterised by high growth, high taxes and low unemployment, Harold McMillan’s ‘You’ve never had it so good’ era. The economic messianism of globalism has brought sluggish growth and high unemployment and governments have felt under pressure to keep taxes to a minimum. Even so they do have to get revenue from somewhere and they do this by stealth taxes – reduction of grants, the encouragement of charity work and by lotteries.

The main point of criticism of lotteries is not just that they tax in an underhand manner, but that they tax the poor. It is true that a great deal of the revenue goes back to the poor, but the dogfight mentioned above suggests that by no means all of it does. We are also talking about very big business.

There is, observes Saul, something pretty unseemly about democracies organising gambling and a particularly squalid aspect of this is the amount spent on persuading the poor to be taxed in this way, i.e. by advertising. ‘Thata amachance; thatha amamillions’, is the home-grown slogan. In the USA, where $500 million is spend every year advertising the lottery, it is ‘A million a day – just play’. As Saul so eloquently puts it, ‘Perhaps the most demeaning to the dignity of citizenship and democracy has been the decision of governments to be come the largest croupiers ever known’.

He compares the amounts raised by this method to what comes from corporate taxes and the comparisons are sobering. In Britain it is £97 a year, which is more than half of what is raised in corporate taxes. In Alberta, the energy-rich Canadian province, the revenue from gambling sometimes top the revenues paid by the oil and gas companies.

The justification for this phenomenon of government-as-croupier is that much of the income goes to good causes, as it does here in South Africa. But Saul notes trenchantly that this has the effect of silencing precisely those who might be critical of the encouragement of gambling among the poor and of this particular method of raising taxes for the support of the poor, namely by taking it from the poor to give it back to them.

Unfortunately the South African lottery seems mostly to be taking from the poor at the moment.