Players in Georgia, whose per capita income is about 10 percent below the U.S. average, are doing the most damage to their personal finances compared with lottery-playing habits in other states, according to the “Sucker Index” created by Bloomberg Rankings. While the state had the sixth-highest prize payouts, 63 cents for each dollar spent, consumers spent the second-highest chunk of their income on the lottery, which funds scholarships and prekindergarten.
Of the 43 states with lotteries, 26 had higher sales last fiscal year, helping to make up for lower taxes and federal aid. Governors used the revenue for programs from education to environmental protection. The pot comes disproportionately from lower-income residents, who shelled out a larger percentage of their pay on the games than wealthier people, according to a study in the Journal of Behavioral Decision Making.
“It’s a pro-rich wealth-redistribution technique in Georgia,” said Charles Clotfelter, a Duke University economics professor and co-author of Selling Hope: State Lotteries in America. “To link that tax revenue to a benefit that goes largely to middle-and upper-class citizens is a little stunning,” he said.
In 2010, Georgia residents spent an average $470.73, or 1 percent of their personal income, on the lottery, the Sucker Index shows. Only Massachusetts was higher, with spending of $860.70 per adult, more than three times the U.S. average. Georgia had per capita income of $34,800 in 2010, below the national average of $39,945, while Massachusetts’s was higher at $51,302, according to data compiled by Bloomberg.
Massachusetts players were the biggest lottery winners, getting back almost 72 cents on the dollar.
Bloomberg Rankings created the Sucker Index with 2010 data from the U.S. Census and annual reports from state lottery commissions, which include multi-state games. The total dollar amount of prizes awarded was subtracted from ticket sales, and then the difference was divided by the total personal income of each state’s residents.
Georgia’s lottery law says the state should contribute “as near as practical” to 35 percent of the proceeds to prekindergarten and the HOPE scholarships. A share that large was last transferred in 1997, according to a state audit.