Study shows blacks outspend whites in lottery

0 Comments | Milwaukee Journal, The, Apr 5, 1995 | by Steve Schultze

The Journal Sentinel Staff

Madison, Wis. African- Americans spend more heavily on Wisconsin lottery games than white players, and low-income residents spend a much greater share of their income than wealthier gamblers, a new state- commissioned survey says.

Blacks were less likely to play the lottery than whites last year, but African-Americans who do play spend significantly more on lottery tickets, according to the survey, scheduled for formal release later this week.

Observers say the survey's findings on income of players adds weight to the idea, raised here and across the country, that lotteries prey on the poor while mainly benefiting the better-off through property tax credits generated through lottery sales.

The state's gaming head downplayed the gap.

The new study also showed:

m More than two-thirds of state residents had a favorable view of the lottery, and 51% purchased tickets in 1994.

m More than one-fourth of state residents falsely believed that it was possible to develop a system for predicting the outcome of lottery drawings, the survey found.

Actually, lottery numbers are picked at random, meaning the birthdays, anniversaries and other personally significant numbers players may choose have no relevance to winning numbers. Spending Disparity

Among households with incomes over $20,000 last year, blacks said they spent an average of $60.33 per month on the lottery more than four times the $13.73 average reported by white players, according to the survey.

However, University of Wisconsin-Madison professor Irving Piliavin, who conducted the study, said that because a relatively small number of blacks were surveyed, the spending figures were more accurately stated as a range in which African- American players spent from $19 to $100 a month.

For lower-income players (those earning less than $20,000), the racial gap persisted but was much less pronounced.

For all income groups combined, the average monthly spending on lottery games was $13.75, according to survey responses.

By law, all profits from the $500 million-a-year lottery must go to tax relief, which is paid through a credit on property taxes, thereby benefiting homeowners, not renters.

The tax credit now is worth a statewide average of $112 to homeowners, but the amount varies depending on where you live. The highest credits are paid in parts of the state with high- spending school districts but relatively low tax bases.

After prize payouts and other costs, $137 million was available for tax relief on 1994 homeowner taxes. Overall, about one-third of lottery sales are returned to homeowners and through a separate tax credit, to farmers.

Figures from the Department of Revenue show most parts of the state got homeowner lottery credits in the $100 to $120 range.

But there also was great variation, from a high of $191 in Marinette County's Goodman Township to a low of about $38 in many Door County communities. Door County has a heavy 2 concentration of vacation homes, which aren't eligible for the lottery credit.

Official Downplays Results

Gaming Commission Chairman John Tries acknowledged there was some redistribution of lottery money from renters, who don't directly benefit from lottery credits, to homeowners. But he rejected the notion that the lottery is siphoning money from poor or black residents in general.

"Blacks play more, but only when they can afford to play more," Tries said.

The survey found low-income residents spend a greater share of their income on the lottery, even though the actual amounts are not as large as the sums wagered by the more well-heeled. Those earning less than $10,000 a year spent the largest portion of their monthly income on lottery tickets in the last year, more than 2%. By contrast, families making $40,000 to $50,000 spent just 0.28% of their income. Few Cite Family Problems

Tries also pointed out that in the new Wisconsin survey, only a small percentage reported that their lottery spending had caused family problems or financial difficulties.

It would be "paternalistic" to judge how blacks spend their entertainment dollars, Tries said.

"They are playing it for entertainment value," Tries said.

He drew that conclusion because other survey results indicated that few black or white players bought lottery tickets with any expectation of getting rich quickly. Tries said the finding showed strong evidence that here most lottery players spend discretionary entertainment dollars, not money needed for necessities.

Piliavin, a professor of social work, said that though that seemed plausible, his survey doesn't go that far.

"I wouldn't make that conclusion," he said.

Piliavin said he was surprised by the large gap in lottery spending between blacks and whites, but said he was confident of his survey, which polled 2,084 adults, including 986 whites and 112 African-Americans who said they played the lottery.

Tries also expressed confidence in the survey results, saying it was the most extensive demographic study done of any state lottery. The study was ordered by the Legislature.