Gamed by the State

12. July 2008 by Greg Kelver.

Governor Daniels has had plenty of boneheaded ideas over the last four years but the conceptual idea of getting the State out of the lottery business is NOT one of those.  State government often demonstrates an uncanny ability to screw up a two car parade and apparently it has just done so again with the Hoosier Lottery Scratch-off games.

Seems as though some shrewd attorneys have figured out that selling scratch-off tickets after the big prize is gone amounts to some sort of fraudulent practice.  At first glance, it certainly does not seem right that thousands of Hoosiers are plunking down their cash every week to take a chance on a prize that they have ZERO chance of winning.  Acutely aware of the election year consequences of what could happen once people figure out they have again been scammed by both Old Parties, Hoosier Lottery officials have quickly announced that retailers must immediately remove the tickets for any game in which the top prize has been won.  

http://www.indystar.com/apps/pbcs.dll/article?AID=/20080712/LOCAL18/807120434 

On the surface, pulling the tickets certainly seems like the right thing to do, but if you scratch just beneath the surface, there is a big problem with what state officials have just done.  Depending on when the ”big prize” is won, I think that pulling the plug on a game that just got started probably could result in the state actually LOSING money on a scratch-off  game.  There are obviously significant initial costs to the state to start-up, advertise, administer and pay prizes for a new scratch-off game.  But unlike small business owners who understand the concept of the “break-even” point, apparently break-even is not a worry for state officials.

Years ago, taxpayers were led to believe that the lottery was a cash cow that was going to make money that could be used for noble government purposes (like education). But if the state starts pulling scratch-off games and losing taxpayers’ money, it doesn’t take either a rocket scientist or a CPA to see the fundamental problem with a state-run scratch-off.  And forcing Hoosiers who are morally opposed to any gambling to pay higher sales tax, income tax or property taxes to cover the state’s losses is just flat out wrong.  That is a really bad bet that no overburdened taxpayer should be forced to take.

  Game over.

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