Lottery success raises revenue -- and stakes for ever-ascending
take BY FRANK WOOTEN Of The Post and Courier Staff You have to play to win. Or do you? Lots of South Carolinians are hitting the S.C. Education Lottery jackpot without buying a ticket. In its brief history, the lottery has done more than $2.1 billion in gross business, repeatedly exceeded revenue expectations. In the profitable process, it has created excessive new expectations. Who's placing those bets? Try observation and deduction while waiting in a convenience-store line, and you could reasonably conclude that a significant percentage of that money comes from people of modest means. Yet a survey conducted by Market Search Corporation for the lottery found that overall ticket purchases are generally evenly spread across the assorted income levels -- and ethnic backgrounds -- of S.C. residents. Ernie Passailaigue, executive director of the lottery, told our editorial staff during a Tuesday visit to this newspaper: "We've done exceedingly well, and we've done it in a responsible manner. This is not an in-your-face marketing campaign targeted at people who shouldn't be playing." Who shouldn't be playing? Passailaigue: "If you're using your last dollar on this, you shouldn't be playing." The former state senator from Charleston stressed that our lottery presents itself as "entertainment," not as a path to riches. He added: "I look at it as a voluntary tax." Some other folks look on it as a regressive tax that preys upon the poor. Passailaigue acknowledged that lottery "menu" items similar to "street games" (Pick 3 and Pick 4 -- essentially numbers games) are most popular with black customers. He also acknowledged the lottery's transformation of convenience-store commerce: "Seventy-seven percent of our retailers are convenience stores with gas. Ninety percent of tickets are sold by convenience stores with gas. If you're a convenience store with gas and you're not selling lottery tickets, you're losing business." And if you're buying lottery tickets, you're probably losing money. That 58 percent payout rate makes it a sucker's bet. Then again, for many parents with children attending in-state colleges, the lottery has put them in the chips -- regardless of income. In the 2005 fiscal year, higher education will receive about two-thirds of the lottery's net take, kindergarten through high school approximately one-third. Lottery-backed LIFE Scholarships help keep smart kids in state by providing up to $5,000 a year to students who meet at least two of these three criteria: 1100 on the SAT, B average in high school, top 30 percent standing in graduating class. Once in college, LIFE students must maintain a B average to maintain that scholarship. Once the LIFE word spread, the LIFE bill soared. This "scholarship" goes to more than 90 percent of S.C. students who qualify for admission to the College of Charles-ton and Clemson. Many students who can't even get into those institutions can still use the LIFE money at other in-state schools. Passailaigue said some North Carolinians are even moving to South Carolina -- while keeping their jobs in the Tar Heel State -- to seize the LIFE opportunity. Our public colleges are seizing opportunities of their own. Aware of the giddiness induced in moms and dads by the rewards their "scholars" reap, those schools have steeply boosted their tuitions over the last few years. Think of it as a back-door funding hike. And think of any legislative candidate who suggests eliminating, or at least cutting back, on rapidly rising LIFE costs as a lousy wager on Election Day. No wonder this middle-class-welfare program has become the LIFE of both political parties in the General Assembly -- and a growth entitlement of sorts. So how will we cover its ascending tab? Though the S.C. Board of Economic Advisers has projected $250 million for fiscal year 2005's net lottery proceeds, the Legislature assumed a rosy-scenario figure of $341 million. Don't count that money yet. Don't count, either, on Columbia, Washington or any other capital city forever funding Nanny State "needs" ("scholarships" for kids who merely get into college, "universal" health care, "secure" retirements, etc.) without tapping deeply into middle-class money. A safe bet: Despite what politicians promise, if the middle class wants more from government, the middle class must ultimately pay for it. Despite criticism of "tax cuts for the rich," the top fifth of the U.S. income ladder already pays more than four-fifths of the total federal income-tax bill, according to the Congressional Budget Office. And taxing through the "voluntary" means of a lottery also has logical limits. Some other states, once lottery proceeds waned, have resorted to intensifying their marketing schemes. So far, our lottery's comparatively mild sales pitches are reassuring. So far. But what if (when?) the lottery take doesn't keep pace with the rising demands on it? The Illinois Lottery once made this craven pitch on billboards in Chicago slums: "This Could Be Your Ticket Out." Where can we buy a ticket out of our state's growing collective dependence on lottery loot?
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