N.C.’s lottery still a big draw in poor areas

N.C.’s lottery still a big draw in poor areas


Click here for an interactive map of North Carolina’s county-by-county lottery sales.

Scratch-off and lottery tickets sold by North Carolina’s lottery continue to be most popular in some of the poorest parts of the state.

N.C. Policy Watch found that per capita lottery sales were as high as $500 to $600 in 2013 for  several struggling Eastern North Carolina counties, twice the state average.

Statewide, the $1.8 billion in lottery sales amounted to $238 for every adult resident of the state.

The 10 counties with the highest sales per adult resident are clustered in the northeastern part of the state and have populations where at least one out of every five residents lived in poverty, according to an N.C. Policy Watch analysis of 2013 lottery sales and U.S. Census population data.

The N.C. Education Lottery, established in 2006, received renewed interest this month from N.C. House Speaker Thom Tillis and other House Republican lawmakers interested in expanding the lottery and using proceeds to pay for teacher raises.

Less than $0.29 for every dollar spent on the lottery goes to educational programs, with $478 million sent by the lottery to supplement the state’s $10 billion public education budget in the last fiscal year, according to state lottery figures.

The N.C. Policy Watch investigation found North Carolina’s lottery continues to see its highest penetration in areas with high numbers of impoverished residents. The analysis used 2013 lottery sales data from North Carolina’s 100 counties, and then calculated per capita sales figures using adult population figures from the U.S. Census.

The highest per capita sales in the state were in Nash County, where $598.57 per adult resident was spent on lottery tickets in convenience stores and gas stations. The lowest per capita sales in the state were in the mountainous Madison County, with $64.26 per capita sales.

Other top-selling counties include Halifax ($577.47 per capita sales); Vance ($523.62); Wilson ($504.31); Edgecombe ($461.98); Lenoir ($445.31); Washington ($428.90); Bertie ($404.42) and Martin ($395.18).

In Nash and the nine other counties with high per capita sales, more than 20 percent of their population lived below the federal poverty line, approximately $24,000 in household income for a family of four.

The statewide poverty rate was 18 percent, according to 2012 data from the U.S. Census, the most recently available poverty estimates.

Lottery sales have seen big sales in poor counties for several years, as previous N.C. Policy Watch investigations found in 2010 (click here to read) and 2011 (click here to read). The statewide per capita amounts have also steadily increased in that time, from $200.11 in the 2009-10 fiscal year and $212 in the 2011 calendar year.

The lottery was approved in 2005 after a controversial middle-of-the-night vote by a Democratically-controlled legislature. Opponents from the left and right decried the passage at the time, saying it would end up preying upon those who could least afford it.

Now, Tillis and fellow Republican House budget writers want to expand the lottery and use proceeds to pay for teacher raises, a measure that would mean doubling a current restriction that the lottery use one percent of its budget for advertising.

State Senate leaders have already expressed their skepticism about the plan.

“My first thought, they need to call the gambling hotline,” Republican state Sen. Tom Apodaca told reporters after hearing about the House proposal. “They seem to have a gambling problem.”

A decision about whether the lottery’s coffers will end up funding teacher raises will be decided when Republican leaders of both houses hash out their differences about the $20.6 billion budget in conference committees behind closed doors.

Republican Gov. Pat McCrory noted his disdain for lottery advertising in early 2013, when he called on lawmakers to shift advertising dollars to school technology projects.

Lottery officials have also cast doubt about whether they’ll be able to generate the $106 million that House lawmakers want next year. The News & Observer reported on Saturday that lottery staff sent a fiscal memorandum to lawmakers last week saying they only anticipated raising $59 million if proposed restrictions like a ban on advertising at college sports events are adopted.

There may be other ways the lottery could expand, if lawmakers wanted.

A February 2013 performance audit by a Wisconsin-based industry consulting group recommended the North Carolina look into expanding advertising and cutting back on $1 to $2 games to expose consumers to more high-dollar scratch-off games. The report by Delaney Consulting also said keno, a game with multiple drawings every hour played in bar settings in other states, could also be a big source of revenue in the future for North Carolina.

That’s because players often end up taking any winnings they might make while continue to play from barstools.

“The churn created by this game [keno] causes players to reinvest in the game and also creates incremental food and beverage sales at these locations,” the audit said. “It is a win-win for lotteries and social environments as the keno product is known to cause patrons to stay longer and spend more in those locations that offer keno.”

Lottery’s losers

Though poverty rates in North Carolina’s mountains can often mirror that of the struggling eastern part of the state, data shows the lottery has not had as high sales there.

The fact that the lottery sees some of its highest per capita sales in poor areas of Eastern North Carolina is worrisome, said Peter Gilbert, an attorney with the University of North Carolina law school’s Center for Civil Rights.

It may be a sign that black and minority residents in impoverished areas are disproportionately shouldering the cost of the lottery.

Several of the Eastern North Carolina counties with high per capita lottery sales also have black and minority populations of 40 to 50 percent, with fewer jobs and opportunities in those struggling areas than in some of state’s growing urban areas, he said.

“It seems that there’s a disproportionate impact on those North Carolinians that can’t afford to pay,” Gilbert said. “It’s a very regressive form of taxation.”

Many of those counties — Halifax and Lenoir – already struggle with providing and funding quality schools, and have economic and racial segregation in both school and in housing patterns, he said.

“You’re raising lottery money on the backs of people who are already struggling for funding in their local school districts,” he said.

Questions? Comments? Reporter Sarah Ovaska can be reached at (919) 861-1463 or [email protected]

(Images of Scratch off tickets: North Carolina Lottery)