RALEIGH — The best argument for setting up a state-run lottery monopoly in North Carolina is that the state government needs more tax money to spend.
It’s noticeable how infrequently lottery proponents such as the administration of Gov. Mike Easley make this straightforward pitch. They apparently don’t believe that the people of North Carolina will buy this, the notion that the fiscal challenges facing the state are simply derived from a lack of ways for Raleigh politicians to get their hands on more of other people’s money. Nor do lottery supporters seem confident that the public will believe additional revenues from a state lottery would be effectively “invested” in bigger government.
Instead, they repeat the same tired cliche that lottereans have been using for years: North Carolina must set up a state lottery so that we will stop losing hundreds of millions of dollars to neighboring states with lotteries. You’ve no doubt already heard this argument over and over again, and if a bill ever passes in the NC General Assembly to hold a statewide referendum on a government lottery, voters will be treated to additional iterations of it.
We’re past the point where lottery boosters can claim ignorance about the basic flaw in this, their most-used argument. They know by now, after my organization and many others have pointed it out, that the true net loss in tax revenue from North Carolinians to the state-run lotteries next door is only a small fraction of the hundreds of millions of dollars typically mentioned (because North Carolinians win lottery prizes), and that this revenue “loss” is too small to be rationally concerned about. That is, administrative costs of setting up and operating a North Carolina lottery each year — including annual payments to out-of-state administrators and vendors — would almost certainly exceed the current net revenue loss.
It is, in other words, like spend a dollar a year to save less than a dollar a year. The argument makes no financial sense.
So why continue to make it? Because of its superficial plausibility. Lotterean argumentation is reiff — sorry, make that rife — with superficial plausibility. For example, plenty of state legislators favoring a lottery referendum have accused their critics, including me personally on several occasions now, of being contemptuous of public opinion and inconsistent about consulting it.
But who’s really being inconsistent? Lottery proponents such as Easley and legislative leaders say the public should decide whether North Carolina will set up a state-run gambling monopoly and punitively tax it each year to finance government growth. But they do not favor asking the public to have a vote on other ideas such as an annual constitutional cap on state spending, legislative term limits, supermajority requirements for legislating tax increases, parental choice in education, and a host of other ideas that poll as well or better than a state-run lottery does. And for the record, I do support a limited initiative-and-referendum system for North Carolina, even though I’d hate to see it result in a government lottery monopoly.
Indeed, many of these same government officials are been working furiously for years now to avoid referendum votes on key public issues traditionally subjectd to voter approval, such as the issuance of public debt. Back in 1999, they wanted to allow the University of North Carolina to issue billions of dollars in debt for construction projects without a referendum. Eventually legislators thought better of this idea (they had some help). More recently, the General Assembly has used financing means for prison construction that avoided a referendum. Why not let the people decide?
The familiar arguments for a state lottery in North Carolina serve as a clear exception to the adage that things just get better with age. No, sometimes they just get rancid.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.