Every Michigander has seen them: Mega Millions billboards advertising the money that could be yours with the right lottery ticket. Offering instant wealth, the Mega Millions and other lottery games bring over $2 billion in sales to Michigan. Where does this incredible sum go? Michigan Lottery advertising would have you believe that gambling is not a waste of money, but a way to benefit public education through the School Aid Fund. An examination of where the money really goes, however, isn’t so encouraging.
Revenue increase through “painless” means is the best argument for state lotteries. It is deemed better for citizens to voluntarily give money to the state via gambling than for the state to raise taxes. Under the belief that people would gamble regardless of its legality, and that the lottery would significantly benefit the public school system, Michigan residents approved the constitutional amendment necessary to establish a state lottery on May 16, 1972. Since then, the lottery has expanded from a single game to more than 70 “scratch off” games and numerous online games. These games have generated more than $48 billion in lottery ticket sales.
Whereas in 1995 approximately 40 percent of Michigan Lottery funds went to the School Aid Fund, that number had decreased to 30 percent by last year. Michigan Lottery spokesperson Andi Brancato attributes this change to the increase in lottery prizes. In order to keep citizens interested in paying for lottery tickets, both the chances of winning and the prizes for winning have increased.
Although Brancato raises an important point, such a change highlights the fact that the majority of lottery resources are required for self-sustainment. Five cents of every dollar goes to the continued advertising of the Michigan Lottery, as well sundry expenses. Seven cents is saved for the lottery retailers, while 58 cents goes to the lottery winners. Of the $48 billion the Michigan Lottery has generated after almost 40 years, only $16 billion has gone toward educational purposes.
Since 1972, the Michigan Lottery has averaged about $410 million to the School Aid Fund each year. But when compared with other contributions to the School Aid Fund, such as state sales tax (42.5 percent), income tax earmarking (17.7 percent), and state property tax (16.7 percent), lottery proceeds (6.6 percent) are small. Despite a strong advertising front, the lottery doesn’t provide nearly as much support to schools as other methods of collecting funds.
There is nothing inherently wrong with spending a few dollars on a lottery ticket. But Michiganders should not support the lottery in the false belief that most of the proceeds are going the schools. Most of the money is used to keep the lottery running – a fact you’ll never see plastered on a flashy Mega Millions billboard.