Tuesday, May 01, 2001

Lower-income Ohioans more likely play lottery

Expansion proposal renews gambling debate

By Spencer Hunt
Enquirer Columbus Bureau

        COLUMBUS — The Ohio Lottery offers everyone a chance to strike it rich, but records show most of its sales come from working-class and lower-income neighborhoods.

        An Enquirer analysis of the Ohio Lottery's $2.1 billion in sales last year shows it does better business in areas of the state where people earn less. Among the findings:

        • More than 62 percent of the lottery's sales came from neighborhoods where annual household incomes fell at or below a statewide median of $38,970. Half of Ohio households have higher incomes; half have lower incomes.

        • Nearly 60 percent of gamblers who won $1,000 or more lived in areas with household incomes at or below the median.

        • More than 61 percent of the 10,146 businesses that sold lottery games last year were in the lower-income neighborhoods.

        The analysis also reveals stark differences between Ohio's richest neighborhoods, where typical households earn $68,000 or more, and the state's poorest neighborhoods, where households earn $20,000 or less:

        • Lottery sales in the poorest neighborhoods were more than twice as high as in the richest neighborhoods.

        • Winners in the poorest neighborhoods outnumbered winners in the richest neighborhoods 2-to-1.

        • Some 616 businesses sold lottery tickets in the poorest neighborhoods, compared with 346 in the richest neighborhoods.

  Lottery sales and winnings, arranged by zip code, in Hamilton, Butler, Warren and Clermont counties.
  Top five lottery sales agents in Hamilton, Butler, Warren and Clermont counties
        Gov. Bob Taft, anxious to pump up dwindling state revenues, has put the Ohio Lottery in play. Despite strong opposition, he still hopes to persuade skeptical lawmakers to add a multistate game, such as Powerball, to the list of games the lottery offers in order to give schools another $70 million over the next two years.

        That has renewed an ethics debate over whether government should be involved in gambling at all. Lottery critics say poor people are the ones who pay — and lose ——the most.

        “I believe this confirms factually what we've been hearing generally,” says the Rev. John Edgar, leader of a United Methodist anti-gambling task force in Ohio.

        “We are taking money from the poorest citizens in our state to provide a basic service — education,” he says. “It is inappropriate for us to use the lottery as a way of extracting more money for schools.”

        Lottery Director Dennis Kennedy disagrees. Lottery outlets, he says, are concentrated in poorer areas because that is where a bigger concentration of shops and stores can be found.

        The lottery can't restrict where outlets are located, and to do so would be discriminatory, he says.

        He also says it's wrong to presume only neighborhood residents buy from a local outlet. Anybody can go anywhere to buy a lottery ticket, and people do that all the time, he says. For example, he says, downtown lottery outlets across Ohio daily attract thousands of workers who live elsewhere.

        At the same time, Mr. Kennedy says it has been years since the lottery studied its own data on who plays its games.

        “We're trying to do things to make the games more attractive to higher-income levels,” Mr. Kennedy says. “I'm not saying that in the past that we did games to attract lower-income players.”

Wealthy bet less
               A clear difference in attitudes and wagering on the Ohio Lottery is on display every day in two Greater Cincinnati communities.

        In the lower-income neighborhood of Walnut Hills, the numbers are a daily part of Hassan Fardan's life.

        The retiree says he spends about $20 a day on games such as Pick 4, Pick 3 and Super Lotto. He frequently travels across the Ohio River to play Powerball in Kentucky.

        “I play because I like the challenge of it,” Mr. Fardan says. “I have some extra money, so I play the lottery.”

        In an area where typical household incomes hover at $18,400, Mr. Fardan is one of many loyal lottery players.

        State records show cash registers at 13 Walnut Hills businesses rang up more than $100,000 a week in sales last year, for a total of $5.3 million.

        The lottery is less popular 10 miles north in Madeira, which has a similar population but is wealthier. Typical household incomes in Madeira surpass $80,000.

        Only seven businesses offered lottery games there, about half the outlets in Walnut Hills. The Madeira businesses posted $800,000 in sales last year; an average week brought in $15,500.

        Lottery data also show that 37 Walnut Hills residents won prizes of $1,000 or more last year, compared with six who listed Madeira addresses.

        Most of the Madeira sales came from the J.K.'s Chili lunch counter. Owner Jiries Khalilieh says his customers don't bet as much as players in other areas.

        “People here are just more conservative,” he says.

National studies
               The Enquirer's findings echo those of recent national studies. The National Gambling Impact Study Commission, a group formed by Congress to study the economic and social effects of wagering, concluded poor players pay more.

        The commission reported in June 1999 that players with household incomes under $10,000 bet nearly three times as much on lotteries as those with household incomes of more than $50,000.

        The top 5 percent of regular lottery gamblers accounted for 51 percent of total sales.

        The commission's results were based in part on research done by Duke University professors Philip Cook and Charles Clotfelter.

        Their report to the commission found high-school dropouts spent $334 on lottery games in any year while college graduates spent less than $90. They found that African-Americans spent four times as much on the lottery as whites.

        Mr. Clotfelter says lotteries amount to a regressive tax on the poor.

        “As a percentage of income, the amount an individual spends on the lottery rises as the income goes down,” he says.

Lottery leaders respond
               Lottery officials across the country dispute the findings of Mr. Clotfelter and the commission.

        David Gale, director of the North American Association of State and Provincial Lotteries, says it's unfair to describe a lottery as a tax. He says people choose to spend money on lotteries rather than movies, sporting events or other entertainment — not necessities.

        “If you don't pay your taxes, after several notices, you're hauled off to jail,” Mr. Gale says. “The lottery is a choice.”

        Mr. Kennedy, the Ohio Lottery director, questions any analysis that links sales to certain areas. He notes that many lower-income ZIP codes are found in urban downtowns.

        “A lot of sales in those neighborhoods come from people who are commut ing,” he says. “That makes it kind of hard to determine sales by region.”

        One reason why there are so many more lottery outlets in poor areas, he says, is because there are more businesses there. Suburban communities, where incomes generally are higher, are largely residential areas with few businesses.

        Mr. Kennedy wouldn't comment about results that show that most lottery winners listed addresses in lower-income areas.

        The lottery is trying to do more to win over wealthier individuals and businesses in higher-income areas.

        “We are, at this point, taking a look at how we put (lottery) terminals out there,” Mr. Kennedy says.

        He says the agency is looking at games that would appeal to wealthier Ohioans. A scratch-off game based on golf and another that offers Harley-Davidson motorcycles as prizes are more popular with higher-income players, he says.

        The agency also is examining new recruiting strategies that would sign up more businesses in affluent areas.

        “Unfortunately, our product is not as attractive as it was,” Mr. Kennedy says. “About eight years ago a business relationship with the Ohio Lottery was a lot more attractive.”

Fighting over Powerball
               A growing apathy over the Ohio Lottery can be seen in its sales, which have declined four straight years. Lottery officials blame the drop on competition from other states' riverboat casinos and from multistate lotteries such as Powerball and the Big Game.

        Mr. Kennedy and the governor believe sales can be revived if lawmakers let Ohio join a multistate game or create one of its own. Mr. Taft made a multistate lottery a part of his two-year, $44.8 billion budget proposal.

        “Voters approved of the lottery. We need to support it through a multistate lottery.” Mr. Taft says. “We ought to stabilize the lottery as a source of income (with the multistate game).”

        An April 17 Ohio Poll found 53 percent of state residents favor Ohio joining either Powerball or the Big Game. The University of Cincinnati-produced poll has a margin of error of plus or minus 3.5 percentage points.

        The multistate idea is not popular with lawmakers. The House budget bill doesn't include Mr. Taft's plan.

        Though he has twice pushed a plan to put slot machines at Ohio's seven racetracks, House Speaker Larry Householder, R-Glenford, worries a multistate game would increase problem gambling statewide.

        “We have a lottery where people are going into convenience stores, grocery stores, anywhere and everywhere in the state of Ohio where they are able to play a numbers game,” he says. “And we are talking about expanding that.”

        The plan may still have support among Senate Republicans. Whether they turn to a multistate lottery for schools is far from clear.

        The $70 million a multistate lottery could raise over the next two years would make up only a small portion of a plan that would spend $1.4 billion more on schools over the next two years. The budget bill raises that money for schools without expanding the lottery.

Owners want Powerball
               Outside the Statehouse, store owners in Walnut Hills and Madeira say they need a multistate game to pump up gamblers' interest and their incomes. They get a 5.5 percent commission from every lottery ticket sale.

        Ebonne Fashions Co., a Walnut Hills store that sells beauty supplies, sold more than $1 million in lottery tickets last year. Owner Syung Moon Kim estimates the lottery side of his business has fallen off 20 percent to 30 percent over the past few years.

        “A lot of people play here and then play in Kentucky,” he says.

        Mr. Kim and Mr. Khalilieh say a game like Powerball would recapture some of their losses. Mr. Khalilieh says groups that oppose expanding the lottery pay no attention to the fact that people will gamble whether Ohio allows it or not.

        “If people don't gamble here they will go across the river or to (Las) Vegas,” he says. “Why should the money go across the river?”

        Anti-gambling leaders, including nationally known activist Rev. Tom Grey, say people might reach a different conclusion if they knew more about how lotteries operate.

        “There aren't any lottery outlets in Ohio's most affluent neighborhoods. Why? Because nobody plays it,” the Rev. Mr. Grey says. “This is impacting poor people.”

        If Walnut Hills gamblers had a choice, they'd bring Powerball to Ohio.

        “Today I've got to go over to Kentucky and play,” says Mark Eubanks, 30. “It's $46 million.”

        Mr. Fardan doesn't like anti-gambling groups assuming the lottery hurts him.

        “The lottery is a personal choice,” he says, “whether you're poor or rich.”


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