Poor odds

Lottery fever fuels a half-billion-dollar tax on Seattleites who can least afford it.

LOTTERY FEVER! Everyone's got it! With the Washington state lotto jackpot (at press time) standing at $32 million—its biggest prize ever—even avowed nongamblers have been lining up to get in on the action.

But the excitement, the glamour, and the fantasies serve only to mask a more dismal day-to-day reality: The state lottery is a year-round regressive tax on poor neighborhoods in this city.

Documents obtained from the state lottery commission tell the tale: The top lottery retailers in Seattle are all located in the least white and most economically disadvantaged areas. A map of these top ticket sellers forms a kind of horseshoe pattern, running from the Central District through Ranier Valley, over South Seattle and then back up through the International District and Beacon Hill (home of the state's top grossing outlet: The Hilltop Red Apple).

Among Seattle's top 10 lottery outlets, the northernmost is the Bangmi Smoke Shop at Second and Pike. In this tiny concrete room, customers purchase lottery tickets and discount cigarettes from two holes in the back where only a pair of hands are visible. The patrons are not exactly Nordstrom shoppers. Lottery sales at the Bangmi total over a half a million dollars annually.

As University of Washington Geography Professor Emeritus Richard Morrill observes, the lottery "traditionally portrays a pattern of doing the best business in the poorest neighborhoods."

Laju Nankani, the public relations director for the lottery, plays down the location of top-grossing outlets in impoverished areas. "While it is true that many licensed Lottery retailers are located in urban areas in Seattle," she says in a written statement, "those areas also are the hub of numerous other businesses. Many people work in these areas, drive through these areas, and hence are more likely to stop at licensed Lottery retailers in these areas to purchase their Lottery tickets. Because of the influence of workers on sales, a comparison of a store's sales to the demographics of the residents around it is not valid."

By this logic, high-traffic neighborhoods such as Fremont, Wallingford, or Queen Anne—which are well-off, educated, and white—should have top-grossing lottery retailers. But they don't.

THE LOTTERY COMMISSION is clearly sensitive to the charge that they are preying on poor minorities. They have published a demographic study from fiscal year 1999 that purports to find that "Lotto playership is especially high in the middle to upper income and older segments. It is low among the young and the downscale." The study also suggests that lottery playing is more common among whites than among minorities.

But the published numbers withhold more than they disclose. According to the lottery's research director, Tim Brown, the study was based on a random telephone survey of 2,350 Washington adults. Naturally, given the ethnic makeup of Washington state, 90 percent of survey respondents were white. Likewise, the study tells us, 90 percent of those who had played the lottery in the last three months were also white. By contrast, only 2.5 percent of the people who said they had played in the last three months were African-American.

This certainly confirms that few African Americans were surveyed; it tells us nothing about how much African Americans play the lottery as compared to whites. For that, you have to go behind the agency numbers and perform an additional computation not displayed in their study. Doing this reveals that, by the agency's own survey, blacks played the lottery in 1999 at a rate of 60 percent (that is, six out of 10 played), as compared to 52 percent for whites. Hispanics had an even higher rate of play, at 71 percent.

The lottery's Tim Brown argues that this is an invalid conclusion because "the sample of the individual minority segments is too small to be projectable." Which would seem to be precisely the point.

The study numbers also indicate that a person who makes over $50,000 a year is more likely to play the lottery than someone who makes under $20,000 a year. This may well be true; but those numbers do not address the more important question: how often people play and what percentage of their income they blow on tickets.

WHEN WASHINGTON state sold its first lottery ticket in 1982, it was following a decade-long trend of states decriminalizing gambling. The Washington Legislature was also facing a record budget deficit. The argument then was that the state could not stop illicit gambling, such as the numbers racket, and should instead control and tax it.

But as Professor Morrill points out: "At least, with numbers playing, the money stayed in the neighborhoods."

Merritt Long, the director of the Washington State Lottery, claims that the lottery helps communities by benefiting individual retailers, who get a six to seven percent commission on each ticket sold. Prosperous local businesses means prosperous neighborhoods, he argues. "The lottery helps local businesses, helps to balance the state budget, and gives to local charities, including the food bank and book drives. . . . Everyone in Washington benefits from lottery sales," says Long.

"That's bull hockey," says longtime Central District resident and activist Jean Amos. "I do not see any improvement in the areas that these places are located. I see a lot of money going away, but nothing coming in. Besides advertising, that is."

Indeed, by the sheer fact of different zoning codes, there is a highly disproportionate number of lottery billboards in the Central District as compared to the Highlands or even Capitol Hill, which has the effect of pushing lotto on the less-wealthy. With a combined budget of more than $400 million a year, the nationwide lottery advertising campaign is one of the largest in the world.

As a rule, about 60 percent of lottery revenues—which totaled $473 million last year—are paid out in prizes. The rest is divided up between the baseball and football stadiums, lottery marketing, and the state's General Fund. Nothing in the General Fund is specifically earmarked for neighborhoods from which the lottery revenue comes. A one-way cash flow out of concentrated areas to the entire state is the result. (Initiative 728, on the ballot this election, would take all the lottery proceeds in the General Fund and put them toward school construction.)

Unlike most lotteries in the United States, the Washington State Lottery is doing very well and growing. It probably had its best week ever last week. Director Long calls the lottery "a part of the economic development of Seattle." This is true in more than one sense: The lottery has helped create our hourglass society of very public wealthy and very hidden poor in Seattle.


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