The recent New York state budget negotiations focused on how Gov. Hochul could throw a financial lifeline to New York Mayor Mamdani, as they sought to balance the city budget without reducing it. The headline result was authorization for the “pied-à-terre” tax on high-value second homes in the city — which is likely to yield just a few hundred million dollars toward the city’s $124 billion budget, risking private investors pulling out of the city.
But what if there were a way to reduce state spending by hundreds of millions and, in the process, protect the financial and mental health of New Yorkers? In fact, there is such an option: putting a halt to the nation’s highest level spending on state lottery advertising.
As the slick new TV “Can You Imagine?” campaign — shot in multiple locations by a prominent filmmaker — reflects, the state Gaming Commission is on track to spend a stunning $388 million between 2022 and 2027 on just one ad agency media contract (McCann New York), having contracted for $434 million for 2020 alone with the same agency.
It turns out the lottery is a full employment program for Madison Avenue.
A mayor who is truly concerned about the poor would be urging the state to stop tempting them with illusion-based ads to spend their money foolishly on what amounts to a regressive tax.
“Every New York Lottery ticket represents a world of possibility,” asserted New York State Gaming Commission Chair Brian O’Dwyer in rolling out the “Can You Imagine?” campaign. In reality, each ticket. leads to a high probability: that a low-income household will waste its paycheck.
Per the Tax Foundation, the lowest-income taxpayers spend three times as much on lottery tickets as those of higher incomes. As a study based on University of Chicago research found, “40 million households are habitual players, mostly in the lowest quartile of household income.” They spend an average of $2,500 a year, spending that “often represents a material fraction of their discretionary income.”
Ad campaigns like “Can You Imagine?” are clearly aimed at just such buyers, with dream-like scenarios of travel that the wealthy can already afford. (For instance, a Neapolitan pizza slice suggests a visual sequence of a trip to Naples.) Keep in mind what’s not advertised: the odds of big payouts are daunting, 1 in 45 million for the NY Lotto and 1 in 302 million for Mega Millions.
But wouldn’t lottery revenue for the state fall if advertising were reduced? Perhaps not. Massachusetts has the highest per-capital lottery sales in the nation. By law, the Bay State caps lottery advertising at $6 million a year. Its residents spend $915 a year on lottery tickets, far more than New York’s $481.
What’s more, it might be desirable if both lottery spending and the revenue for the state it generates were reduced. Low-income New Yorkers would be far better off putting the dollars they put down for tickets at one of the hundreds of bodegas selling the tickets into a bank CD — where they would earn interest, rather than evaporating.
Indeed, were state governments not exempt from Federal Trade Commission rules, the lottery ads might well be barred as deceptive.
Better to warn, through creative public service ads, that the lottery, like DraftKings and the other ubiquitous sports betting sites, are gateway drugs for those who can go on to one of the dangerous gambling habits noted in the small print. The National Council on Problem Gambling estimates that 20 million Americans suffer from it.
The lottery, it’s claimed, provides billions for the state education budget. But as any budgeteer knows, all funding is “fungible” — the earmarked education budget allows for higher spending in other categories. Less lottery revenue might force the state to tighten its belt for a change.
Even more broadly, though, there is a moral question. It is one thing for states — 45 of which now have lotteries — to legalize what was once called a vice. It is another thing altogether to tempt residents to partake in it. New York is spending hundreds of millions to do just that. The state Legislature should call a halt.
Howard Husock is a fellow at the American Enterprise Institute and author of “The Projects: A New History of Public Housing.”