Ex-Alabama governor to prison for lottery bribes

August 6, 2012 10:03 am

After years of appeals, the former governor of Alabama was sentenced to six years in prison for accepting bribes and other charges stemming from his efforts to launch a state lottery.

“I never expected my career in public service would end in a federal courtroom,” Ex-Gov. Don Siegelman told reporters.

Wayne Flynt, a former Auburn University history professor, said history will view Siegelman as a cautionary tale. The corruption case that brought him down rested at the intersection of two of the Democrat’s trademarks - aggressive fundraising and his plan to establish a state lottery to fund education. Once again, the case shows the corrupting influence that gambling often has on elected officials.

Siegleman made the launch of a state lottery a signature issue of his campaign. He supported a bill to let voters decide on the lottery in referendum ballot in 1999. The measure was defeated.

Siegelman was indicted in 2004 and again in 2005 on charges of bribery and mail fraud in connection with Richard M. Scrushy, founder and former CEO of HealthSouth. Siegelman was accused of trading government favors for campaign donations when he was governor. Scrushy was accused of arranging $500,000 in donations to Siegelman’s campaign for a state lottery fund for universal education in exchange for a seat on a state hospital regulatory board, a non-paying position

Who’s the biggest bookie?

July 18, 2012 9:37 am

In New York, officials moved to crack down on illicit gambling, while the state pushes to further legalize it.

Clyde Haberman of The New York Times highlights the hypocrisy surrounding the hyped-up raid on a building in Chinatown that was described as a major gambling operation. “But people in the building say the gambling amounted to low-stakes mah-jongg and card games,” he wrote. “And the arrests led to nothing more than misdemeanor charges against a few immigrants middle-aged and beyond, including a 78-year-old woman who hardly came across as her generation’s Ma Barker.”

Meanwhile, Gov. Andrew Cuomo and other state lawmakers are busy trying to amend the state’s constitution in order to allow for commercial casinos. Initially, Cuomo was negotiating with a Malaysian firm to give them the gambling rights in New York City – similar to the way mob families carve up territories.

Then, of course, there is the issue that the state is one of the biggest numbers runners in the country. The New York Lottery made $2.9 billion in the fiscal year that ended on March 31. The state said the money went to education, but as Haberman pointed out: ”lottery profits are thrown into the general treasury, rendering them indistinguishable from other sources of state revenue. One could just as truthfully, though less effectively in the public relations department, say that the profit supported welfare payments and recreation programs at Attica.”

Haberman then cut to chase: “Also left unsaid is how the lottery encourages working stiffs and the very poor to part with scarce dollars in pursuit of a hazy dream. It’s fundamentally no different from how people in Chinatown plunk down a few bucks on their mah-jongg tiles. Yet one gambling operation is lauded as noble while the other invites the full weight of the law.”

Texas GOP calls for ending lottery

June 29, 2012 4:26 pm

In a move of unlikely allies, the Texas Republican Party has joined with the Dallas NAACP in calling for the Lone Star State to end the lottery.

The Texas Republican Party platform includes a plank about legalized gambling in general and the lottery in particular. It states: “We oppose the expansion of legalized gambling and encourage the repeal of the Texas State Lottery. We oppose dedicating any government revenue from gambling to create or expand any government program.” (See an earlier blog here on the reason why the Dallas NAACP wants to shut down the lottery.)

The Texas Legislature is set to vote next year on whether to reauthorize the lottery. Momentum is building from a diverse coalition to end the lottery.

In April, the Texas Sunset Advisory Commission, representatives from the Texas Baptist Christian Life Commission and Texans Against Gambling/Stop Predatory Gambling in Texas urged shutting down the Texas Lottery Commission, citing a two-decade record of failure to delivery on promises.

NAACP: Close the Texas lottery

June 28, 2012 1:40 pm

Studies show that the poor and minorities gamble away much more money on the lottery than other groups. (See here and here for more studies and research.)

As such, states profit by stripping wealth from those who can least afford it. It’s a classic regressive tax in the worst way. That’s why the Dallas chapter of the NAACP wants Texas to end its lottery.

The nation’s oldest civil-rights group say they are bothered by how poor and minority Texans spending their money on lottery tickets instead of necessities such as rent or health insurance, and the funding has not helped public education as advertised. “People with very little money are spending their money on the lottery,” said Juanita Wallace, president of the Dallas branch of the National Association for the Advancement of Colored People.

Wallace pointed to a story about a man spent his limited dollars to buy lottery tickets, hoping to hit it big, rather than buy health insurance. “He’s dead,” she said. While individuals make the choice to buy lottery tickets, Wallace said the government has a duty to look out for the most vulnerable. “People oftentimes make decisions not in their best interests,” she said. “We have to look out for those people.”

The lottery is the ultimate scam as Harvard psychologist Dan Gilbert points out. “Forgive me, for those of you who play the lottery — but economists, at least among themselves, refer to the lottery as a stupidity tax, because the odds of getting any payoff by investing your money in a lottery ticket are approximately equivalent to flushing the money directly down the toilet,” he said. Watch his powerful video presentation on mistaken expectations from the Ted conference here.

The state of gambling in America

June 26, 2012 9:23 am

As longtime opposition to gambling wanes, its popularity has increased as more and more states are getting hooked on the revenue from casinos and lotteries. As a result, gambling has turned into a $90 billion industry. The benefits of jobs and tax revenue have come to overshadow the economic and social costs that come from gambling.

That’s essentially the takeaway in an evenhanded report detailing the state of gambling in America released by CQ Researcher. (Read the full report here.)

The report asks if states are “hooked on money” from gambling? It provides lots of historical data and details on the explosion of gambling, as well the arguments for and against gambling. The report also shines a light on problem gambling and debates the impact of lotteries on the poor. Going forward, the report looks at the looming growth of online gambling and how that will exacerbate many issues. The report is an easy read and good industry overview that is recommended reading.

Juicing the Irish lottery

June 22, 2012 11:55 am

After the great boom known as the Celtic Tiger, Ireland has been one of the European countries most devastated by the 2008 economic collapse.

Ireland’s economy remains a wreck, thanks to a housing bubble, toxic loans from banks and the government’s decision to put taxpayers on the hook for a bailout of the troubled banks. So what is a country struggling with debt and high unemployment to do? Look for ways to get its citizens to gamble more.

Of course, that is the worst policy initiative possible. Ireland’s economic hard times have already led to an increase in problem gamblers, especially among the younger workers looking for ways to rebound from the recession.

Ireland has a population of about 5 million people. About 2 million play the lottery every week, generating millions for the government. But now the Minister of Public Expenditure is looking for ways to make more money off of the lottery. The government is kicking around a variety of ideas, including selling lottery tickets online. With misguided policy ideas like more gambling, the Irish minister could be governor of New York or some of the other states pushing new gambling measures.

Lottery contract leads to lawsuit

May 16, 2012 11:01 am

A federal judge has ordered the mayor of Washington, D.C. to testify in a lawsuit that alleges misconduct in the awarding of a lottery contract.

The lottery dispute is at the center of a legal dispute that is shining a light on dubious deals by D.C. officials. The lottery case alleges Mayor Vincent C. Gray and other officials wanted a different minority partner to get a piece of the $38 million contract.

The city’s former contract officer, Eric W. Payne, alleges he was fired because he opposed efforts to scrap the lottery contract. The fallout killed the lottery deal. Allegations of extortion and vendatta’s threaten to upend the mayor’s administration.

More broadly, the suit underscores the corrupting influence the lottery can have on governments. The river of money that flows from the lottery is a tempting honeypot for elected officials when it comes to awarding contracts and jobs. That issue is all the more troubling as more states look to privatize the lucrative lottery operations. Look for more shady deals and hookups as lawmakers and their friends jockey for control of the lottery.

Latest gimmick: privatize state lotteries

April 30, 2012 11:26 am

As states continue to search for ways to fill budget holes, the latest gimmick is to privatize the lottery.

Illinois became the first state to privatize the lottery. New Jersey, Pennsylvania, Ohio, Washington and other states are all considering proposals to privatize the lottery. The push for short-term revenue gains comes with obvious risks that include opening states up to corruption and creating more problem gamblers.

State lotteries are giant cash machines. Private operators are salivating at the prospect of gaining control to those cash cows. If history is any guide, the backroom jockeying by the private companies must be watched closely. The winning bidders will likely be connected friends and big campaign givers to the governor or other powerful pols. (Those odds are much better than the odds of hitting the Power Ball.)

But even more problematic is the likely result of the sharp rise in problem gamblers that will come with private operators. Here’s why: a private operators will have an incentive to sell as many tickets as possible because that will probably be part of their compensation. As such, the private operator will be more efficient and aggressive when it comes to selling tickets. There will likely be an increase in places where tickets are sold. There will likely be an increase in lottery games to be played. And there will likely be more expensive lottery tickets sold. For example, Texas offers a $50 lottery ticket.

The result will be more people spending more money on lottery tickets. More people getting addicted to lottery tickets. And more people spending a larger percentage of their income on lottery tickets. Studies show that the most vulnerable residents spend a higher percentage of their income playing the lottery. Expanding the lottery through private operators may provide a short-term increase in revenue but will likely lead to more problems down the road.

The failure of state lotteries

April 17, 2012 9:06 am

Some influential Baptist preachers in Texas say the lottery should be abolished because it has done more harm than good. “Ask the pertinent questions. Has the lottery fulfilled its promise? My answer would be ‘no,’” said Suzii Paynter, director of the Baptist Christian Life Commission.

The preachers say the lottery was touted as a “voluntary, non-regressive” way to raise money. Instead it preys on the poor and caters to impulse purchases of scratch-off tickets. Studies show that the poor and low income spend a higher percentage of their income on the lottery than others.

Texas began selling scratch-off tickets for $50 in an attempt to attract higher-income players, but that hasn’t worked, the preachers argure. The lottery has failed to live up to its promise in other states as well, including Virginia. About $1 billion a year from the Texas lottery goes to fund public education. But the preachers argue that the lottery has not provided a real revenue increase for schools but has simply replaced other revenue sources.

Some think it is time to close the lottery. According to the Abilene Reporter-News: the Texas Lottery Commission is one of several state agencies before the Sunset Advisory Commission, a panel of lawmakers and residents that recommends whether and how to keep an agency running. The full Legislature will make final decisions in 2013. Also, fighting more gambling is a group called Texans Against Gambling.

“The lottery is screwed up”

April 6, 2012 10:33 am

A University of Iowa student makes a compelling case against states getting into the gambling business. 

Samuel Cleary’s piece in the Daily Iowan, details how the lottery is “screwed up: statistically, economically, and psychologically.” Smart kid. Cleary also shows how the lottery is not all it is cracked up to be.

“Aside from the fact that our government is essentially functioning as a casino owner, the lotto is not as good for state budgets as it’s made out to be. Lotteries have long been advertised as being supportive of a certain cause, usually education,” he wrote. “Yet, the National Gambling Impact Study Commission reported in the past, “There is reason to doubt if earmarked lottery revenues in fact have the effect of increasing funds available for the specified purpose.”

Well said. Sadly, this college student understands the negative effects of gambling better than most elected officials.