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Is Buying Lottery Tickets the Best Way to Spend Your Money?

Aired May 5, 2000 - 7:30 p.m. ET


ROBERT NOVAK, CO-HOST: Tonight: Who wants to be a millionaire? Apparently everyone, as millions line up to buy a chance at the $230 million Big Game jackpot. But is buying lottery tickets the best way to spend your money?

ANNOUNCER: From Washington, CROSSFIRE. On the left, Bill Press. On the right, Robert Novak.

In the CROSSFIRE, in Atlanta, Rebecca Paul, president and CEO of the Georgia Lottery Corporation, and in Chicago, Tom Gray, executive director of the National Coalition Against Legalized Gambling.

NOVAK: Good evening, welcome to CROSSFIRE.

Are you playing the Big Game? I'm sure not talking about the NBA or Stanley Cup playoffs; I'm talking about people standing in line in seven states to buy $1 dollar tickets to win an immense lottery. The picking at 11:00 p.m. Eastern Time tonight. Some lucky person may have the winning ticket and receive $230 million dollars over the next 26 years. That is The Big Game. It offers the second-largest prize in American lottery history, but the winner could take a one-time lump sum payment of $111 million. The odds? Only 78 million to one.

Friends of the lottery say the winners are citizens of the seven states participating in the Big Game. Their governments will receive millions. Georgia, Maryland, Massachusetts, Michigan, New Jersey and Virginia. The critics say the losers are low-income taxpayers who pour in dollars they can ill afford against horrendous odds. So is the big game a painless substitute for taxation, or it is a wicked exploitation of the poor-- Bill.

BILL PRESS, CO-HOST: Rebecca Paul, good evening.


PRESS: I want to ask you, Rebecca -- first of all, I have to admit that I have voted for the lottery in California, and I occasionally even buy a couple of tickets, so I'm not your total enemy tonight. But I do have some serious questions about it.

PAUL: Good.

PRESS: One of them is, as Bob just mentioned, the odds here, 76 million to one. They say the odds of winning the lottery as great as getting struck by lightning and bitten by a rattlesnake on the same day, Rebecca. Isn't this about the most stupid think I could do with my money.

PAUL: Well, I'll tell you, there are 10 winners of multimillions of dollars in The Big Game in Georgia, over 130 winners in Georgia in just six years. I don't know 130 million people who've been struck by lightning and bitten by a rattlesnake on the same day.

PRESS: But -- and the psychology of this, too. Like here's today, it's $230 million. The bigger the pot, the less chance a person has of winning, and yet the more people that go out and buy tickets. I mean, aren't we all just getting sucked into something that's, you know, very, very little chance here?

PAUL: Well actually, the odds remain constant, whether it's a $5 million jackpot, or a $230 million jackpot, because the number of possible combinations remains the same. So it's one in 76 million at all times. Now the chances of there being a winner tonight are much greater because so many people are playing. The odds of the game remain the same. Now one in 76 million, all horrendous odds, absolutely, and that's actually, for the player, you can't appreciably change the odds the more tickets you buy, so we say to a player, it only takes one ticket to win, and we certainly encourage them to do just that.

PRESS: But you can improve your odds if you look at another form of gambling. The lottery has the worst odds of any form of legalized gambling. And yet when you look at how what gambling people participated in over the last year in this country, let me show you on this graphic, 9 percent of people who gambled in the United States last year, bet on the horses, 25 percent bet on office pool, 31 percent went to the casinos -- for your card games or whatever -- 57 percent went to the lottery. So the state is enticing people in to do the -- into the least likely winning -- winnable form of gambling.

PAUL: Well, I think if you look at same Gallup poll data, you'll see that 75 percent of the American public believes that a lottery is an appropriate way to raise funds for good causes. In Georgia, if you graduate from a Georgia high school with a b average, the lottery pays way your to college, tuition, books and fees. Ninety-eighty percent of the freshman class at the University of Georgia are there are on lottery-funded scholarships. So in Georgia, the people feel good about their lottery. Again, that same Gallup poll says average person spends about $5 a month, and at $5 a month, they feel that that's an OK thing to do.

PRESS: But they'd be better off betting on the Kentucky Derby tomorrow, right?

PAUL: Well, they might be, but you won't win $230 million in the Kentucky Derby tomorrow.

NOVAK: I've got a personal question to ask you, Rebecca Paul. Do you buy lottery tickets?

PAUL: It's illegal for me to play in Georgia, but I do buy tickets in Florida when I go visit, so I play in other states.

NOVAK: How much do you spend a year on lottery tickets?

PAUL: On lottery tickets? Probably $100.

NOVAK: Do you really?

PAUL: Yes.

NOVAK: If everybody did, you would be in good shape, wouldn't you?

PAUL: Absolutely.

NOVAK: Now I'd like to get hard figures, Rebecca Paul. How much does the state of Georgia in one year get out of various lotteries in a revenue?

PAUL: Last year, we returned about $650 million dollars to the three programs that we fund.

NOVAK: Six-hundred and fifty million. And where does that money used to come from? Is this all found money programs you didn't have before. You had to have state government before you had lottery, I believe, and education. Where did that money come from?

PAUL: Well, when the Georgia Lottery began, they started three new programs that never existed before. So Hope scholarships didn't exist before the lottery. Prekindergarten programs for every 4-year- old in the state in Georgia didn't exist before, so the lottery dollars went to fund new programs, from pre-K all the way through college.

NOVAK: do you think it's -- gambling, where I grew up, was considered immoral. Do you -- is that a problem to you? Do you worry about that?

PAUL: Well, I used to run the Illinois Lottery, which I think is where you grew up.

NOVAK: That's right.

PAUL: Then I started the Florida Lottery, and then I moved to Georgia to start the Georgia Lottery. So obviously, wouldn't have done this for...

NOVAK: Are you lottery queen of America? Forget that question.

PAUL: I've just been here longer than most.

NOVAK: All right, I want to ask you about that -- the immorality. I mean, I -- some people, like Governor John Engler of Michigan, who is a good, free-market Republican, he says it's immoral. He fights any kind of gambling in Michigan, doesn't he?

PAUL: I think he supports the Michigan lottery, but he may fight other forms of gambling. I don't want to speak for Governor Engler, but the Michigan Lottery is a very good lottery, and certainly a part of The Big Game was the $230 million jackpot tonight.

NOVAK: Do you think that immoral question is the difference between a lottery and say casino gambling?

PAUL: I think you find different players. I mean, most of our players will go in and buy $18 dollars gas, hand the clerk a $20 dollar bill, spend their $2 in change on lottery tickets. We compete against Coke, and Frito-Lay and Mars candy. I'd much rather you spend your $2 in change on a lottery ticket than a Slim Jim, and that's really who I compete against.

PRESS: Well, how about this, Rebecca -- how about if you saved up all those one or two bucks that you threw away at the gas pump and invested them at the end of the month in a good mutual fund, for example, wouldn't you be better off?

PAUL: I'm not the sure stock market is any less risky than playing the lottery, but that is a whole other subject.

PRESS: Well, I think it is less risky. Let me just show you come a comparative figure. If you took, spending let's say $30 a month, OK? And let's not that much, people spending $5 or $6 dollars a week -- $30 a month for 42 years, if you put that money in the lottery, assuming you didn't win, which is going to be the case for most people who buy those tickets, you've thrown away $15,120, just down the drain. If you invested it in the Standard & Poor's 500, over that same amount of time, 30 bucks a month, 42 years, you'd earn $557,208. Now you tell which is the better investment, or the wiser investment, Rebecca.

PAUL: I don't know, talk to winner of $230 million on Monday. They might say they're happy with their dollar investment this week.

PRESS: I know, you said before, but we're talking about the average American. We're talking about all those millions and millions of people who are going to buy a ticket don't win. I mean, seriously, wouldn't they be better off investing in a good mutual fund or some good investment account?

PAUL: Well, I certainly would never encourage someone not to invest in a retirement account and play the lottery instead. Most people spend their $2 in change, and I don't know whether they'd buy the Slim Jim rather than put it in the stock market, so.

PRESS: Again, I'm not against the lottery, but let me just point out that what the federal government says, that I can only invest $2,000 dollars in an IRA, tax free. The federal government says I can only put 15 percent of my earnings into a 401(k). Yet the federal government or the state governments allow me to spend an unlimited number of dollars on the lottery. Don't you think maybe there's something a little wacko about that?

PAUL: Well, I'm not sure you can compare the two. And the federal government has pretty much stayed out of lotteries, as I think they should. It's really a state's rights issue, and each state determines whether or not a lottery is right for their state, as opposed to the federal government.

PRESS: But the key question, I guess, Rebecca, is should this state be in casino business?

PAUL: Well I'm not sure that any one in Georgia would think that the games we offer are anywhere similar to a slot machine that you can pull every 30 seconds or a blackjack table or a craps table. I think a lottery game is looked at very differently, not only by the players but by the citizens and the legislative leaders and the governor of our state, who were very supportive of the legislation when it passed seven years ago.

PRESS: OK, Rebecca Paul, thank you very much for being on CROSSFIRE.

We're going to have to take a break here. When we come back, we're going to be joined by Tom Grey, who's executive director of the National Coalition Against Legalized Gambling. And, of course, I'm the bleeding heart here. I'm going to want to know, are these state lotteries unfairly taking money from the poor and the minorities?

We'll get to that right after we come back. More CROSSFIRE coming up.


PRESS: Welcome back to CROSSFIRE.

A $230 million lottery jackpot tonight. And after you get your share, cash now or monthly installments for the rest of your filthy rich life, the big questions are, how much money will really go to education? And should state governments be in the casino business in the first place?

Joining us now to debate the merits of what are 37 different state lotteries in Chicago, Tom Grey, executive director of the National Coalition Against Legalized Gambling -- Bob.

NOVAK: Mr. Grey, isn't it a fact that if you didn't have the lotteries, that poor people would be playing the numbers game on the streets as they have for decades, for centuries?

TOM GREY, EXEC. DIR., NAT'L. COALITION AGAINST LEGALIZED GAMBLING: That's a great argument. They're still playing it today using the lottery numbers. So any time you legalize gambling, you don't cut into illegal gambling. But the problem we have is that money is being sucked out of those poor neighborhoods, brought down to state capitals, and then turned around and sent back to more affluent communities when it does go to aid education, especially in the state of Georgia, where they have a whole tuition credit program. And Rebecca Paul was on, and I'm sure she waxed eloquently about everything that was done. But poor people are financing rich kids' college education in Georgia today. NOVAK: But, Mr. Grey, you kind of nimbly jumped over the question of the fact that poor people like to play the numbers. Of course, I notice that you lived for a while in Hanover, Illinois, population 908. I bet you they didn't have a numbers game in Hanover, but...

GREY: Well, I'm in Rockford now and a population of 140,000, Bob.

NOVAK: Yes, but I'll tell you, in the real world, Mr. Grey, they have a numbers game. And I don't really understand your point, because people are going to play the game. They -- I mean, you're an upper-class fellow. You don't understand that the poor people enjoy this.

GREY: Come on, Bob. You're a capitalist. And when you start to put government to push gambling as a way to fund education, I really lose faith in your instincts here. This is the way the rich people manipulate the poor people so they don't have to pay taxes for education.

You know, my dad paid taxes so I could go to school. He didn't say, you know, let's let a lottery do it. I think we need a wake-up call in America, politicians that will say if it's important enough to educate kids, then let's do it the a good old-fashioned way. Let's step up and pay for it ourselves.

NOVAK: I'm sure Tom Grey is a good fellow, but my favorite -- I much prefer Tom Jefferson. He was one of my favorite presidents. And he said, "The lottery is a wonderful thing. It taxes only the willing." That's the best kind of tax I can think of. It's a voluntary tax. You only get taxed for what you spend, doesn't take it involuntarily. What's wrong with that?

GREY: Well let's say -- let's cut the advertising budget then that reaches into the millions to try to seduce people. There's no truth in advertising. I'm sure that Thomas Jefferson, if he saw people lined up, taking off time from work, going across state borders to try and hit a one in $76 million odds, he might just revise his statement on that, Bob.

NOVAK: I want to give you some numbers Mr. Grey. Of the monthly lottery spending, 39 percent is $4 or less -- $4 dollars or less. That's what a guy would spend in about a half hour drinking beer. Another 25 percent, that is a total of 64 percent of the total amount of spending, is under -- is $9 or less. That isn't a lot of money. Why are you having all these tears about $4, $5, $6 a month?

GREY: Let me give you one statistic from the National Gambling Impact Study Commission that shows that 5 percent of the people who play the lottery buy 51 percent of the tickets. Are you really suggesting, Bob, that you want those people that can't control their spending, that just don't spend that minimum amount, that spend much more than they should, to fund half of the lottery sales in the United States? Is that what this is about? NOVAK: This isn't -- what if they get pleasure out of it? Are you -- I mean, we have a -- we have -- we used to have freedom in this country. People do with their money what they want.

GREY: Bob, what -- you really think people get pleasure out of losing money?

NOVAK: I always did.

PRESS: They get pleasure out of...

NOVAK: You know Nick...

PRESS: They get...

NOVAK: You ever hear of Nick the Greek? He was one of the great gamblers -- not Jimmy the Greek, Nick the Greek. And Nick the Greek once said, the greatest thing in the world is gambling and winning. The second greatest thing is gambling and losing.

GREY: So what we do is move people from welfare to work, and then we use lotteries and casinos to take their paycheck? Is that the Republican dream here?

PRESS: Well let me ask you, Mr. Grey, to get back to -- by the way, before we get to education, which I'd like to talk to you about, I want to point out, I grew up in a town of 1,200, OK? Not Hanover, Illinois; Delaware City, Delaware. We did have a numbers game in Delaware City, Delaware, for the record. There was probably one in Hanover, too. I'm sure my father never took part in the one in Delaware City, Delaware.

NOVAK: He was the mayor, wasn't he?

PRESS: He was the mayor. How could he?

You -- you talk about education. You're bemoaning some of the different educational proposals out there, or systems that are out there based on the lottery. But aren't you overlooking the fact that the big winner for these state lotteries in every state is education? It is the schools, it is the kids, which wouldn't have that money if it weren't for the lottery, Tom Grey.

GREY: Well, "Money" magazine did a story in 1996, and it looked at states with lotteries and without lotteries. And it found that states without lotteries fund education to a greater degree than states with lotteries.

Most of your listeners know that when lotteries came in, they came into Illinois in '96 -- in '76, and they said, hey, they're going to solve education. It's now 25 years later and we've still got the same education problems. What happened?

PRESS: Well, here's what's happening, it seems to me, and I can speak for California, which just recently had a measure on the ballot to build more classrooms. It lost. You put these bond measures on the ballot, they lose. The lottery's on ballot, it wins.

I mean, you've got to get the money. If you can't get it through taxes -- and people are not going to vote for higher taxes -- you're alternative is to let them spend the money on the lottery and get the money that way.

GREY: We're running budget surpluses in states across the United States. This is the time they ought to start weaning themselves off the dependency on lottery, which is a very regressive tax. It's a very inefficient tax.

For every dollar they bring, the state only gets 34 cents. You have a sales tax, you bring in $1, you're going to get probably 99 cents out of that dollar.

NOVAK: Let me ask you a question about gambling in general and the state of Illinois -- I'm from Illinois. You know, I'm from Joliet, Mr. Grey. And the year before I was born, during the Depression, 1930, they closed down all three steel mills in the city. City didn't recover. It really never recovered all through those years, always hard times.

They brought in two riverboat casinos, they got the licenses, and the city is transformed. There is enough money for public services. There is no unemployment. There is no increase in crime. Tell me who's the loser in that.

GREY: Bob, come on. We'll go walk around. You'll find that the parking lot is the only economic development you see around that riverboat in Joliet.

NOVAK: That's not true. The downtown looks better than it's ever looked.

GREY: Fannie Mae closed. It was two blocks away. Anyway, let's talk about then: Should we have a riverboat in every town like a chicken in every pot? Is that your solution to depressed neighborhoods? How many casinos -- we've got a lot of communities that would love to have a casino sitting in the center?

NOVAK: Well, who's the loser? I don't understand who the loser is? These people want to spend their money.

GREY: Well, you've got to understand all those social costs -- the bankruptcy, crime and corruption -- is being passed on to the people who don't gamble.

NOVAK: We'll have to continue this later. Thank you very much, Tom Grey, and Bill Press and I will -- no, we'll have closing comments.

PRESS: Riverboat gamblers.


(COMMERCIAL BREAK) NOVAK: Bill, you were trying to be devil's advocate to make a good program tonight, but let me tell you this. Gambling is as common to ordinary people as acquisition and sex is. It's something that everybody does in communist societies, in royalist societies, in democratic societies. People like to gamble: not all people, but most people.

PRESS: And Bob, I do have to admit that the lottery is better than higher taxes. Agreeing with you on that subject. But I've got to tell you...

NOVAK: Ah! I'm going to faint. I thought you loved...

PRESS: ... I haven't been around as long as you, but you know, when I was growing up, we were encouraged to buy savings bonds with our money. Now, today you're encouraged to buy lottery tickets. I think savings bonds are a better investment. But I've got tell you, I'm as big a sucker as anybody else. I got my Big Game tickets for tonight.

NOVAK: Listen, Mississippi never had enough money for schools. They had those riverboat casinos, they have enough money for schools. I think it's a plus.

PRESS: Same for 37 states. I'm with you and with the lottery.

From the left, have a good weekend. I'm Bill Press. Good night for CROSSFIRE.

NOVAK: From the right, I'm Robert Novak. Join us again next time for another edition of CROSSFIRE.



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