lottery prep
Inside the secure world of choosing Powerball millionaires
01:21 - Source: CNN
New York CNN Business  — 

If residents of Alabama, Utah, Alaska, Hawaii or Nevada wanted a chance to win this week’s record Powerball jackpot, they had to travel to another state to buy a ticket.

These five states do not offer government-operated lotteries or participate in interstate drawings with rollover jackpots such as Powerball or Mega Millions. They are the last remaining lottery holdouts in America.

Since 1964, when New Hampshire became the first to offer a state lottery, 44 states have started their own or joined multi-state jackpots. (Mississippi was the most recent state to add lotto games in 2019.)

States, often under budget pressures, introduced lotteries as a way to add revenue without raising taxes. They found willing partners in gambling companies that benefit from running lottery games.

More than 200,000 retail stores and other outlets in the United States sell lottery tickets. In 2019, lottery sales topped $91 billion, according to the North American Association of State and Provincial Lotteries.

But the five holdouts have a number of reasons why they haven’t joined the rest of the country in adopting state lotteries.

Alabama and Utah prohibit gambling in their state constitutions, and religious groups in these conservative states have for years blocked efforts to legalize casinos or adopt lotteries.

Utah, where more than 60% of the the state’s population are members of the Church of Latter Day Saints, has long opposed a lottery.

Efforts to add a lottery have gained strength in Alabama, however, and the state could be getting closer to adopting one.

“Alabama has been trying to pass a lottery since the election of Don Siegelman as governor in 1998. Churches helped defeat a lottery referendum the following year,” said Jonathan D. Cohen, author of “For a Dollar and a Dream: State Lotteries in Modern America.”

Now, 24 years later, “I think they might be serious this time, as Mississippi finally got its lottery act together,” he said.

In Nevada’s case, public lotteries have been blocked by the powerful casino industry, which views sales of lotto tickets in convenience and grocery stores as competition — even though many stores have slot machines instead of lottery tickets.

In the past, pressure to add lotteries has often come from neighboring states. That’s because when one state adds a lottery, people often flood across state lines to buy tickets. The holdout state then has an incentive to keep the revenue from ticket purchases in its own state.

Hawaii and Alaska, of course, don’t have any US neighbors and don’t face this problem.

“That allows them to not have a lottery without people going across the border,” said Victor Matheson, a professor of economics and accounting at College of the Holy Cross who studies lotteries.

Concerns that lower-income households spend a disproportionate share of their incomes on lotteries compared to wealthier households have also blocked lottery expansion.

“A lot of states have been reluctant to start lotteries in the first place,” Matheson said. “They are worried about their regressive nature and gambling addiction.”

An investigation of state lotteries by the Howard Center for Investigative Journalism found that in every state where lotteries are legal, stores that sell tickets are disproportionately clustered in lower-income communities. And far more money is wagered every year on instant scratch-off games, which studies show attract more low-income gamblers, than huge jackpot drawings such as Powerball.

Recently, states that have adopted lotteries have emphasized that sales from tickets will go to social programs.

But lotteries are a “really unwise way to fund education and other public services,” said David Just, a professor of economics at Cornell University who has studied behavioral decisions around lottery tickets. The people likeliest to buy tickets are often the same ones who most rely on these government programs, he said.