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News Nationalize Powerball/Mega millions?

  1. Nov 28, 2012 #1
    With all the Hype around the power ball this week I was wondering if anyone had any thoughts about making the "big" pay out games national and directing the funds to Debt repayment?

    I would propose that the states all keep the "smaller" games i.e. dailies and scratch offs but that the 2 big games become federal "voluntary" revenue streams.

    From what I remember seeing pay out plus administrative costs on those games come to 50% leaving 50% as revenue for the states. So for each 500 Million dollar jackpot the government would also make 500 Million in voluntary taxes.

    Some states i.e. Ca and Pa exempt state lottery winnings from state income taxes we could even extend that to the federal level for these federal drawings.

    I am not sure the impact taking that revenue from the states would have but IMO it would be minimal since most of it goes to special projects already and is not general budget revenue.

    Thoughts? comments? data? I can not look up anything to do with the lottery this network.

    Major objections?
  2. jcsd
  3. Nov 28, 2012 #2
    nobody can afford any taxes ... but a half Billion dollars can be given away to buy lotto tickets.

    I don't understand.
  4. Nov 28, 2012 #3


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    Current US Debt = 16*10^12 dollars

    1 lottery payout = 500 * 10^6 dollars applied 100% to debt payment

    number of lottery payouts for total debt repayment = 32000
  5. Nov 28, 2012 #4
    I never said it was the entire answer just that it is better then nothing keep in mind that is the pay out from 15 non winning drawings so the annual total for 104 drawings would be in the area of 3.5 Billion which alone would still be 4500 years to pay off the entire debt. Just looking at the numbers should open some eyes to the fact we really need to do something about this.
  6. Nov 28, 2012 #5


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    The major objections would come from the states. Over the course of the year, Powerball alone should rake in about $5 billion a year, with 50% going to payouts and 50% being divided among the participating states (based on how many tickets sold in their state). The states would be very upset.

    Keep in mind the federal government already takes in 25% of the payouts in federal taxes, or about 12% of the total revenue.
  7. Nov 28, 2012 #6


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    I think the major objection should be what role should our government play. Should the government play on the weakness of its citizens and encourage them to take a risk equivalent to flipping a coin and getting 'heads' 27 times in a row? The government should encourage behavior that is an advantage to its citizens or do nothing at all, IMO. Apply an outrageous 'sin' tax on alcohol an tobacco to both raise money and discourage self destructive behavior can at least be rationalized from that standpoint but to regressively tax its citizens and encourage this self destructive gambling behavior?
    What's next? Government run horse racing? Slot machines? Online poker?
    No thanks.
  8. Nov 29, 2012 #7
    I agree with this. Governmental public policy really should take the high road (because often people need a little shove to get them to behave in ways that they know are best for them), even though the people who are 'the government' are (or so it seems) often taking the low road.
  9. Nov 29, 2012 #8
    I would agree with you if all those things were not already state run in all of the states they exist in and got that way by popular vote. Obviously the people want government run gambling and it is always pitched at the state level as a revenue generator why not expand it to federal?

    Raising taxes can not fix our problem and the President and Senate have not even mentioned significant cuts we need an outside the box revenue solution to even begin to address the problems we face.
  10. Dec 4, 2012 #9
    I think using gambling to raise tax revenue is a great idea. At least this way, the taxation is voluntary. Obviously, people are going to gamble, and we have a huge deficit problem, so why not?
  11. Dec 4, 2012 #10
    Wait, you want the federal government to come in and take lotteries away from the states? Isn't that a tenth amendment issue?
  12. Dec 4, 2012 #11
    No Jack I want the 2 lotteries that are inter state and already present in 84% of the country to be come national. The remaining intra state lottery drawings will remain as is.

    Think of it as the draft but instead of picking soldiers they are picking millionaires and you need to pay to enter and can voluntarily enter as many or as few times as you like.
  13. Dec 4, 2012 #12
    Right, you want the federal government to come in and take over. I'm not sure this is legal. Maybe you can call it interstate commerce?

    Allow me to be more specific in my objection. The governments of several states got together and formed the Multi-State Lottery Association. This association is who runs Powerball and Mega Millions. What you're suggesting is that the federal government comes in and usurps control over this association which is currently run by the states. I do not see how this is legal. Right now, the states have the right to form this association and run their own lottery, and I cannot imagine the federal government stealing this from the states.
    Last edited: Dec 4, 2012
  14. Dec 5, 2012 #13
    Legality has not stopped this government from sidestepping rules on immigration and environmental regulation why should it on revenue?

    I never said it was legal or even "right" just that its an option.

    Heck have the fed start its own third major drawing and have it in all 50 states. A voluntary tax still sounds like a fine option.
  15. Dec 5, 2012 #14


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    It would just be simpler if you assessed a special tax on stupid people
  16. Dec 5, 2012 #15
    What an interesting idea. I suspect that if you tried to explain and expand that idea, it would answer so many questions, such as, why did you post that?
    ( Alfi holds up sarcasm sign ... just in case lotto ticket buyers read this)

    For my opinion about the big lotteries, I would prefer if the payouts were smaller and therefore more numerous.
    As in, instead of one winner of Hundreds of millions, I would like to see hundreds of winners of One Million Dollars each. And ... keep drawing numbers till ALL the prizes have been won.
    Tax free ( they already paid the 'stupid tax' by buying into that dream. ) winnings. The government could then tax any gains in the next years,( smart winners ) or if they spend the money in the first year, that is the stimulus for everybody that sold them the stuff they bought.
    Last edited by a moderator: Dec 5, 2012
  17. Dec 5, 2012 #16
    The federal government doesnt have to take over the interstate lottery, it just has to act as a good capitalist and create an alternative lottery with more appeal.

    Not saying the states will be happy about it, but the government doesn't have to take over anything, nor dissolve any interstate commerce agreements.
  18. Dec 5, 2012 #17
    But that's what the OP had specifically said, I was just commenting on his suggestion, not any alternative suggestions.

    I honestly think the federal government would have a hard time competing. Powerball and Mega Millions already have massive brand awareness, and a competitor would likely struggle.
  19. Dec 5, 2012 #18


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    I object on ethical grounds. Furthermore I believe that the solution to the debt is to stop spending money, not look for more ways to funnel money from the public to the government, or shift what is already here from the State to the Federal Government.
  20. Dec 8, 2012 #19
    In my country (Poland) there is such gov lottery - "Lotto". It was simply too profitable to privatize.

    EDIT: Concerning ethical subjects - you may try German idea in which lotteries (like cigarette companies) have to put warning on all their adds (concerning the chance of winning).
  21. Dec 8, 2012 #20
    Actually, I think this argument is completely illogical, people are conscious beings able to make there own decisions. Forced taxation on products drive markets underground, this has been seen numerous times. It is estimated throughout the world that the black-market (or underground economies) provide 1.8 billion jobs (see link below) and consequently, just raising taxes exorbitantly on tobacco and alcohol would result in this number being driven up.

    On the other hand voluntary taxation has been strongly suggested to have the smallest collateral effect on markets because it allows them to still operate as free as possible (Allen Greenspan's, "Age of Turbulence"). I think if the federal government created its own lottery system (as Travis_King suggested in comment #16) it would be one of the most brilliant ways to tax our population.

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    Last edited: Dec 8, 2012
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