The case for a federally run Powerball

For the past few weeks, millions of Powerball players have tried their luck and come away empty handed. After multiple drawings without a winner, the jackpot has rolled over to the estimated sum of $1.5 billion, a record, for tonight’s drawing. The massive surge in ticket sales means millions of dollars in revenue for state governments. Yet, while state coffers stand to benefit from the latest wave of Lottomania, the federal government does not. With the exception of taxes collected from winnings, Washington does not collect a penny in lottery revenue. This should change. Powerball should be replaced with a federally run, national lottery game. If states can fundraise through lotteries, the federal government should be able to as well. In particular, the federal government should assume control over Powerball, using this new source of revenue to address the United States’ huge national debt.

In practical terms, Powerball is already a national lottery. Formerly known as Lotto*America, Powerball is operated by the Multi-State Lottery Association (MUSL), a nonprofit owned by its 37 members (34 state lotteries, the D.C. Lottery, and the lotteries of the U.S. Virgin Islands and Puerto Rico). In all, 44 states—every MUSL member and 10 others—offer Powerball. As of 2014, 95 percent of the American population lived in a state with a lottery, and that number may soon rise if Alabama passes a lottery in the coming year.

{mosads}Though Powerball is national in scope, its proceeds aid participating state governments. Like state-run lottery games, approximately 50 percent of every dollar spent on a Powerball ticket goes to prizes, while 5 percent remains with MUSL for operating expenses and roughly 5 percent goes to the 160,000 Powerball retailers nationwide. The remaining total, approximately 40 percent of Powerball revenue, goes to the governments of lottery states, most of whom channel the money to education or to their general fund. In 2014, states took in approximately $20 billion from the over $70 billion that Americans spent on lottery tickets, according to data compiled by the National Association of State and Provincial Lotteries. In recent weeks, the rising Powerball jackpot and attendant surge in ticket sales has provided a corresponding boost to state coffers. Though lotteries provide a tiny percentage of overall state revenue—on average, lottery revenue represented 1 percent of total income for lottery states in 2013—lottery agencies and elected officials frequently trumpet the importance of lotteries as means of raising revenue without direct taxation.

Rather than provide further profits for states already benefiting from scratch tickets and a slew of other games, a federally run Powerball could provide Washington with much needed fiscal aid. In the 1980s, the last time Congress seriously considered a national lottery, the idea was met with widespread enthusiasm. In a 1983 survey of 2,000 readers of Lottery Players’ Magazine, 87 percent supported a national lottery and, in a 1986 Gallup poll, 62 percent of Americans said they were in favor. In Europe and Asia, most lotteries are operated by national governments. In the United States, a national game could promise prizes that consistently reach upwards of $1 billion, jackpots which could raise billions for Washington. In the 1980s, politicians on both sides of the aisle anticipated profits of up to $10 billion per year from a national lottery, and the current Powerball craze indicates that profits today would be far higher. As added incentive, the federal government could waive federal taxes on lottery winnings. Currently, both federal and state governments take money out of lottery prizes.

Rather than allow a national lottery to become a political project benefiting whichever party controls the White House or Congress, profits from a national lottery should go directly towards alleviating the United States’ national debt. Though it currently rests at nearly $19 trillion dollars, the national debt has been scantily discussed in the 2016 presidential campaign. In fact, both parties continue to propose spending increases. Jeb Bush has promised to undo $1 trillion in cuts to military spending enacted under the Obama administration while Sen. Bernie Sanders (I-Vt.) has pledged to make public colleges and universities free to protect upward mobility. Every candidate, however, seems to be acting as if the national debt does not exist, presenting their plans for health care and other areas of federal spending while ignoring that 6 percent of the federal budget, over $200 billion a year, goes directly to paying off interest on the national debt. A federally run lottery will almost certainly not raise $200 billion annually, but it will begin to address what may become a massive economic crisis should the threat of a government default reemerge. If state governments are to profit from lotteries, then the federal government should be able to do so as well. Rather than create another lottery game, the federal government should assume control over Powerball whose current popularity indicates the particular appeal of a national lottery. 

Cohen is a Ph.D. candidate in the Corcoran Department of History at the University of Virginia where he is working on a dissertation entitled For a Dollar and a Dream: State Lotteries and the American Culture of Inequality, 1964-2014.