National Lottery to Fund Government?

Many States rely on lottery revenues to fund various projects. With the recent record breaking Mega Millions jackpot I began thinking about the possibility that all government funding should come from similar voluntary means. Consider the following pro’s and con’s.

As a libertarian I support minimal government and voluntary interaction; therefore, I am at least partially favorable to the idea of voluntary taxation. Additionally lotteries have played a vital role in the founding of this country. Roger Dunstan writes, “The Virginia Company of London, the financier of Jamestown in Virginia, was permitted by the Crown to hold lotteries to raise money for the company’s colonial venture. The lotteries were relatively sophisticated and included instant winners… All 13 original colonies established lotteries, usually more than one, to raise revenue. Playing the lottery became a civic responsibility.” Harvard, Yale, Columbia, Dartmouth, Princeton, and William and Mary universities were funded at least partially from lottery proceeds. The Continental Congress also established a lottery to help fund the war for independence, however the lottery was abandoned because it was too large and the tickets could not be sold.

Aside from the potential that government funds are only raised from voluntary means, there are other economic impacts. Primarily no wealth is created with the building and running gambling facilities, it is merely transfered. Dunstan adds, “The benefit for a region is if the transfers are from outside of the region. In contrast, there is not a stimulus or net benefit if development of the casino leads to more money being spent outside of the region.” The same goes for nation-wide gambling. No stimulus occurs unless tourist from foreign countries pay and don’t win.

There is also the potential for politicians to get their hands in the proverbial cookie-jar. In 1990, 17 legislators and lobbyists in South Carolina were convicted for bribes related to votes to legalize parimutuel racing. Legislators in Arizona, Louisiana and Missouri have either resigned, been convicted and/or been defeated in election as a result of gambling related scandals.

Considering the pro’s and con’s of a national lottery; I would not oppose replacing all federal taxes with a national lottery. However, until specific details of any (hypothetical) proposal are known I am reluctant to fully support the idea, primarily because of the potential for corruption and secondarily because I don’t support government having a monopoly over any institution. However, I believe that all State and federal prohibitions on private gambling and lotteries should be repealed.