Lottery Formula a Bad Bet?

Photo courtesy of Pixabay.

By Shannon Golden
Boston University Statehouse Program

A version of this story ran in The Sun Chronicle

BOSTON — A person buying a lottery ticket usually thinks about hitting the jackpot and what do with the winnings. It’s doubtful they’re considering that they’re contributing to the largest source of local aid in Massachusetts.

The Legislature established the Massachusetts State Lottery in 1971 in response to the need for new funding sources for the 351 towns and cities of the commonwealth. Since then, the lottery has generated $110.4 billion in sales and returned $24.7 billion in net profit to the state for local aid.

In fiscal year 2016, some $979.8 million in direct local aid from lottery sales was distributed to towns and cities through a formula established by lawmakers.

But today, many question whether the formula is still a fair way to distribute the much-needed local aid.

Lottery revenue is a key component of unrestricted aid and is the second-largest pool of funds to communities after state education aid.

The distribution is based on a formula that takes into account income, property wealth and population, and is meant to provide aid to cities and towns that need it most.

The formula does not take into account a town’s lottery sales.

Last year in Attleboro, with about 44,000 residents, sales totaled $42.7 million, while the city got $5.2 million in lottery aid.

Harvard, a central Massachusetts town with a population of 6,520 that chooses not to sell lottery tickets, still received $1.3 million in lottery aid in 2016.

Seekonk, with more than double Harvard’s population, sold $19.9 million in lottery tickets last year, but only received $1.1 million in aid — $203,803 less than Harvard.

Seekonk Selectman David Viera says the current distribution formula is disproportionate and unfair to towns like his.

“We obviously border Rhode Island and we have an influx of individuals from Rhode Island who come into Massachusetts to buy lottery tickets,” Viera said. “We need to put up with the additional traffic like those sorts of things.”

Rep. Steven Howitt, R-Seekonk, and Sen. James Timilty, D-Walpole, are sponsoring legislation to remove lottery aid from any city or town without lottery sales.

“If you want to take a principled stand against the lottery, why would you want to take part in the revenue” Timilty told The Sun Chronicle.

Geoffrey Beckwith, executive director of the Massachusetts Municipal Association, an advocacy group that serves cities and towns, opposes the legislation.

“There are 351 cities and towns with different development patterns and history,” Beckwith said. “To create a one-size-fits all rule like that would miss in far more places than it would hit.”

The idea of including sales in the distribution formula has been around for a long time, but it’s not practical, he said, explaining that many people play where they work and shop, which might not be their hometown.

He also explained that Massachusetts has many rural communities which might not even have a gas station or store, so residents go to a neighboring town to buy lottery tickets.

A distribution formula that includes lottery sales would punish those communities.

Howitt told the Boston Globe he thinks it’s unfair for a town like Seekonk, which is larger than Harvard and has much lower property values, to receive less lottery aid, when Seekonk brought in almost $20 million in sales.

“I just think there should be some weight given to sales,” Howitt said.

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