There are too many variables to determine conclusively which Maine municipalities and counties spend the most per capita on lottery tickets and no evidence that the state’s $231 million lottery has targeted the poor in its marketing, a study released Friday by the Legislature’s investigative arm said.
The report by the Office of Program Evaluation and Government Accountability cited several limitations that prevented the agency from determining the breakdown of lottery ticket purchases and winnings by region.
Those included the possibility that lottery retailers had purchased tickets that were not sold to consumers nor returned to the lottery, thus inflating sales; the impact of ticket purchases by non-Maine residents; tickets bought online; and the fact that some retailers are located in service center communities or on major travel routes and might attract non-local buyers.
OPEGA Director Beth Ashcroft said these variables made it difficult to draw firm conclusions about who exactly buys lottery tickets in Maine. “We determined that using the data available on a per capita basis resulted in statistics that lacked meaning and were potentially very misleading,” she said Friday.
The report followed a series of stories by the Maine Center for Public Interest Reporting in October 2015 that found poor regions of the state spent disproportionately on lottery tickets. Research conducted by Cornell University behavioral economist Dr. David Just, at the request of the Center, showed that for every 1 percent increase in unemployment in a given zip code, lottery sales increased by 10 percent.
OPEGA’s report did not address the unemployment findings.
Lawmakers had also tasked the watchdog agency with investigating whether or not the lottery had targeted particular demographic groups or regions of the state.
The report reviewed the lottery’s marketing between March 2015 and December 2016 but found “no indication that the Lottery puts any marketing or advertising emphasis on any specific demographic group.”
The agency noted “general agreement that an inverse relationship exists between socio-economic status and lottery play.” But the report added that there is no consensus on why.
LACK OF TRANSPARENCY CONFIRMED
OPEGA’s report included a finding that the lottery had failed to comply with state law requiring monthly reporting to the State Treasurer and annual reporting to the Governor and Legislature.
“Current management … did not provide OPEGA any explanation for not reporting,” the report said.
Those findings support the Center’s 2015 investigation, which found the lottery lacked transparency and legislative oversight.
The report also noted that the lottery had not posted the State Liquor and Lottery Commission meeting dates, agendas or minutes to its website, and had only been announcing meetings to the public with one day’s notice.
“A lack of legislative awareness of Commission deliberations and decisions could result in the Lottery developing initiatives that are not aligned with broader legislative expectations for gaming in the State,” the report said, citing the lottery’s short-lived attempt to introduce Keno in 2015. That plan was scrapped after legislative concerns emerged.
The Center’s investigation in 2016 found that people receiving public benefits, such as food stamps, aid for needy families or Medicaid, have likely spent hundreds of millions in lottery tickets over the past five years, enough to take home at least $22.4 million in prizes over $1,000 since 2010, according to Department of Health and Human Services data. Last October, the LePage Administration implemented a rule that removes people who win $5,000 or more through the lottery from the food stamps program.
Friday’s report revealed the lottery plans to begin regularly sharing data about winners with the Department of Health and Human Services in order to check whether welfare recipients remain eligible for state support.
Some lawmakers on the Government Oversight Committee immediately criticized the OPEGA report Friday, saying the limited scope had prevented OPEGA from going far enough to answer bigger questions about whether or not the lottery, which generates $52 million annually for the state’s General Fund, was unfairly impacting the poor.
“It’s a tax, and this particular group is paying the price,” said Sen. Geoffrey Gratwick (D-Bangor). “We need to have that discussion. That’s going to be the bottom line for me.”
Friday’s report noted that legislative investigators had conducted interviews only with the lottery’s management, the chair of the State Liquor and Lottery Commission, the House Chair of the committee that oversees the lottery and the lottery’s advertising contractor, the Boston-based Fuseideas.
Gratwick said he wasn’t surprised that legislative investigators hadn’t turned up evidence of targeting of the poor.
“If I’m a businessman, I don’t want to admit that upfront,” Gratwick said.
Rep. Jennifer DeChant (D-Bath), a marketing professional with over 20 years of experience in the field, questioned the study’s methodology. She said the Boston-based Fuseideas undoubtedly had a good idea of the demographics it was targeting.
“When you make an ad buy, you know what you’re getting, who the end-user is. And that was absent from this,” said DeChant. “As a marketing person, did I walk out of here with a better understanding? No,” she said.
Ashcroft, of OPEGA, said the report stopped short of making policy recommendations.
“We didn’t set out to try to tell you where we draw the moral line there,” said OPEGA director Beth Ashcroft. “The reality is, if we’re going to have revenue generated from the lottery, then we have to do something to increase the sales. The question is, how aggressively are we going to go after that?”
Cornell’s David Just, an economist and lottery expert who has studied the decision-making of those who purchase lottery tickets, said the academic research is clear: If you’re poor, you have a higher probability of playing the lottery, and you spend a larger percentage of your income and wealth on lottery tickets.
He said Friday that even if conscious targeting wasn’t taking place, any advertising at all was likely to appeal to those least likely to afford a low-probability lottery ticket.
“There may not be anything malicious in it, but that doesn’t mean it’s not happening,” said Just.
Just said Friday the regardless of the OPEGA report’s findings, lottery data in Maine raises questions that deserves more scrutiny.
“Isn’t it more egregious to say, ‘we don’t really know if its hurting the poor, so we’ll just go ahead doing what we’ve been doing,’ than, ‘we have some evidence that it’s hurting the poor, but it’s not perfect evidence, so maybe we should take a step back?’” said Just, adding that gathering consumer-level data is the only way to get perfect statistics.
“Some people will always say, ‘we don’t really know.’ But getting the right data would allow us to answer that question and really figure out what the social cost of the lottery is, to balance out with the social benefits.”
The Government Oversight Committee will hold a public hearing on the OPEGA report May 12 at 9 a.m.