Long before Democratic Gov. Mike Easley uttered the phrase "education lottery," North Carolina used money from a lottery to build one of the first dormitories at the University of North Carolina at Chapel Hill.
Lotteries are older than the Republic itself. A lottery helped George Washington's army during the Revolutionary War.
So far, North Carolina, which banned lotteries in 1834 on religious and moral grounds, has resisted the latest lottery movement that began in 1964. Today, it remains the largest of 13 states that don't have a lottery.
So what would happen if the state got back into the lottery business?
Would a lottery be simply another form of entertainment like a new sports team? Would it boost the state's economy or erode its work ethic? Would a lottery help children get a better start or break up homes by spawning problem gamblers?
A lottery would undoubtedly change North Carolina. What's unknown is how dramatic that change would be. In states with lotteries, five out of 10 adults play at least once a year. About one in 20 develops a gambling problem.
"Conceivably, the state could undertake any kind of activity and make money off it, from prostitution to the sale of illicit drugs to any number of things," said state Sen. John Hawkins of South Carolina, which is debat-
ing a lottery. "But we draw a line and say we are not going to engage in certain types of behavior. The lottery obviously is a gray area. Many people oppose it, but a majority were in favor of it."
The positive changes that backers of a North Carolina lottery promote include reduced class sizes in early grades and a pre-kindergarten program for 4-year-olds.
Easley cites the Georgia lottery as a model of how the games could help the Tar Heel state. Begun in 1993, it funds college scholarships for students with a B average, a voluntary pre-kindergarten program for 4-year-olds, and technology and building improvements for schools.
A study by two University of Georgia economists found that the Hope Scholarship program has increased enrollment about 10 percent at four-year colleges and universities. Students in public colleges get full scholarships, and those at private institutions get $3,000 a year.
The study also found the aid had not significantly increased access to education.
"You are winding up giving money to people who are probably going to school anyway," said Chris Cornwell, of UG's Terry College of Business and a co-author of the study.
The increased enrollment has come because the state is better retaining its top students. In 1993, one out of four Georgia students who scored at least 1500 out of a possible 1600 on the SAT attended college in state. Now, three out of four stay in state. The expectation is that students who attend college in a state are more likely to settle there.
"It's reversed the brain drain," said Rebecca Paul, president of the Georgia Lottery.
It also is helping preschoolers get a good start. About 62,500 4-year-olds are enrolled in lottery-funded pre-kindergarten this school year. Children who have attended pre-kindergarten get higher academic and social ratings from their teachers and have better kindergarten attendance, according to the Georgia Office of School Readiness.
Easley proposes to use lottery proceeds to pay for a voluntary pre-kindergarten program for North Carolina's at-risk 4-year-olds.
Cultural change?
If North Carolina embraced a lottery, citizens would start hearing a different message from state government -- one promoting materialism and risking their hard-earned money in the name of striking it rich.
Lottery officials from other states downplay the effect of such messages on society.
"I don't think Minnesota culture has been changed by the lottery," said George Andersen, director of the Minnesota Lottery, which began in 1990. "It's simply another, convenient entertainment form. I don't think cultures change because of McDonald's giveaways, either. Culture probably changed more dramatically with cable television and VCRs."
But Chuck Neely, a Raleigh lawyer and former legislator who is organizing opposition to a North Carolina lottery, views lotteries as a vice.
"It's another step in the coarsening of the culture of the state," he said. "You ultimately end up where every convenience store becomes a little gambling parlor."
If North Carolina adopts a lottery, about 4,500 gas stations, convenience stores and other businesses would sell tickets, the N.C. Association of Convenience Stores estimates. Posters, cardboard cutout figures and other eye-catching gizmos would promote the purchase of tickets. TV monitors might hang in stores, broadcasting prize drawings.
Steve Levitas, lobbyist for the association, said convenience store owners don't necessarily think that offering lottery tickets will increase other sales.
"They think there is just as much risk that somebody buying a Coke or bag of chips will spend money [instead] on a lottery ticket," Levitas said. "The money generated by a lottery for retailers is not a huge amount, even for a store that does a relatively high amount of business."
North Carolinians would encounter lottery ads on TV and billboards, too.
Duke University professors Charles Clotfelter and Philip Cook, in their 1999 Report to the National Gambling Impact Study Commission, said the message of lottery advertising on one level teaches that gambling is a benign or even virtuous activity that offers a desirable escape from the dreariness of work.
"It is probably not an exaggeration to say that the message of lottery advertising is a subversive one -- that success lies in picking the right number," they said. "This perverse 'education' initiative ... may have the ironic effect of reducing government revenues over the long run, by reducing economic growth.
"Specifically, if the lottery promotion erodes the propensities to work, save and self-invest in education and training, the consequence will eventually attenuate growth in productivity."
Social costs
While lotteries generate money for socially beneficial programs, they also carry social costs -- such as changes in consumer spending, increases in problem gambling and movement toward more addictive types of games.
"The biggest cost is the shift of money out of other businesses," said Robert Goodman, director of the U.S. Gambling Research Institute and author of "The Luck Business." "It's really a transfer of consumer spending from restaurants and retailers into lottery spending. My experience is it's very typical that states don't consider that. In a typical state, you may be looking at millions of dollars."
If North Carolina mirrors other states' experience, a lottery would lead to an increase in the number of compulsive gamblers.
States that introduce gambling had higher rates of people with problems, the National Gambling Impact Study Commission noted in June 1999. Of the estimated 125 million American adults who gambled within the past year, the commission said, about 7.5 million had gambling problems.
Bill Brooks, president of the Family Policy Council, a pro-family advocacy group, estimated that over a 10-year period, a lottery would create 200,000 compulsive gamblers in North Carolina.
Estimating what problem gamblers cost society is difficult at best.
The National Opinion Research Center estimated the average annual cost of job loss, unemployment and welfare benefits, poor health and treatment at $715 to $1,200 per gambler, depending on the severity of their problem.
Despite those problems, lotteries remain popular.
"Once people reach a certain age, it's their decision how they use their money," said Joseph Clanton, a 49-year-old retired New York police detective who played the Virginia lottery while visiting recently in Martinsville, Va.
Clanton plays his badge number in New York's daily Win 4 drawing.
"If you haven't got the money to lose, don't play," he said. "If there's a sickness, there's a sickness. But it's just like playing bingo in the church."
For many states, legalization of a lottery is a first step to other state-sanctioned gambling. When lottery revenues level off or decline, states often seek to add new games or approve other forms of gambling such as video poker machines, video keno or casinos.
"It's likely to escalate," Goodman said. "Legislators will turn to more hard-core forms of gambling as a kind of quick fix.
"It seems to me that states have shifted from being regulators of gambling to being promoters of gambling. Who is going to watch the store if the people running the store are promoting these enterprises?"
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