Thursday, July 07, 2005

Poor get poorer in lottery land

Higher-poverty areas win less

Posted: July 5, 2005

Nearly one-third of all state lottery tickets sold in southeastern Wisconsin last year were sold in poor neighborhoods, and players in these areas hoping to strike it rich have not seen as many big payoffs as the rest of the region, a Journal Sentinel analysis shows.

Lottery Tickets By the Numbers
6 cents on the dollarWinnings in the 18 high-poverty ZIP codes of southeastern Wisconsin for residents who played the lottery.
10 cents on the dollarWinnings in the other 76 ZIP code areas of southeastern Wisconsin.
It’s all random. There’s no way I, or anybody at the lottery, could influence the location of winners.
- Mike Edmonds,Director, Wisconsin Lottery
Poverty and the Wisconsin Lottery

Longtime lottery player Tim Butler, who lives on Milwaukee's west side, didn't need to see the numbers to know that he and his neighbors are not exactly reaping big rewards from their investment in lottery tickets.
"I have never won any decent amount of money with tickets I bought in the inner city," said Butler, a Milwaukee County bus driver, shortly after returning home with another $20 worth of Pick 3 and Pick 4 tickets.
He said in the seven years he has been buying lottery tickets - usually several every day - his biggest prize has been $500 won in the Super Cash game with a ticket, he makes a point of noting, that he purchased on the city's south side.
"I'm going to keep playing, hoping things will change," Butler said. "And all the money I lost, I stand a chance of recouping."
Butler lives in the 53210 ZIP code, where, according to U.S. Census data, almost 25% of residents live below the poverty level. In that area, a total of $3.3 million worth of lottery tickets were sold during the 2003-'04 fiscal year.
Yet, residents of that area won only about $145,000 in prizes of more than $600 each. That's about 4 cents for every $1 spent in lottery tickets. Only prizes greater than $599 are tracked by the lottery by winner because those winning tickets must be taken to a state lottery validation center to be cashed.
Most other high-poverty areas of southeastern Wisconsin had similar ratios of lottery sales to winnings.
In the 53233 ZIP code area - bounded roughly by Highland Ave., the Menomonee Valley, 27th St. and 6th St. - where the poverty rate is more than 47%, neighborhood retailers sold $1.1 million in lottery tickets while residents won only a total of $11,100 in prizes of $600 or more.
Overall, in 18 ZIP code areas of southeastern Wisconsin with the poverty rates of 10% or more, a total of $54.8 million worth of lottery tickets were sold. That's 32% of total sales in the entire region of $171 million during 2003-'04. Lottery sales statewide that year totaled $483 million. The statewide poverty rate was 8.7% in 2000.
In those higher-poverty ZIP codes, the return in big payouts of residents' ticket purchases was about 6 cents on the dollar (though a couple of ZIP codes had much higher winning rates - in 53212, with a 36% poverty rate, it was 22 cents on the dollar, for example).
In the other 76 ZIP code areas that make up southeastern Wisconsin, the lottery paid out more than 10 cents for every dollar spent on tickets.
And in wealthiest ZIP codes areas in southeastern Wisconsin, the proportion of winnings to tickets sold is more than double that of the poorest areas.
Residents living in the 20 ZIP codes with the highest median household incomes won $3.1 million in 2003-'04 with $21.7 million worth of tickets sold in those areas. That's 14 cents in winnings for every dollar in lottery sales.
For example, in the 53045 ZIP code in Brookfield, where the median household income is about $85,000, there were $1.2 million worth of lottery tickets sold in 2003-'04. Residents of that ZIP code won more than $520,000, about 45 cents for every dollar spent on tickets.
Of course, people who live in one ZIP code area do buy lottery tickets outside their own neighborhoods, which somewhat skews both total sales and total big prize payout statistics by individual ZIP code.
But the Journal Sentinel's analysis of figures supplied by the Wisconsin Lottery uses the best method available for comparing lottery sales with the household incomes of ticket buyers, many of whom make ticket purchases close to home. And the lottery's data is the only way to track where the winners live.
Mike Edmonds, director of the Wisconsin Lottery, said he's not sure the available data supports any hard-and-fast conclusions about lottery sales or about where winners live. Just because someone buys a lottery ticket in a high-poverty area doesn't mean they live there, he said.
Despite the strong feelings of Butler and other Milwaukee lottery players, Edmonds flatly rejects the notion that where people live and buy lottery tickets determines who wins larger prizes.
He said he hears this theory recited all over the state.
"When I'm outside of Milwaukee County, people say, 'All your winners are in Milwaukee,' and when I'm in Milwaukee County people say, 'All your winners are outstate,' " said Edmonds. "That's a common complaint; but, in the end, it's all random. There's no way I, or anybody at the lottery, could influence the location of winners."
Edmonds also noted that one of the most popular games in Milwaukee County is the Pick 3 game, which has a top prize of $500 - prizes that are not recorded and tracked by the lottery. Of the $23 million in Pick 3 sales statewide last year, he said, half of those sales were in Milwaukee County.
But Sen. Spencer Coggs (D-Milwaukee), whose district includes many of the ZIP code areas with high poverty rates, including the poorest - 53233 - sees reason for concern in the analysis of lottery data.
He said the sales data are likely to be a good reflection of where people living in poor neighborhoods buy lottery tickets because they often lack transportation and are likely to walk to the nearest gas station or convenience store to buy tickets.
Coggs said he was troubled by the large lottery sales figures in poor neighborhoods, but understands why poor people buy lottery tickets even though the cost represents a higher percentage of their incomes than it would for others.
"They feel themselves in poverty and they don't feel a way to get out and this lottery presents this almost-impossible chance of getting out of poverty," he said. "Poor people tend to feel more desperate about these kinds of things, and they take that one-in-a-million chance more than a middle- or upper-middle income person."
Coggs said for years he has heard complaints from his inner city constituents about the lack of big lottery winners from predominantly African-American neighborhoods.
The conclusions of the Journal Sentinel analysis, he said, were startling and might cause his constituents to rethink their lottery habits.
"I honestly believe people seeing these statistics might want to reconsider throwing their money away," said Coggs. "My view is 'buyer beware.' But if I was buying lottery tickets and I see that low numbers of people from my neighborhood are actually winning, I would think twice about playing."
Ashif Maher has worked at the Mobil station near W. National Ave. and S. Layton Blvd. in the 53215 ZIP code, since 2001. Each day, he said he sells about $800 in lottery tickets in this area, where the poverty rate is 20%, and hands out around $200 to those lucky enough to win.
Many of the players are elderly or poor, he said. Most of them lose, and many of the winners take home only a dollar or two.
"No, I don't think it's fair at all," Maher said. "People play like it's like the casinos."
Sue Robinson, who lives on the city's southwest side in ZIP code area 53215 and who said she buys Powerball tickets once or twice a month at her corner convenience store, admits that the numbers on winners are not very encouraging.
In her ZIP code, a total of $5.2 million in lottery tickets were sold in 2003-'04 while prize payouts of $600 or more totaled just $202,000 - less than 4 cents on the dollar.
"Every time I go, I see people who probably shouldn't be buying lottery tickets," she said. "If you really can't afford it, that's where that hope thing comes in."
Robinson said despite what she called "a real lousy return" on her investment in lottery tickets - the most she ever won in five years was $7 - she's not going to stop playing.
"I'm at the stage where a buck or two isn't going to hurt me. It's that little glimmer of hope of getting away from my wage-slave job," she said.
"You do hear about people winning; you might beat the odds, you never know."
Steven Walters and Chase Davis of the Journal Sentinel staff contributed to this report.
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