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State Lottery For Alabama Case Analysis

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using a national per capita figure. Broadly interpreting these results, it appears that Alabama could expect somewhere between $85 million and $115 million in revenues from a lottery. That is between 1.8 and 2.5 percent of total state tax revenues. Fast forward to this year, Senator Del Marsh introduced a bill to legalize gambling at four sites across the state and create a lottery that will generate $400 million for the state’s coffers, 11,000 new jobs and an economic impact of almost $1.3 billion. Another factor to be analyzed is how lottery revenues are used. Each state determines where the money collected from lotteries goes by using its own unique formula. In Georgia, for example, about 64 cents of every dollar in revenue earned by the …show more content…

According to an article on the Alabama Policy Institute website, the same market forces that reduces Alabama’s tax revenue-putting the state in its current fiscal crisis-would have the same effect on a lottery. For example, during the Great Recession in 2008 to 2012, the revenues generated by lotteries for their states declined for an average of two years. Another economic decline would drive down revenues from an Alabama lottery, forcing the state to raise taxes and introduce more exciting and addictive games. Also with 95% of Americans already living in lottery states and many others living within a few hours’ drive from a lottery state, very few tourists would come to Alabama to play the lottery. This means that most of the lottery revenue will come from Alabamians resulting in a possible downfall for Alabama’s overall economy. For instance, other states have found that the discretionary incomes of residents that would have been spent on local businesses are instead being spent on lottery tickets, transferring large amounts of revenue away from local economies that would have used them to create jobs, goods and services. This is the opposite of the kind of economic stimulus a depressed economy needs. Also, lottery players are mostly poorer residents and lottery retailers are usually placed in minority neighborhoods. The lottery preys on those who can least …show more content…

For years, it has used loans, savings and one-time windfalls to balance its budget. Currently the state faces a $200-300 million shortfall, $700 million if borrowed money is included. Before this year’s budget was passed, Alabama legislators had three solutions to the budget deficit problem; 1) tax increases and budget cuts, 2) accept an offer from the Poarch Band of Creek Indians of $250 million to bail out budget shortfall in exchange to exclusive rights for casino gaming, or 3) legalize a state lottery. Ultimately the legislatures voted to raise tax on cigarettes and approved Governor Bentley’s budget cuts. However many Democrats and some Republicans believed that a state lottery would have been the way to go. Lottery proponents have argued for years that Alabamians are playing the lottery by crossing state lines; resulting in the state missing out on tax revenue that could be used to fund various education initiatives or patch the hole in the General Fund budget (Sims, 2015). By instituting its own state lottery, Alabama would retain the money that is currently being spent on lottery tickets in all of the border states that are benefiting from Alabama not having its own lottery. Although Governor Bentley doesn’t oppose a lottery, he points out that it would take years before citizens could approve it and the infrastructure could be set up. Coincidently, Senator

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