[Congressional Record Volume 141, Number 129 (Friday, August 4, 1995)]
[Senate]
[Pages S11472-S11474]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                         MISLEADING LOTTERY ADS

 Mr. SIMON. Mr. President, many States have been directly 
involved in the explosive growth of gambling across the Nation in the 
last two decades.
  The staggering surge in State-sponsored and State-licensed gaming has 
largely been the result of impulsive decisions by cash-strapped State 
and local governments whose leaders are looking for painless new 
sources of revenue.
  There has been scant attention, at any level of government, to the 
larger and often troubling public policy implications that accompany 
the gambling boom. I have introduced S. 704, a bill that would charter 
a Gambling Impact Study Commission which, after an 18-month inquiry, 
would release its findings in a report that would provide some guidance 
to the President, to the Congress, to State and local governments and 
to the American people as these decisions are made in the future. 
Senator Lugar has joined in this effort as the chief Republican 
cosponsor of this legislation.
  In the current issue of the Washington Monthly, Joshua Wolf Shenk 
offers an illuminating analysis of the ways that State lotteries often 
entice individuals into gambling with sales pitches that, he notes, are 
``the only form of advertising unburdened by State and federal truth-
in-advertising standards.'' I call his article, ``Everyone's A Loser,'' 
to the attention of my colleagues, and I ask unanimous consent that it 
be printed in the Record.
  The article follows:

             [From the Washington Monthly, July/Aug. 1995]

 Everyone's a Loser: How Lottery Ads Entice the Wrong People to Gamble

                         (By Joshua Wolf Shenk)
       Tom had been playing the lottery for two years when God 
     started whispering in his ear. At first, Tom (who asked that 
     his last name be withheld) would spend just a few dollars a 
     week. He had his regular numbers, and he'd play them when he 
     thought of it.
       But then, he says, on the days that he hadn't planned on 
     playing, the word would come from Heaven: Your number is 
     coming tonight. Fear would strike him like ice water on the 
     neck: ``I'd think, `I'm not going to win it. I don't have the 
     [money] on that number.' '' So he'd rush out to play his 
     regular number, and many more. Before long, he was spending 
     $300 a week on tickets.
       ``It was `A Dollar and a Dream'; `Hey, You Never Know,' '' 
     he says, repeating the advertising slogans of the New York 
     lottery. Tom pauses. ``Those were good come-ons.''
       It's no accident that the voices inside Tom's head echoed 
     lottery ads. They're extremely effective. And they're 
     everywhere: on the radio and TV, in bus shelters and on 
     billboards, even in mailings sent straight to homes. The 
     message is simple: Play the lottery and get rich. Get rich, 
     and all your problems will be solved. The New York lottery 
     takes in more than $2 billion in sales each year, and it 
     spends $30 million each year on advertising to keep the cash 
     rolling in.
       State lotteries target anyone who might cough up a dollar 
     (or $10 or $20) for the chance to strike it rich. 
     Conveniently silent on the odds, these ads send the message 
     that hard work and patience is for suckers. In the process, 
     the ads help wring billions of dollars from the most 
     vulnerable ``customers'' possible--the poor and the addicted.
       Criticism of state lotteries runs a wide gamut. Some say 
     the state shouldn't even allow gambling, much less conduct 
     it. Others argue that gambling should be left in private 
     hands. Still others believe that the state should run 
     lotteries for roughly the same reason many states run liquor 
     stores: to keep the business controlled and clean, and to 
     make money for the state.
       Regardless of where you stand on these important questions, 
     though, one thing should be clear: The advertising that 
     entices Americans to spend tens of billions of dollars on 
     lottery tickets each year is deceitful and corrosive. It is 
     the only form of advertising unburdened by state and federal 
     truth-in-advertising standards. The fact that it comes from 
     the state--which
      ought to encourage people's strengths, not prey on their 
     weaknesses--makes it all the more foul.
       Today, 37 states and the District of Columbia have 
     instituted lotteries, and that number is likely to 
     grow.``Quite simply, states need the revenue,'' explains 
     David Gale, executive director of the North American 
     Association of State and Provincial Lotteries. ``Every dollar 
     raised by the lottery is a dollar you don't need to get from 
     taxes.'' Across the country, $34 billion in lottery tickets 
     were sold in 1994. In Texas, the lottery contributed $935 
     million to the state's budget. In New York, the figure was 
     $1.01 billion. As states have become dependent on lottery 
     revenue, the pressure to keep people playing has become 
     relentless. ``Marketing is absolutely essential,'' Gale says. 
     ``Lottery tickets are no different than any other product. 
     Your market will lose interest after a while. You have to 
     keep after them.''
       Like any sophisticated business, lotteries target the 
     specific groups of people most susceptible to suggestion. The 
     Iowa lottery's media plan, for example, contains the 
     following statement of objective: ``To target our message 
     demographically against those that we know to be heavy 
     users.''
       One such target is the poor. The charge that lotteries are 
     regressive--that is, hitting lower-income residents the 
     hardest--makes intuitive sense, since the pitch of wealthy 
     fantasies clearly resonates most strongly among those who are 
     least affluent. ``There's absolutely no question about it,'' 
     says Charles Clotfelter, a Duke University economist and a 
     leading authority on lotteries. According to a study by the 
     Heartland Institute, a conservative think tank, the poor 
     spend more money than the non-poor on lotteries--not only as 
     a percentage of their income, but also in absolute terms. 
     Blacks and Hispanics also tend to play more often than 
     whites.
       I worked two summers at an Ohio convenience store that sold 
     lottery tickets, and my experience there confirms these 
     findings. The store drew customers from all socioeconomic 
     backgrounds, but lottery players 

[[Page S 11473]]
     fell into distinct categories. On a normal day, the lottery patrons 
     were mostly working-class blacks. When the jackpot for Super 
     Lotto got sky-high, some wealthier folks joined the lines. 
     But the staple customers--those who spent five, 20, or 40 
     dollars a day on daily numbers and
      scratch-off games--were the same people every day; not 
     executives or store managers playing for kicks, but postal 
     workers and retirees on Social Security. You'll see the 
     same trend at almost any lottery outlet. You'll also 
     notice that the same stores almost invariably sell liquor 
     and cigarettes. Choose your poison.
       The image of miserable working people magically transported 
     to lives to wealth and ease is a staple of lottery ads. A 
     billboard once placed in a slum of Chicago read simply: 
     ``Your Ticket Out of Here.'' An ad for the D.C. lottery shows 
     a man ``before'' the lottery--with matted hair, stubble on 
     his face, and glasses--and ``after''--freshly washed and 
     clean-shaven, wearing a tuxedo, and holding the program for a 
     theater performance. The copy reads: Just One Ticket . . . 
     And it Could Happen to You.'' And ad for the Michigan lottery 
     shows a college kid piloting a Lear jet. Then it cuts to him 
     day-dreaming on the job at a fast food restaurant. ``Thirty 
     new Lotto millionaires were created last year,'' the 
     announcer states. ``Play the Lotto, and you could win the 
     stuff dreams are made of.''
       Lottery ads also go after gambling addicts, using a message 
     tuned to their weaknesses. About 5 percent of the population 
     is susceptible to compulsive gambling, according to Dr. 
     Valerie Lorenz, executive director of the Compulsive Gambling 
     Center in Baltimore. In many cases, she says, lottery ads 
     help tip these people over the edge.
       Remember Tom's greatest fear, that his number would fall on 
     a day he hadn't bet? This is one of the defining 
     characteristic of compulsive gamblers, and it's a button that 
     lotteries push incessantly. ``Don't forget to play every 
     day,'' the Pennsylvania lottery ad says. Many ads picture 
     disheartened would-be winners whose numbers came up on a day 
     they declined or forgot to play. One ad for Tri-State 
     Megabucks (in New Hampshire, Maine, and Vermont), for 
     example, shows a pathetic man grilling hamburgers on a fire 
     escape, while scenes of wealth and granduer flash by. The 
     theme is set to the tune of ``It Had to Be You,''

     It could have been you.
     It could have been you.
     Countin' the dough.
     Ready to go, on that three-month cruise.
     Walkin' in style, down easy street,
     Wearin' a smile, it could have been sweet.
     But what can I say?
     You just didn't play.
     It could have been you!

       The theme of magical, instant transformation also lures 
     problem gamblers. ``They live in a very painful world,'' says 
     Dr. Lorenz. ``They want to escape into fantasy, and they want 
     it instantly.'' And, of course, the sheer regularity of the 
     ads is a curse to addicts trying to stay on the straight-and-
     narrow. ``I hear this all the time from lottery addicts who 
     are in recovery,'' Lorenz says. ``They'll cover their ears or 
     their heads. They'll say, `I wish I could leave the state.' 
     But that wouldn't help. It's all over the country.''
       The ads never mention the losers. Tom Cummings, executive 
     director of the Massachusetts Council on Compulsive Gambling, 
     told me about two women he has been counseling. ``One lost 
     her house after going $40,000 in debt playing the lottery,'' 
     he said. ``The other gambled away money that was supposed to 
     pay for her daughter's education. All on the lottery.''
       Lotteries aren't alone in suggesting that their product has 
     magical qualities--that's the art of advertising. But lottery 
     ads take a prize when it comes to their systematic 
     distortion. Because the lotteries are chartered by state 
     legislatures, they're untouchable by federal regulators and 
     they consider state regulators their colleagues in public 
     service. This allows lotteries to conceal the astronomical 
     odds against winning and inflate the size of jackpots.
       Consider a 1993 California radio spot profiling a lottery 
     winner: ``John Padgett went to bed on Saturday night a 
     regular guy,'' the announcer says. ``When he woke up, he was 
     worth $11 million. That's because he's Super Lotto winner 
     number 610.''
       Well, not quite. Padgett did win an $11.5 million jackpot. 
     But that's not worth $11.5 million. Any prize over a million 
     dollars is paid out over 20 years. Padgett's annual payment 
     came to $575,000. After taxes, the actual yearly award is 
     worth around $400,000. And the lost value--due to both 
     inflation ($400,000 will be worth far less in 2013 than it is 
     today) and lost interest--is significant.
       It may be hard to sympathize with someone receiving a 
     $400,000 check every year. But this ad--and nearly every 
     state uses a similar pitch--is
      clearly misleading. The government would never allow similar 
     distortions from private sector advertisers.
       Finance companies, for example, are explicitly forbidden to 
     air commercials that feature investors who have earned vast 
     sums of money with the message, ``It could be you.'' But 
     lotteries do just that. ``I was probably going to have to go 
     back to work to make ends meet,'' Kentucky lottery winner 
     Denise Golden says in one ad. ``And now I won't have to. . . 
     . It's a dream come true.''
       Lotteries are also exempt from Federal Trade Commission 
     truth-in-advertising standards and rules that, to give just 
     one example, require contests and sweepstakes to clearly 
     state the odds against winning in every advertisement. 
     Omitting the odds is a crucial element of lotteries' media 
     strategy, since they're trying to convince people that if 
     they play long enough, they are certain to hit the jackpot. 
     ``Sooner than later,'' says an ad for the West Virginia 
     lottery, ``you're gonna win!'' ``We won't stop until 
     everyone's a millionaire,'' the New York lottery promises.
       A clue as to how far lotteries exceed the bounds that 
     constrain other advertisers is indicated by a report from the 
     National Association of Broadcasters issued in 1975. Three 
     tactics seemed clearly out of bounds, the NAB concluded:
       1. [Indicating] what fictitious winners may do, hope to do 
     or have done with their winnings.
       2. [Using] unqualified or inaccurate language regarding 
     potential winners' winnings. (e.g. ``There's a pot of gold 
     for those who buy lottery tickets''; ``Buy a ticket and be a 
     winner.'')
       3. [Utilizing] approaches which praise people who buy 
     lottery tickets or denigrate people who do not buy tickets.
       Today's lotteries hold themselves to no such standards. The 
     only rule is to produce maximum profit. Even in Virginia and 
     Texas, two states that forbid their lotteries to ``induce'' 
     people to play, ads make gambling seem fun and glamorous. 
     Missouri originally required all its lottery ads to include a 
     disclaimer: ``This message . . . is not intended to induce 
     any person to participate in the lottery or purchase a 
     lottery ticket.'' The disclaimer was dropped in 1988. It was 
     thought to be hurting sales.
       Lotteries defend themselves against criticism by citing the 
     revenue they raise. They also advertise to publicize their 
     role in funding state projects. (Not
      only does this approach bolster political support, it's also 
     a shrewd ploy to hook more players. Gambling is fun--and 
     it's also a public service!)
       Each state has its own slogan: ``When Colorado plays, 
     everybody wins.'' ``The Missouri lottery: It makes life a 
     little richer for all of us.'' The premise of these ads--and 
     a crucial element of lotteries' popularity--is that money 
     goes to improving favorite areas of state spending, like 
     schools or parks. But this is a mere accounting trick. Ohio 
     claims that its lottery revenue goes toward education, for 
     example. ``But that doesn't mean that the budget for 
     education grows by that much,'' David Gale explains. ``What 
     happens is, the legislature budgets this much for education. 
     They see the lottery will contribute this much. So they take 
     the money they would have spent on education and put it to 
     other uses.''
       Most states avoid the fiction altogether and say outright 
     that the money goes to the general fund. But that doesn't 
     stop lotteries from claiming credit for the very best of 
     state government. On its 20th anniversary, the Maryland 
     lottery ran a series of ``public service'' ads. One pictured 
     a nurse holding an infant, saying the baby would get better 
     care because of the Maryland lottery. Another ad in the 
     series gave credit to the lottery for the high school 
     graduation of an inner-city black teenager.
       It is true that lottery profits go to state treasuries. But 
     so do taxes. Taxes are also honestly raised and reflect 
     community decisions about how to fairly distribute burdens 
     and responsibilities. In the current political climate, 
     raising lottery revenue is a political virtue; raising taxes 
     is political death. Naturally, politicians choose the easy 
     route. New York Governor George Pataki recently announced 
     plans for an enormous tax cut. He intends to make up the loss 
     in revenue through the introduction of ``five minute keno'' 
     in liquor stores and bars, which is expected to net the state 
     $115 million per year.
       Lotteries defend themselves by pointing out the obvious: No 
     one is forced to buy a lottery ticket. ``I get so angry when 
     people say they should decide how [others] should spend their 
     money,'' says Teresa La Fleur, who publishes books and a 
     magazine for the lottery industry. ``Unless we decide it's 
     wrong to gamble, it's just a fact of life that people are 
     going to make choices with their money.''
       But states don't merely allow, or provide, gambling. They 
     stimulate it. In addition to running ads, some states even 
     conduct direct-mail campaigns, sending coupons for free 
     tickets via mail. In a typical
      campaign, cited in ``Selling Hope: State Lotteries in 
     America,'' by Clotfelter and co-author Phillip Cook, 35 to 
     40 percent of the coupons were redeemed for lottery 
     tickets. One-third of those who redeemed the coupons were 
     new players; one-third of these new players began to play 
     regularly.
       Considering the addictiveness of lotteries, these types of 
     promotions are inexcusable. Of the nearly 40,000 calls to the 
     Council on Compulsive Gambling in New Jersey last year, for 
     example, 52 percent complained of addiction to lottery games. 
     Imagine the outcry if Phillip Morris sent free packs of 
     cigarettes through the mail.
       In fact, the parallel between cigarettes and lottery 
     tickets is uncanny. That's why both have been the subject of 
     strict limits on advertising. Until 1974, when Congress 
     repealed a ban on the promotion of gambling in the mass 
     media, TV stations couldn't so much as mention winning 
     numbers. Now, of course, TV is the most popular medium of 
     advertising. Besides the many commercials, lottery drawings 
     are televised and a number of states have half-hour game 
     shows centered around the lottery.

[[Page S 11474]]

       Congressman Jim McCrery, a Republican from Louisiana, has 
     introduced legislation requiring the Federal Trade Commission 
     to impose truth-in-advertising standards on lotteries. That 
     would be a start. But a more dramatic step--banning ads 
     altogether--is in order.
       Lottery ads don't just sell a product. They sell a way of 
     life. One ad for the Washington state lottery shows a line of 
     workers punching their time clock. ``The true joys in life,'' 
     the announcer says, ``are not found in the empty pursuit of 
     pleasure, but in the accomplishments realized through one's 
     own hard labor. For nothing satisfies the soul so much as 
     honest toil, and seeing through a job well done.'' Then the 
     man at the end of the line takes his timesheet and throws it 
     out the window. ``Of course, having a whole bunch of money's 
     not bad either.''
       When will public officials stop for a moment, and listen to 
     what they're saying--that hard work and patience are for 
     suckers, that civic virtue is a function of how much you 
     spend on the lottery? ``Even in these cynical times,'' says 
     Clotfelter, ``government has some moral capital. So when the 
     government says, `Children, stay in school'; `Husbands, don't 
     beat your wives'--these have some value to them. If you take 
     that capital and use it [the way lotteries do], one has to 
     ask, does this serve the intention of the state?''
     

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