Factually! with Adam Conover - Why No One Wins the Lottery with Jon Cohen

Episode Date: December 14, 2022

Lotteries are the most popular form of gambling. So why the hell is the lottery run by our own government? And do they actually provide a windfall for public schools, or are they a scam that diverts money from the poorest taxpayers to a few giant companies? This week Adam is joined by Jonathan Cohen to explain how the government ended up taking over lotteries from organized crime syndicates, how they were then captured by a few large companies, and whether or not they actually pay off for society in the end. Pick up Jon’s book at http://factuallypod.com/books -- Promo Code: FACTUALLY Listener Discount: 10% Vanity URL: hover.com/FACTUALLY Learn more about your ad choices. Visit megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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So if all of that sounds good, if you want a big box of delicious snacks like this for yourself, use the code factually for $15 off your first order at Bokksu.com. That's code factually for $15 off your first order on Bokksu.com. I don't know the truth. I don't know the way. I don't know what to think. I don't know what to say. Yeah, but that's alright. Yeah, that's okay. I don't know anything. Hello and welcome to Factually. I'm Adam Conover. Thank you for joining me once again as I talk to an incredible expert about all the amazing things that they know that I don't know and that you might not know. Both of our minds are going to get blown together and oh my god, we are going to have so much fun doing it.

Now as always, I want to remind you, if you want to support the show, please head to patreon.com slash Adam Conover for just five bucks a month. You can get every episode of the show ad free. You can join our community discord. We do a community book club. It's a blast. Would love to have you there. Patreon.com slash Adam Conover makes a huge difference to me. Thank you so much. Now let's talk about this week's episode. This week, we're talking about the lottery. Now, for you Americans listening out there, I want you to imagine for a second that you are not American, that you have come to America from a different country or even a different planet, and you go to your local convenience

store. Now, when you get to that convenience store, you might see something pretty weird. You might notice that the convenience store is selling a form of legalized gambling that is run by the state that you are in. Like, literally, you give the state of California or Connecticut or New Jersey a dollar, and they will enter you into a randomized drawing where you could win money. Now, that's kind of weird because, you know, for most of American history, gambling has been considered a vice, a bad thing, a sin in this, you know, historically oppressively Christian nation. So how did it come about that the lottery is so popular that it is played by one in eight Americans

every single day and is so embedded in the fabric of our society that it is run by the literal government? Aren't you a little bit curious about that? Well, I am too. Not only is the history of the lottery incredibly fascinating, after you listen to this episode, I think you'll have to agree that the lottery is not an entirely good thing in American life. And no, I'm not just talking about the fact that, you know, everyone who wins the lottery ends up unhappy and dead at the bottom of a well, or whatever the Netflix documentaries already told us. The actual truth about the lottery is much weirder and darker even than that. So let us get to the interview because this episode is a banger. My guest today is Jonathan D. Cohen. He's a historian and he's the author of the book For a Dollar and a Dream, State Lotteries in Modern America.

Please welcome Jonathan Cohen. Jonathan, thank you so much for being on the show. Or do you prefer John? John is great. Okay. John, thank you so much for being on the show. So you have a new book out about lotteries. I'm so excited to talk about this because I had my own intuition about lottery, something that occurred to me a number of years ago where some facts in your, some facts in your life start to fall into place. Right. So right out of college, I worked at a gas station in upstate New York and I sold lottery tickets and I had never interacted with the lottery before,

but I saw the different variety of lottery games. There are scratch offs, but I also, people come in to play the numbers game. That's what it's called in New York state, the numbers. And there are three numbers that are chosen every day, you know, randomly one, four and six or whatever. And there are different ways of betting on them. You can either try to get the exact number or you can do a box or whatever where you're like, oh, the number's in any order or I get two out of the three numbers or whatever. There's different ways to chop it up. And so I got used to selling these

tickets and I learned about it. Then a number of years later, I was reading a book about the mob or actually was it the mob or was it about, it might have been about numbers games in Harlem, New York. It was something about illegal lotteries in New York. And it described that, oh, well, three numbers were chosen randomly and you could do the box or you could do the whatever. And I was like, hold on a second. This is the same game.

The New York State Lottery reproduced the same game as was run by organized crime like 100 years earlier that's fucking weird that's why would the new that's that's bizarre right that's like if i i don't know you ban dog fighting and then the state says well now we have state sanctioned dog fightings because people like them so much um so i noticed this and was like, this strikes me as something very weird about this public institution that has been around, obviously, my whole life for many generations that I've gotten very used to, and it made me think there must be some fascinating history there. And I believe you're on the show this week to tell us what that history is. Why did that happen? What is

the history of lotteries in America? Yeah, well, I'm a historian, so I'm going to start far back, but I'm going to proceed real quick just to get us through. Oh, take all the time you want. This is what we are here for. We're here for the deep dive on this show. This is one of those Dan Carlin six-hour podcasts, right? So,

lotteries are first used as sources of public good and civic innovation, as far as I can tell, in the 15th century Belgium. They make their way pretty quickly into England, where there's a big lottery commissioned by the queen in 1567. And then they're used sort of most auspiciously to fund British colonization of Jamestown and the Virginia colony in the 17th century. By the state? By, like, the queen is saying saying like, hey, to raise money, you can. So it would be like the Virginia lottery, excuse me, the Virginia shipping company or whatever the, you know, they outsourced colonization to these private companies.

The Virginia Bay colony, excuse me, company would hold a lottery to raise funds. And this, and then I'll just jump ahead a little bit, but in the United States or in the colonies, they sort of serve the same purpose in part because it's really hard, especially if you live six weeks by boat from a banking center, to raise capital and just to get cash to build stuff, to build roads, to build bridges, to build churches. And especially in the colonies, which pretty quickly become defined politically by a hatred of taxation. which pretty quickly become defined politically by a hatred of taxation. The best way to raise money without actually raising taxes is to hold a lottery and hope that that is going to provide enough for the civic purposes that you need. So lotteries were initially used as like an alternative form of taxation. You don't want to tax people.

You don't want to say, hey, everyone has to pay me money for my colony or my bridge or whatever because that might make the wealthy people mad. A lot of people won't want to do that. Instead, we'll do an opt-in tax where everyone gives me money for free and somebody gets a random big bonus at the end, which of course is less than I'm bringing in overall, so I come out ahead. It's basically a stealth tax.

Right. A voluntary taxation, to borrow a phrase from Thomas Jefferson. And I'll say, just among the folks who use it are universities you might have heard of like Harvard, Princeton, Yale that use lotteries to fund the construction of dormitories specifically. And then lots and lots of those old churches you see when you drive through New England, those were paid for with lottery money. Wow. And so I imagine this is an exciting community event when this happens in colonial America,

kind of like the, I don't know, oh, the university's throwing a lottery for the new dormitory. Everyone go down a bite. Like, I can just imagine you're bored in the countryside in Massachusetts in like 1650 or whatever. It must be exciting.

And the only, and it is exciting, except the only, in retrospect, what seems like I can't believe this was exciting is these lotteries are effectively raffles. In terms of what we have today, you don't pick your own numbers, you're buying a ticket. And actually the tickets are sort of expensive, which is how we get this practice called insuring the lottery, which is how we get this thing called policy gaming, which is how we get the numbers games. Because it's for people who couldn't afford like a full ticket, because it might be like three pounds, but that's the equivalent of like $25. So you have sort of like a side bet, and then the side bet has numbers, and that's where

you get these numbers games initially. Got it. It looks totally different from what we have now. Let's step through that in a second. But you did say raffle, and that made me realize, oh yeah, of course, I know a raffle, like the church raffle. That's very commonplace and very benign. And, you know, you win, what, a date with the pastor and a stuffed animal or something like that.

If you lose, you get a date with the pastor. But it's designed in such a way, it's unlike Powerball or Mega Millions, which are designed so that theoretically no one can win and then the prize gets bigger. This is designed such that someone is almost guaranteed to win. There would be blank slips inside for sort of mathematical probability reasons and to weigh things out, and maybe nobody wins on a first drawing, but you're sort of guaranteed on the spot.

The problem is if you live eight weeks into the countryside on a wagon, who's going to tell you that you won until the next time you come to market with your wares? Okay, but so these were being done by large institutions that presumably had a lot of reputability in the community. What was the next phase of lottery evolution? Yeah, so they're done by reputable community, I would just say, but you need often permission from your local governor or the state. And in some states, the state of Pennsylvania, for example, like owned a wheel, like a lottery wheel, sort of like a bingo wheel we know today, and would like lend it out to you for a $25 fee or whatever to hold your lottery. This is, I guess, presumably a way to make people feel that the games aren't rigged. Oh, the state or there's some government agency that's organizing this process and that owns the actual instruments that are being used.

Someone else could build their own lottery wheel. But hey, if it's the state of Virginia's lottery wheel, you trust it a little bit more. Right, a little bit more. But quickly, actually, these games go away. In the 1820s, 1830s, amid the Second the second great awakening the sort of rise of evangelical world that just fervor uh states start cracking down on them and banning them this is gambling this is gambling writ large and then lotteries i mean are are as commonplace then as they are today and sort of are the example above all of and again lotteries are different from other types of gambling other

gambling you you hang out with your friends you play poker in your in your house whatever lotteries rely on mass participation on as many people as possible in as many places buying in. And therefore, they're unique as a public policy problem because of their inherently wide reach compared to other types of games. So during the Second Great Awakening, which is a big, I believe we've talked about it on the show before, big mass American religious movement. Basically, everyone's like, I'm going to start my own cult. And there's suddenly a million cults and religious groups all over the United States. Isn't that the period that Mormonism comes out of, I believe, right? A little later, but, you know, same conversation.

Yeah, okay. So, and they start, gambling becomes an enemy of this movement. And they say, oh, this is a sin and a vice and it's awful. And lotteries are the most pervasive, so they start to get shut down. That's right. And there's actually one, well, they come back very briefly after the Civil War, but just, again, states are sort of facing this fiscal crunch.

But then what we get by the 1890s is there's just one state lottery left. It's in Louisiana. And it's just this absolutely corrupt enterprise that rakes in millions. I think it's like $28 million a year or something. They pay a total of like $500,000 in taxes. They just bribe their way through the Louisiana state legislature every single year to keep their charter and to keep their monopoly.

And most importantly, they sell tickets all over the country. So you're living in Massachusetts. Massachusetts and every state between Massachusetts and Louisiana has banned lotteries. But Louisiana Lottery Company, called the Golden Octopus, would sell tickets all over the country and get people to play. And the reason this is important is because it takes Congress to finally crack down on Louisiana. Because that's when they banned the interstate transportation of lottery tickets, interstate transportation of gambling advertising. I'm getting a little ahead of myself. Those are going to be really big problems for state lotteries when they start up in the 60s that all these old congressional laws are still on the books.

But it takes Congress to slay the golden octopus. is a private company but it's it's chartered or allowed by the louisiana uh the louisiana legislature uh i assume some bribery and some kickbacks they're not really paying taxes but like so it's uh it's it's definitely a private company capturing what what was once done as a public like need to fund public shit and they're ostensibly funding like a hospital or like a children's hospital in in lou Louisiana. That's where the money goes and it's always been very important for lotteries that you have some beneficiary of a good cause that can justify your participation.

That's the same thing that we, literally lotteries advertise that way today, but in this case it was a lie. I assume we'll go on to talk about whether or not it's a lie today. Don't spoil. But it's a fraction. Even today it's a significant percentage. Back then, we're talking like $500,000 out of $28 million in sales.

Any lottery commission would get murdered if they offered odds like that today. Okay, so it's basically stamped out in the United States. So what happens next? So that's when we get to your beloved numbers games and policy games. So again, policy has these roots in the 18th century, has been basically popular in the black community almost exclusively in the 19th century, this sort of practice of ensuring the game. And the game changes.

Now you draw 12. It's very complicated. You draw 12 numbers between 1 and 78, and you need to pick a certain number within the 12. It's not worth getting into. But pretty quickly, this guy, in 1924, roughly, Casper Holstein, who's a black immigrant from the West Indies, invents numbers games, as we come to know them today, which are daily

or multiple times a day numbers games that, crucially, can't be rigged. So this is a genius innovation. Basically, you open the newspaper, and if you know where to look, you can find the winning number. And at the time it was the last three digits, let's say, of the New York Stock Exchange. So you can't rig that. No one's going to affect how much the stocks get traded in a single day. That's what the number is going to be. And to your point, you bet it box, you bet it straight, whatever.

And it's probably a pretty good pseudo-random number. If you were in what you said, this is the late 19th century? This is now the early 20th. Okay, so the early 20th century. If you're trying to come up with a random number as best you can, looking at the last three digits of a large number is pretty good because it's the total value of the stock exchange or the volume traded. It's crazy. Cause you do like, you do one digit from one,

two digits from the other. It's not worth getting into, but yeah, it's, it's some, some combination of numbers that are printed. I mean, if I wanted to find a random number today, that would be not a bad method. Uh, honestly, I'm sure there's some statistical bias in it somewhere, but it's like, that's a pretty smart thing to do. And I just want to talk a little bit more about the, you talked about the policy or the insurance piece of it where you're you're betting in the uh you know you have a number of ways of chopping up the bet um and you said we got there because what the original tickets were too expensive and it was a way to make it more accessible i find that part of it really interesting because it's like

i've experienced the same thing that one or two times i've gone to a horse track where it's like, oh, well, you can just bet on which horse you think is going to win. But then you don't have a very good chance and it's not that much fun if you lose. But if you start chopping the bed up and saying, oh, wait, I can I'll I'm creating a number of different scenarios in which I'll win less money, but I have a better chance of winning. But maybe now I'll win, you know, a dollar and five cents for every dollar I bet. But still, like, that's a, it's a way of making it, of increasing mass participation, right? Because you can play more for less money.

Is that right? Yeah, and what's great about numbers games and policy too is that it's just, when it's not being run by the state, for example, or by some big entity that has needs to raise a certain amount of money, when it's just being run by a company, they'll take a penny and they'll take a dollar. So you can bet as little as a penny when it comes to things like numbers games,

and there are runners who will take your bet. And even if you're hoping just to make $0.25 or $6, if you bet a penny, you'll get a payout of roughly $5 or $6. For people who only have a penny, and know a penny then is worth i don't know maybe a dollar now let's say yeah uh it's it's not nothing yeah um and and and you're you're right you're what you're hitting on is the accessibility and the the focus on letting as many people particularly as many poor people as possible sort of get a stake right game and it lets people feel like they can strategize oh here's what i do this is my this is my way of doing it. I box this and I do that and I do my birthday and blah, blah, blah, blah, blah.

And I've got all these different things. I've got five or six different bets going on in every single day. And most days, one of them hits. Or at least they do often enough that it's a lot more fun and it lets you feel like you're in control of it

more than, you know, it's not roulette, it's blackjack or something. I don't know. That's a bad comparison. People do have a strategy. They do think, like, this huge industry, some of the best-selling books of the early 20th, late 19th century

are dream books that tell you how to convert images you have in your dream into numbers. So, oh, Adam dreamed of a dog riding a firetruck last night. Dog is number 726, and firetruck is 435. And so, therefore, he should playruck is 435. And so therefore he should play that in the numbers. And I tell this anecdote in my book, but someone who dreamt of a number and won

money this way was Colin Powell's father, who had a dream of a number. I don't know if he didn't say what number. And they basically scrapped together every single dollar their family could get. Ended up being $25 in the late 50s. Put it on a number, they hit, and that's what let them buy their first house in Queens, is that Colin's father hit the numbers for $25.

And that's what brought us the war in Iraq, right? Yeah, thank you, numbers games. You did it again. Well, no, but I think that's a really illustrative example, because these are folks who, I don't know their entire family history, but what you're describing, it was like the lottery was a path to the middle class for that family. For a Jamaican immigrant working as a shipping clerk in New York in the 1950s. And so who was running these games?

You said this fella invented the idea of the numbers game and that couldn't be fixed. But who is, if they've been banned by most states and by Congress, you know, on an interstate basis, who's running them? That's a great question. And it's a great question in part because it's really hard to figure out. And because they're illegal, there's not a be unkind, who are, you know, they're taking money from poor people and enticing them to gamble, but are reinvesting a lot of the money back in the community. And they are employing huge numbers of young black men in particular who are sort of collecting bets and have routes and they tell people when they won. And then it's

different in every city. But at some point, you know, organized crime does try to muscle in. And we're talking about, you know, the classic Italian or Irish gangsters who see how much money is being spent on the games and try to muscle in. In some cities, it's ineffective. In Boston, for example, they just take the whole thing over. I don't want to emphasize, I don't want to say, imply that it's only black people who are playing the games, a lot of Latino white working class people who are playing as well. But who's in control? The white organized crime often is bankrolling it. Sometimes they have direct control over it.

And sometimes they get pushed out. And it remains black controlled. Is there some reason that in the black community at this time that lotteries took root specifically? Is there some history there? I'm just curious. Yeah, I mean, I think it goes back to policy a little bit, which was, again, sort of always the black equivalent to the to the lottery going back hundreds of years. I mean, I do think for many of the same reasons we see disproportionate lottery playing black communities today in terms of unlike other forms of economic advancement, lotteries don't discriminate.

Lotteries are, everyone has just as bad odds of hitting. And so why couldn't Colin Powell's father, you know, win the lottery and buy a house in Queens when he might not be able to get a loan from a bank? I mean, yeah, that's a great explanation when you've been shut out of every other means of advancement than the one, this is the one that is still open to you even though the game is rigged against you. Well, it's actually not as rigged as real estate or banking or capitalism in general from that perspective. Especially if – and this is not always the case, but especially if the money that you lose is actually going to be reinvested in your community. Sure.

If the numbers – operator is actually somebody you know, for example, then even better. Yeah, this reminds me of last year I read a book called Small Time by a journalist named Russell Shorto who wrote about his father's, I believe it was his father's, history as a gangster in, like an Italian mobster in, oh, I forget where, somewhere in New Jersey, right? But the way he described, it's a really wonderful family memoir about his own relationship with his father, blah, blah, blah, blah, blah.

But part of it that stuck with me was, you know, they were part of this sort of, the book's called Small Time, this sort of small time part of the mob. And he's like, what did they actually do? They offered gambling to everybody in the town. And the way he describes it is kind of that people also just wanted to gamble. Like there was just a demand for gambling.

People, Americans, people anywhere, they like to gamble. If you don't provide them with a way to gamble, they will come up with a way to gamble. And so the way that his family at that time looked at it was like, oh, we're providing important services to people um and so there's there is that element of it as well to a certain extent right that this is just like something that people just want to do right and we can get into this and and it's a 1976 federal gaming commission a gambling commission their opening words of their final report is gambling is inevitable which i think is true to some degree in the way that you're describing. The question is, is it inevitable that we have a $91.4 billion a year industry run by the state that advertises and entices people to play?

There's some question of when we move away from it being a voluntary tax into a almost compulsory, almost like you're so enticed that you sort of have no option but to participate. There's a question there, but I think you're right. Fundamentally, there is some inevitability to the participation. Well, we're going to get to that modern form in a little bit. But at the time that we're describing here, early 20th century, what you have instead is lotteries or numbers games or different variations on this almost across the country, right? Like in every, if I live in Peoria, Illinois, there's probably a lottery that's probably run by some local small time gangsters, right? That I can go to every day and that people know and sort of trust to an extent. Am I right in that vision? I think the conversation and the vision is often about these big operators. And then there's a lot of sort of exactly the example you laid out, sort of small time people who just sort of do it for fun. And I'll point folks to an amazing memoir by Bridget Davis about her mother who ran a numbers game in Detroit and how much of it was built on personal relationships and trust.

Right. Even though her mother had to sort of rely on organized crime sometimes. If too many people were betting on a single number and if that number hit, she would lose everything. So you sort of offshore some of your risk to organized crime. But a lot of it is really small, especially concentrated in urban Northeast and Rust Belt cities. So Peoria is a great example.

I don't know if it makes it to California, for example. But those are, no coincidence, these are the first states that enact a lottery, are the ones that have all this illegal numbers gaming already happening. So at this point, we're making it sound so, like, sort of nice and quaint and community-based here, but this is really, like, part of the fabric

of American culture at this point, that, like, it's a neighborhood thing that everyone's familiar with. So, look, we have to take a really quick break. But when we come back, I want to find out what the fuck happened next and how this how this was all taken apart. We'll be right back with more Jonathan Cohen. OK, I'm back with Jonathan Cohen. We're talking about the lottery in America. So in the early 20th century, we had these small scale lotteries sort of distribute around distributed around the country that were run by local operators. Clearly, those don't exist today. So what happened? What what eradicated the local small time organized crime lottery?

the local small-time organized crime lottery? Well, the real one was that the state came in. The subtext that maybe we don't have to get into is that the war on lotteries is what immediately preceded the war on drugs. And before the war on drugs, basically what police used to arbitrarily arrest and harass people, particularly people of color, in urban America was numbers games.

Because basically everyone was playing the numbers or was running a numbers game. So if you wanted to sort of just beat up a kid on the street or grab some people and throw them in a pen, almost invariably you can find number slips in their pocket. This is like a cliche from a Cops or Robbers movie. Hey, he's been running the numbers. Like, lock him up.

Exactly. What are you doing around here? Racketeering, running the numbers. Like, lock him up. Exactly. What are you doing around here? Racketeering, running the numbers. Like, it's just, like, I didn't even, I just thought it was like a random phrase. And yeah, so you could literally just, like, do a stop and frisk, stick your hand in someone's pocket

and find, oh, you've been playing the lottery. I'm taking you downtown. Exactly. So not to say that all that enforcement was particularly effective in terms of your initial question, but organized crime sort of does pivot from the numbers games to drugs. And that sort of is one blow, I guess, to this local operator version of the numbers games. But the real death knell is the rise of state games, which started in 1964 in New Hampshire.

But then by the early 70s, as other states are getting on board, they're adding daily numbers games, and they can offer safer payouts, a lot of stuff that the illegal games can't. Well, let me just ask, as well, in, you know, the mid-20th century, there was a huge push to shut down organized crime by the FBI and, you know, the federal government in general, and was that part of this story, too? the FBI and, you know, the federal government in general. And was that part of this story, too? Yeah. So the the I in an ironic way.

So the key favor hearings, which you're alluding to, which which, first of all, in the 1950, 1951, had more. These are organized crime Senate hearings around the country. They had more viewers than the World Series in 1950, 1951. People are just watching this like you can't miss TV. And ironically, so so Estes Kefauver, who's a senator from Tennessee, he implants in the public mind this idea that gambling isn't just something the mob does. It is what enables the mob to do everything else that it does.

It isn't just a source of income. This is how the mob buys prestige, how they buy protection to run narcotics, how they run protection to run prostitution rings, sort of you name it. He sort of sees gambling as at the heart of what they do. And ironically, all these investigations, and there are a couple others that follow them, reveal to the public how profitable gambling is and help whet legislators' appetite for legalized games in the first place. Like maybe they never even realized how profitable these things are if it weren't for all these Superboy crime fighters trying to show off how much money they put on the table by arresting all these numbers operators.

But so what is the connection where like, OK, you know, obviously the state, whether you're talking about the federal government or the state governments or even a city, obviously they need money. They're always trying to raise revenue. But what is the link that makes them look at this and go, oh, wow, there's a lot of money being made here. We should get in on this. I mean, that occasionally happens. If you look at marijuana legalization, that's often framed as, hey, this is a way that the state can raise revenue. But it's not like we're doing that with, you know, crack or like other, you know, it seems like pretty rare that the government is that or that legislators are that focused on, hey, let's get in on this racket. So why would that happen? Right. So I think the fact that lotteries are old and have these sort of historical roots

makes them a little less scary. You know, no one's ever tried other than portugal you know legalizing all drugs for example so that would be sort of a step too far um for a lot of folks and then i i argue uh that you know in the 40s 50s states basically had this amazing economic arrangement where they could raise services without raising taxes just because of the unique circumstances of the post-World War II American economy. And in the 1960s, that starts crashing. Inflation, Vietnam, states just basically need money, but folks, voters, don't want to raise their taxes and they don't want to lose any of the services they have.

And if that's the case, you sort of, you need to get money somewhere and gambling is one of the only ways to do so without taxes. Yeah, the post-war economy has this strange bubble that like created, I've talked about on the show before how, you know, when we look back in the forties and fifties, we think, oh, that's how life was for most of America. No, it was actually a short little post-war bubble where we dominated the world economy. And, you know, that's why everyone had a two car garage and a chicken in every pot.

But then when things started changing, nobody was ready for it. And when you look at the levels of taxation, that's also the highest level of taxation on the wealthy that started going down. So there's this need to suddenly replace revenue. Right. And now that Germany and Japan are back on the scene after, you know, rebuilding their economy, after we rebuilt their economy after World War II, for example. Yeah, absolutely. But there's something else I'm just curious about in this dynamic where you had said that the state lotteries were originally banned

because of this, you know, the second great awakening, this religious movement, a bit of Puritanism. I'm sure we can chart that with the temperance movement too. And, you know, there's a lot of strains there, but now it's what, it's like just 50, 60 years later and the states are going ah never mind like this kind of gambling is okay and the interesting dynamic to me is you say the it's the biggest ratings ever hearings on tv about this about how this this is a legal activity

but the revulsion isn't about the gambling because the states just turn around and reinstate gambling right via the lottery the revulsion is about something else uh that people are upset about and i'm looking at it and is it that it's racial outgroups right it's like we've got italians who are you know making this service for you know black americans and that's what people are is that the seediness of it like hey let's you know what let's let's turn this back into a thing that white people are running or non-Italian white people are running. Yeah, well, there's a lot of, I think an important comparison here

that is on the minds of a lot of people is prohibition. In the aftermath of prohibition, people realize, even some people in the temperance movement, that making something illegal doesn't just make it go away, for example. So starting 60s, 70s, especially there's a rise, and we don't have to get into this, in the temperance movement that making something illegal doesn't just make it go away. Yeah. For example. So starting 60s, 70s, especially there is a rise, and we don't have to get into this, the rise of a sort of victimless crime as a rhetoric that sort of emerges for the first time and gambling sort of fits the bill as a victimless crime.

And a lot of folks don't know this. In the early 70s, a couple states decriminalized marijuana sort of very, very briefly. Oh, wow. In part because of this victimless crime rhetoric. And this idea, and if there's all these surveys at the time in the 60s and 70s of people who see a lot of illegal gambling, believe that police officers know about illegal gambling, believe that police officers take bribes and therefore don't do anything on purpose.

So they're like, why is this still illegal? Why doesn't the state raise money from it when clearly making it illegal and trying to enforce it and paying all this money for law enforcement is not working? Right. OK, so so the states start instituting lotteries again. And what's, again, crazy to me is that, like, they're using the exact same game patterns that the people who they're sending to prison use. They're like, oh, okay, we're going to send you to jail for doing this. But great game idea. Let me start selling it at the convenience store and taking a cut of it. I wish they were that smart.

They're not quite smart enough to do that. It takes them a couple years to add the daily numbers. I can't even explain how absolutely insane the early New Hampshire and New York lottery games were, in part because of federal taxes that they had to deal with. But it has to be tied to a horse race. So you do a horse race. It's live on the spot. You're doing a horse race.

But then you do a drawing. But your drawing is about which race you're going to do and then another drawing of which horse in which race is going to be affiliated with your ticket. And again, there's all these weird taxes, and this is meant to be so it can't be rigged, and horse racing is the sport of kings, so it's supposed to raise the reputation. But tickets are really expensive, and basically it sucks. No one wants to do it.

And New Jersey is what sort of first crafts this weekly lottery game, and then in the mid-70s, finally, these states get their act together and add the daily numbers as we know and love them today. Got it. New Jersey innovating in... In gambling, as always, yeah. Incredible.

Okay, well, so thank you for taking us through the history. Let's start talking about lotteries today. Like, when we talk about what the role that the lottery holds today in American life, how do you describe it? Yeah, first of all, I think it's a lot bigger than people who don't play the lottery would imagine, myself included, until I started working on this book. You know, one in eight Americans play the lottery at least once a week. And I think just in terms of its role in American life, I think a lot of people, a lot of those one in eight Americans view it as sort of, frankly, their best shot at the American dream.

And not just a form of entertainment, not just a game, but really their last, best, only chance at a new life. And who are the folks, you know, when you say that one in eight, who is that one in eight predominantly? The top 20-30% of lottery players account for as much as 70-80% of lottery sales and that group, that 20-30%, that 1 in 8 are disproportionately black or Latino, less educated

and lower income than the average American I mean this is sort of true of all gambling scenarios even in video games that involve loot boxes and stuff like that involve, you know, loot boxes and stuff like that. There's always whales. There's always the people who are, you know, that top, that small percentage is making the top of your profits. But normally when we say whales, you imagine someone who's got a lot of money, right? But this is someone who doesn't have a

lot of hope and is willing to sort of bet everything they do have on this distant, distant dream of something better. Yeah, something I think about with this a lot is there's this wonderful book by Matthew Desmond called Evicted. We've had him on the show before and talked about this. But he talks about the psychology of that where when you have so little and you have the choice between like saving your $1 in a bank account where you – what return, what return am I going to see from that? I'm not going to, that's not going to elevate my standard of living at all. Why not do something that's fun and that has a hope and promise at the end of it? Like it seems from my position, I'm like, well, Hey, the expected value of that is less than the dollar that you spent. And so therefore you're, you're guaranteed to lose. And like, that doesn't make any sense to a person who is living on so little, right?

Right, right. The psychology changes, and so it's somewhat rational when you're actually in that position, or at least understandable. Exactly. I think it's so understandable, and there's so many things to go on that. I think a lot of lottery players are actually not the very, very bottom, the bottom quintile of income. It's the second quintile. It's folks who have disposable income to play, but maybe not enough hope, opportunity, entrepreneurship, access, side hustle, whatever, to get it elsewhere. And I think there's sort of two types of lottery.

And this is totally anecdotal from whatever, seven years of research, but it's anecdotal. There's two types of lottery players. One is the one you just described, who's hoping to turn $1 into $60 to get them through the night. And the other are this sort of second-kintile folks who are just looking to get ahead and looking for the American dream and really see no other way by which it's going to come to them. Well, yeah, something that's really interesting in talking through the history and the numbers games and the modern lotteries today, one of the biggest differences to me is the dominance of games like Mega Millions. I mean, when you're talking about numbers, you know, three numbers are going to be chosen and you can chop up those numbers however you want. You can engineer a betting strategy that means that you can play every day, you can bet a dollar every day,

and you'll win on average 90 cents or something like that. Like, you know, I once as a, you know, me and me and some friends bought a hundred dollars worth of $1 scratch off tickets. Right. And we scratched them all off. And at the end we had earned like 80 bucks. Right. So we had only lost 20 bucks and it made me go, Oh, okay. If you just want to do this for fun, if you just like scratching off lottery tickets, you can just do that. You're going to lose money, but you're not losing that much overall. You're, you're winning always a little bit less. And so you get that feeling of winning once every day or so, et cetera. But that's very different from the, uh, from the mega millions psychologically where, or the Powerball where, you know, we just sold here in California. I think one of the biggest bit, I say we, as though I had anything the fuck to do

with it, but you worked at the, you worked at the convenience store in Sacramento, right? Yeah, yeah. There's a convenience store in California and someone got a lottery ticket that was over a billion dollars. Two billion, two billion. Two billion dollars, which is obvious. I mean, that's not even, that number is not even rich. That's wealth, you know?

Now, I think if they cashed it in, they get what, $700 million, something like that. Still, that's a crazy amount of money. And that if you're if you're going for that lottery, you're expecting to receive zero every single day. Every single day you go and buy that ticket and you don't hit on anything. And you're like, I'm going to go buy it tomorrow anyway. That is very different psychologically than going and paying a game where you're expecting to win. You know, you're doing the crossword puzzle scratch off where, you know, you expect to win pretty often. That's right. And I'll just emphasize Mega Millions Powerball gets all the attention, but it's roughly 13, 15% of total lottery sales. The real moneymaker are scratch tickets. And that's where, that's exactly what you're describing, where folks are putting in two dollars, twenty dollars, fifty dollars, getting thirty dollars back, putting in another twenty dollars, getting ten dollars back, putting that back in. All of a sudden they've spent one hundred dollars on lottery tickets. And this is how lottery tickets end up. Americans spend more on lottery tickets than on cell phones or smartphones because fifty dollars becomes thirty becomes twenty percent.

All of a sudden you're at one hundred, even though you started with $50. So do you feel that that form of ticket is more pernicious than the Mega Millions, or do you draw a comparison at all between them? Because what you're describing sounds more like slot machines to me, where you're sitting in front of it, you pull the lever because it gives you that winning

feeling often enough. You go, you know, I would see people when I worked at that gas station, come in and they go, you know, I would see people when I worked at that gas station come in and they would buy, you know, $300 worth of scratch off tickets and they would sit there and do all of them in the store and then turn them back in. And I was like, okay, they're, they won on enough of them that they are having a good time, but they're also spending so much on this every day. So, so when you say pernicious, itnicious, it's a tough question because I think the perniciousness of Mega Millions, Powerball is not just in the gambling in and of itself. I think those games have totally warped American's sense of wealth and their beliefs and their ideas. And that's something that's very hard to quantify compared to something like scratch tickets or

numbers games, which to your point are a lot more pernicious sort of on a, on a day by day basis. Yeah. Uh, well let's talk about what these things are supposed to fund, right? You said early on that, Hey, lotteries always need to have some sort of public good at the end of them. I do see when I see commercials for lotteries, they're like to fund our schools and shit like that. Do lottery.

I know there's many States and they all do it differently, but do you feel that on average they are funding the schools or is it a racket? They're funding something. They're definitely funding something. In some states, there's like a very specific program and like this program – and some of those programs aren't so great. But this program, this merit scholarship in Georgia wouldn't exist if it wasn't for the lottery. This program, this merit scholarship in Georgia wouldn't exist if it wasn't for the lottery. So again, that scholarship happens to be super aggressive and helps white suburban kids go to school and not poor black ones. But so be it.

It wouldn't exist if it wasn't for the lottery. In California, it's a tough question. So this has been a problem in California, Florida, Illinois, Virginia, New York, where every lottery dollar that supposedly goes into the education budget, $1 of standard education appropriation comes out. Right, because the lawmakers are looking at it going, oh, we got all this lottery money, now we can cut the budget. Exactly. So the lottery is designed, it was supposed to supplement the education funding, but it ends up supplanting our already existing revenues. I don't love this, right?

Because, I mean, look, California is a state, we've talked about this on the show before, in the seventies dramatically cut property taxes. And there was this enormous shortfall. It's like the, the one thing you need to know about California and why it is the way it is that property taxes were, were slashed and then capped and money was immediately sucked out of the schools. Like schools suddenly found themselves with million, like $100 million shortfalls in their budgets and they had to plug them quickly. And so doing that with the lottery,

okay, it's like another example of we've got a shortfall, let's plug it up. But you're now taking the money from, like you say, that one in eight people who are poor and desperate and are sinking, you know, dollars that they could be spending sending their own kids to school

right? Saving for college. And six years later, six years after Proposition 13 in 1978 which slashes property taxes is when the lottery comes in. It's this one company that does it which we can get into. They would have done it a lot sooner if they could have but the

atmosphere, the soil for the lottery was very fertile and was laid by this slash in property taxes and this belief that, oh, we can offer all those pre-1978 services without pre-1978 taxes thanks to the lottery. So and this is the core, I think, of the argument against the lottery, right? That this is a, hey, it funds schools. Well, it's a tax on the poor that you've enacted because you were not politically willing or able to tax the rich who own the homes, right, instead. Or any other kind of tax you might want to do, an income tax or whatever.

Well, instead, let's do a voluntary tax that's going to fall on the people who can least afford it. Right, and this is where the inevitability argument is really important, and it's really important to see how it falls short. This belief that the poor are going to gamble anyway, which, sure, are they going to gamble $91.4 billion every year?

No way. Only an entity the size of a state government with that much legitimacy and that much reach into every 7-Eleven in the country could ever garner that much sales. And that's where, again, the inevitability argument sort of falls short. And I think we need to be a lot more sympathetic, as you already were, to the poor and those who decide to participate because there are no options elsewhere.

Right. I mean, it's similar to saying, hey, people are going to drink, but that doesn't mean we need to have beer funnels everywhere and Budweiser ads on TV and et cetera, et cetera. We can still have a harmful drinking culture in America, as I would probably argue that we have, and same thing for gambling. And this actually makes that turn-of-the-century lottery culture look even quainter and nicer now that we're talking about it, because you've just got, you just got your local small time gangster.

Hey, occasionally he has to kill somebody, but most of the time you're just saying, Hey, put, put five bucks on one, two, three for me. And then like, Oh, you win 20 bucks. And like, it's, it's just like, that is fulfilling that need or that public desire for gambling in a way that isn't supercharged with, you know, state run capitalism. Yeah. in a way that isn't supercharged with state-run capitalism. Yeah, and to offer an example that I think might interest you, and I think having watched your show,

I think it gets a lot of these questions about government's role in fostering the common good. Theoretically, in the short term, it's in states' best interest for more people to buy cigarettes because they make money on cigarette taxes. But you would never see the state promoting, oh, hey, everybody, let's go out, buy some Marlboros because California really needs some cash. But that's exactly what we get with lotteries

where the state is actively promoting them every day for just that reason. But again, this is so fascinating to me because we do feel, and we gotta go to break in a second, but I gotta get this question out. We do feel that gambling is a vice in America. Like we know that it's bad for us. We know that gambling addiction

is a problem. There's a religious prohibition against gambling. Gambling has been banned at many times throughout American history. When you ask people, you know, here in California, there were just two propositions on the ballot about expanding gambling in various ways, in two very different ways, but both failed. It's something that Americans have very mixed feelings about in the same way that we have mixed feelings about tobacco. Like you said, there were hearings on television that everybody watched about how the mob was controlling gambling. Just like in the 80s, we had hearings on TV about tobacco, and those were the pariahs. So it's fascinating to me that you would say, well, we wouldn't do

this with tobacco. We do it with gambling. Well, why? It seems like gambling is something that we don't love as Americans. And we know that it hurts people. Everybody's got someone in their family whose grandma lost her house playing the slots. Like we, we know this. So why do we have this blind spot where it's, we, we sanctioned these things? Yeah. I think, I think gambling, this belief that it, everyone does it in some fashion and there's always going to be excesses sort of helps take, takes the edge off a little bit. And the fact that it's been around for so long, but it's a really good question and I don't know why we've decided to sort of turn a blind spot to this issue. And folks may have seen the last couple of days the New York Times put out a four-part investigation into the sports betting industry

and their sort of drive to expand. And there's nothing inevitable, nothing natural about the sort of situation we found ourselves in when it comes to lotteries or sports betting. Yeah, sports betting is actually a really interesting example because it is one that has been banned for a long time and you can make the argument, hey, people just want to bet on sports. I know plenty of people who just like, I just put 200 bucks on the NBA season and I have some fun.

Makes the games more fun. I get that. But also you can question, well, how supercharged is capitalism getting this? How much is this going to infect every part of our society once they really start putting billions of dollars in marketing and penetration behind it? smoking? Why was smoking this incredibly capitalistic, well-marketed, culturally embedded, extremely deadly practice, why were we able to beat that on a cultural level and decrease

it by, I mean, obviously, smoking is still one of the greatest causes of avoidable death in America, but why were we able to have a cultural re-evaluation of smoking and we are not with so many other problems like drinking and gambling? And by the way, I'm not a prohibitionist about these things. You know, I'm not someone who says, oh, all these things should be banned. But I also think we

need to see reason when we have extremely powerful entities like tobacco corporations, like, you know, sports betting corporations that are able to take advantage of our own vulnerabilities and exploit people and hurt people and kill people that's what i think we need to have some reasonable regulation of yeah i think a lot of the the comparison when it comes to gambling is that the people who play and who lose everything are sort of out of sight out of mind and i'll shout out to to a member of my dissertation committee, Sarah Miloff, whose book about the history of cigarette, the political history of the cigarette and the organizing done by people

who are basically sick and tired of sitting in a restaurant and there's a smoking section over there, but the whole restaurant still smells like smoke, for example. And the political organizing around the desire for smoke-free spaces as being something that helped get us to tobacco regulation. And there isn't a sort of spillover effect when it comes to gambling. And everyone, every grandmother who loses their house to slots or whatever feels like an isolated case, even though I hope when someone like me writes a book about it, it's clear what the connective tissue is

and why this is happening all over the country to all sorts of people and from all different walks of life. Okay, well, let's talk about these corporations that are fueling lotteries. But first, we have to take another really quick break. We'll be right back with more Jonathan Cohen. Okay, we're back with Jonathan Cohen. You write about this corporation called Scientific Games Incorporated. Tell me about this company and how instrumental it has been in the spread of the lottery. Yes, so Scientific Games invented the scratch ticket, as we know and love it today,

first introduced in Massachusetts in 1974, and they spread like wildfire across what were at the time the 13 or 14 existing lotteries in the 60s and 70s. But they run into a problem where they want to keep selling their tickets, but no state is about to add a lottery. And they especially want to sell them in California. But what they basically do is a process called astroturfing, where creating the illusion of grassroots organization, but in fact funded by a corporate self-interested entity. So in states like Arizona, California, Oregon, Colorado, Missouri, Iowa, and Washington, D.C., they create citizens groups, they write legislation, they take out advertising,

they pay people to go collect signatures. Great story about this is in Arizona, it was the weekend when The Empire Strikes Back was in theaters, and they basically signed up every single person in line to see Star Wars in 1980 to put the Arizona lottery on the ballot. And if the movie hadn't been in town, they wouldn't have gotten enough signatures and it would have failed. Wow. Wait, and they put it on the ballot like literally as a proposition in Arizona? That's right. And all you need, you know, because this way they're circumventing legislators or circumventing governors, anyone who might be sort of have these puritanical impulses about gambling.

They're putting it right for the people to decide. And it's just the company paying people to gather signatures, writing the bills themselves, sort of taking advantage of this initiative. I thought this kind of thing was a modern problem, the corporate-sponsored proposition. It's obviously a big problem in California, Massachusetts, other states around the country where some company that wants to earn – one of the gambling propositions in California this year was by a bunch of sports betting organizations. This was one of the first cases. You're not wrong that this is, this is one of the first companies. And this is a mid in the 1960s.

There was like very, very few initiatives pass in the whole country over the course of the whole decade. And it's only in the seventies and eighties that these start to come back. And scientific games is right at the tip, right, right at the head of, of, of that wave of not just corporatized, but even initiatives process more generally. And so this is, you know,

we spent half of this conversation talking about, hey, why did the state get into the lottery? What was the appeal to the state? Why did the state take over from the numbers runners? But the way you're describing it, it's like, oh, a fucking company did it. Like it's not the individual legislature's going, oh, hey, let's make some money.

It's decades of bullying and malfeasance by one large corporation. Is that correct? Yeah, and there's a U.S. Senate hearing in 1984 about the lottery issue, and this is two months before the California and Oregon initiatives that are sponsored by Scientific Games passes,

and Minnesota Senator David Durenberger says, I'm afraid we've lost control of this industry. And the implication being that it's no longer up to States, whether they're going to pass a lottery, it's up to the lobbyists and these companies who are either going to pass a lottery in some States, or once all these States pass a company driven by scientific games, all these other States basically figure it's going to come for us eventually, so we'll just do it ourselves.

So they get a lot of credit, to put it kindly, scientific games does, even in a state like Nebraska that takes a couple more years and does it on its own without any lobbyists, but really probably had scientific games sort of in the back of their mind the whole time. Jesus Christ. the whole time. Jesus Christ. Okay, so even setting aside the issue of whether the money raised by the lottery actually helps the schools or if it's just replacing money that's getting taken out elsewhere,

which it sounds like the latter is mostly true, but how much is Scientific Games profiting and the other companies that might be in this space versus how much is the state profiting? Like when I go buy my one lottery ticket, you know, my sister-in-law gets a couple scratchers in her stocking every year. When that happens, who's really benefiting the state of California or Scientific Games Incorporated? Right. So so it depends on the state.

Maybe 30, maybe maximum 40 percent is going to go to the state. That's it. In general. That's it. That's most less than half. Most Jonathan, that's less. It's less than half, Jonathan. It's less than half. It used to be a lot more, and then basically players got spoiled, and they want more and more. And the biggest chunk goes to prizes. So in Massachusetts, it's 72% is prizes.

Some states, it's as low as around 50%. But it used to be 30%, and then people wanted more, and then it went to 40%, and then now all of a sudden, here we are in Massachusetts, it's 72% or so of the money goes to prizes. Okay, well, I mean, that's good. is 72% or so of the money goes to prizes. Okay. Well, I mean that's good. That is who should be getting the money from a lottery. In a perfect world, 101% of the money would go to prizes and you would just be using it as a way not to take money away from poor people but give money.

Wouldn't that be great if the lottery was a net win and then you were giving – well, I guess then people would just buy an infinite number of tickets. So that would be a bit of a problem but i but i this is this is i'm trying to come up with a socialist lottery silicon valley we got we got an idea here i think yeah the movie pass of lotteries everyone is guaranteed to win more money than they spend um this is socialism in action okay but how much is scientific games profiting or and these other right so so roughly 10 to 15 is going to be spent on lottery administration writ large so that's going to pay for the administrators the people who actually run it and then some percentage of that is outsourced to a company that prints the tickets some states print them in-house some states contract with scientific games which is

still around today even though it's owned by this italian conglomerate, to do all these services for them. A lot of states in the 2010 range tried to, excuse me, 2008, 2009, they tried to privatize fully, and the George Bush administration said no. There has to be some actual state control, but they can still outsource their printing and their lotto operations and their computer services and their this and that.

So scientific games at the time in the eighties was getting like two to three cents per ticket max. And, but still your state like California, you sell umpteen million tickets that adds up pretty quick. The other one I'll say is your old bosses at a convenience store get five to 6% of every ticket, both some that sold and then you get a bonus for cashing tickets.

And this is so powerful that Southland Corporation, better known as 7-Eleven, was one of the companies that helped push the Virginia lottery in the late 80s because they wanted the chance to sell tickets. Wow. Because, yeah, I mean, look, here in Los Angeles where I live, there are so many shops that you see these shops called donut shops. They have donuts, but the main thing people are buying are lottery tickets. There's not that big a market for donuts. You know, like they're too sweet. They spike your blood sugar. You can only eat so many of them. And plus they cost, how much does a donut cost, 75 cents?

But like a lottery, what they're selling is lottery tickets. And that's what people are going in for and buying a donut to wash the scratcher down. So, but, you know, that makes me think, okay, those are all mom and pop shops, right? The idea that, oh, hold on a second. The 7-Eleven Corporation is basically a gambling company is not something I had considered. I mean, they sell hot dogs. Yeah, sure. But who's buying these hot dogs?

I've never once bought one, and I've never seen one for sale. Sure, people like the Slurpee or whatever. But the fact that this is essentially these large corporations with outlets all across America are basically an off-track betting site, but for lottery tickets, it's pretty wild. Yeah, and I'm keeping an eye on whether, and obviously this is going to be state by state, as more states do get into sports betting, if a state like New York is uncomfortable with an app, whether they're going to literally become an off-site betting terminal

like we have in England where you have to go to your corner store and watch the games and that's how you place your bet, whether 7-Eleven is going to open up like a sports book. In every single 7-Eleven across the country, you need to go to a brick-and-mortar store to place your sports bet, for example. I wonder if the lotteries only sort of whet their appetite to get more involved in the gambling economy. Yeah, and I've got to say, if you're talking about the amount of money that they can earn, just talking about, you know, you said 30%, say 30 to 40% goes to the state of California and, you know, two to three cents on the dollar or 10 to 15%, depending on how you want to chop it up

is going to the private company. Well, that doesn't sound okay. They're not the biggest profiter, but if you're talking about like one company is making, um, you know, the same order of magnitude off of this as the state of California, right? The, the most populous state in the country that has this massive school system, right? The school system is getting 30% and this company is getting 5% or 10%. That's a shit load of money. Like that is more money than a company needs to be making off of, you know, uh, uh a legalized vice that is hurting people, in my view. So how much are these companies responsible for the growth of the lottery in America? Because as we said, OK, even if we want to call this, you know, something that people are just going to do, right? You can't really ban it, so why not sanction it?

That doesn't mean you need to supercharge it. How supercharged has the lottery gotten? Yeah. Yeah. And this is where David Durenberger was right, that the states have sort of lost control, where the states have this drive and legislators, especially those who don't think about the lottery very often, it's sort of out of sight, out of mind. All they want is for sales to go up.

That's all they care about. They just want the revenue. And as a result, these sort of lotteries have free reign. And the companies will push it and they'll pitch new games. Ultimately, the decision and the responsibility lies with the administrators, some of whom, you know, maybe used to work for these companies, whatever. Right. Yeah, the head of the lottery board probably is pretty cozy with the lottery company, I would imagine. The lottery board probably is pretty cozy with the lottery company, I would imagine. And there have been some actual clear corruption inside track to contract type of situations. And if you're that lottery administrator, if you're going to the legislature and you say, hey, guess what?

I got you an extra $50 million, extra $100 million this year. They're not going to look too closely on, hey, how many people in California or Missouri or whatever are addicted to gambling now who weren't before. Exactly. They're going to say, oh, good job. Thank you. Right, right. Yeah, you did your job, in fact, because your job is to raise money, not promote the common good. And just to answer your question directly, this is how we get from $1 scratch tickets in 1974, and it's sort of complicated, but states didn't used to have multiple scratch tickets at the same time. There would be like one type of scratch ticket for the whole

state, and then at some point it would end, and they would bring in a new type of scratch ticket, and that would be the only type. So eventually they started adding multiple types, now multiple costs, multiple types of games. Texas just added a $100 scratch ticket within the last couple years. That's how we get lotto, sort of the rollover Powerball games that start on a state-by-state basis in the 80s.

Now we know the Mega Millions Powerball all sell in all 45 states. How we get not just the daily numbers games like once per day. You have Keno in some states where it's like every 15 minutes there's a drawing and you see people just post it up in a convenience store all day just playing the lottery every 15 minutes betting on a different type. Again, some of these are introduced by the state and innovated by lottery administrators, and some of them are sort of pitched as the next money-making frontier from some of these companies that are going to get a cut on the profit on each sale. I mean, now that you're describing this, it's bizarre. It's completely bizarre. Like,

I can imagine, you know, in the 70s, oh, this is sort of like a quaint little public service that we do. It raises a little bit of money. Sure, why not? But now you've got states you know, in the 70s, oh, this is sort of like a quaint little public service that we do. It raises a little bit of money. Sure, why not? But now you've got states, 45 states in the country, trying to, you know, every year get more and more people hooked on gambling, running ads on TV for gambling, you know, have $100 scratch off tickets, like, you know, making them brighter and more colorful. I mean, like, imagine if the state ran slots. Okay. In some places they, they, they basically do. And I know in some states, a couple of them, you know, the, the state like runs the liquor stores, right. But the state isn't like advertising on TV. Hey, go buy some vodka today. Right. And here's, you know, we're paying Samuel L. Jackson to stand there with a beer in his hand and tell you,

come on down and like get hammered tonight, courtesy of the state of Connecticut. You know, right. It's it's weird. It's really weird. It's totally incongruous and at odds with what we expect the state government to do, which, again, is sort of promote the common good, however you define it. And I just don't see how selling lottery tickets is part of that common good. Yeah, it certainly doesn't seem like it at this point, but it's also, it's semi-rational to see how we got to this place. If you are a state legislator and you're like, hey, the school budget is getting cut

and we need to raise some revenue and here's a way to do it. And again, it's more politically palatable. Like it comes down to what is so much the problem with so much of American life, which is our, uh, the, the outsized power that a corporations have and B that wealthy people have to avoid taxation. And you combine those two things together and you end up in this situation with just people, you know, making lots of little reasonable steps. You know, you come into the state legislature in 1986 and the scientific games is like, Hey, guess what? If we add a $5 scratcher ticket instead of a $1 or whatever, then we'll get extra money for the

kids this year. Right. And, and you're like, Oh boy, well, I'd love to, even if you want to tax the rich people, it's hard for you to do it like it's it's a it's a slippery slope that we found ourselves at the bottom of yeah and again the fact that the people who play are less educated are lower income are non-white makes it easy to sort of overlook tax on the stupid fuck them yeah they're like hey if you want to play i don't i don't buy them because i know they're a ripoff if you want to do it yeah go nuts that attitude. Right, and just wham, bam, thank you, ma'am. I'll take my billion dollars a year from the lottery and I'm not going to look too closely

at where that money comes from and how exactly we got it. Yeah, oh man, what a bummer. Are there any states that don't do lotteries at all currently? There are five, which might surprise you. Nevada does not. Wait, Nevada? That was not, I wanted to guess. That was not going to be my first guess.

Nevada. I guess because what? It's a competition with the casinos. If you've ever been to a convenience store in Nevada, you know that there's plenty of gambling to be had in the convenience store, just not in the lottery. Okay, so let's really call that four

because Nevada just has plenty of gambling by another name. Okay, I want to guess what they are. Okay. I'm going to guess, and don't tell me until I get them all right, but I'm going to give you my justification. I'm going to guess Utah because of the religious people, because of the Mormons and all that kind of thing. I mean, they don't even drink Diet Coke there. So I'm going to guess Vermont because I was told once that Vermont has no roadside advertising. And so a state with its head on shoulders like that might know about gambling as well.

I'm going to guess I'm going to pick one of the weirdo Western states. So I'm going to guess like Montana, like the states with like almost no government whatsoever. So that's three. And then I got to choose one more. government whatsoever um so that's three and then i gotta choose one more uh okay i'm gonna guess that it is alaska because they got all that weirdo oil money so alaska's right and utah's right yes yeah yes oh good justifications yeah because alaska just gives people a cut of the oil money every year so they've got their vice another way, which is through climate change. That's what they're fucking up. And your justification about the Western state is sort of applies there too,

where the state, the population is just so diffuse that it just doesn't make sense to, you know, how many convenience stores do you think are there in Alaska and how big could the jackpot conceivably get with that few people? Right. So in addition to Utah, inexplicably,

and I don't know why, Hawaii is the only other state without any form of legalized gambling in the country. Wow. Wait, isn't there, isn't there one additional one as well? There's one more and it's Alabama. They just can't get their shit together.

They've been trying since, since 1998. They pat, they, they, they voted in a democratic governor in Alabama, if you can believe it to basically because he was going to raise money for the lottery for education with the lottery, had a referendum the next

year. It failed. White and black churches sort of mobilized against it. And then for the last 23 years, they've just been trying and trying and trying. Mississippi finally got their act together three, four years ago, started their lottery. Can't get their ducks in a row. Wait, so Alabama didn't do something that is hurting the poor and poor people of color they tried they tried they just can't they just can't figure out how that's really surprising to me um

man and do you feel that there is any prospect to change the lotteries that we have across i mean it's so deeply embedded now um that i it would be very difficult. Like if you even tried to make a change in California, you'd have people saying like, God, there was a there was a law. We just had a referendum against flavored vape cartridges and cigarettes in California. And, you know, which are obviously really, really harm, especially in the case of like flavored cigarettes, you know, poor folks. And you had people say, oh, well, this is going to hurt mom and pop vape shops, which like, of course it will. Like, that's a real problem.

But we need to ask what's more important to us. And is this the way we want our mom and pop shops to be earning money? And or should we make a larger change? You would have that that argument supersized if you tried to touch the lottery at all in this state, I imagine, and many others. So is there any prospect for change? So I don't think, you know, no state has gotten rid of their lottery since 1890s. So I don't think it's going to happen anytime soon. I don't think we need to aim that high. I think there are levers at the state level that can be pulled that would make

lotteries fairer and less harmful to the poor. I'm talking about things like getting rid of that $100 scratch ticket in Texas, for example. Maybe we go back down to $25 as a maximum. Powerball mega millions just hit $2 billion. Why don't we add a prize cap? They can't get above $1 billion. They can't get above $500 million.

These are, and there are a couple others related to advertising, states that can't advertise their lotteries in certain ways or can only spend a certain amount of their budget on advertising. All of these have precedent. All of these used to be pretty common in the lottery world. And then basically states just wanted more money and got rid of them. Why, in your view, would it make a difference to cap the lottery at $1 billion rather than $2 billion?

Because for a lot of people, I feel like, hey, the B is the important part, or even the 500M, you know. Yeah. And by the way, I want you to return to your point about how this sort of has skewed Americans' notions of wealth because I thought that was an interesting argument you alluded to earlier. Yeah, and that's exactly why I would propose it being limited. And again, it used to be very, very common until, you know, the late 80s, the New York prize was capped at $50 million. Nowadays, Powerball and Mega Millions start at $40 million.

So this is a sort of recent adaptation. I think, first of all, if there's a prize cap of any kind, and maybe a billion is too high to your point, we should stick to $500 million, a prize cap of any kind means that it's not going to create this type of media frenzy in the same way that gets people involved, and that, in a lot of cases, gets people in the door and turns them into committed players

because there's this phenomenon where you play your aunt's birthday and now you feel like you've got to keep playing it because it's going to hit eventually. And then you get to the point where if you don't play it, you feel like it did hit, you're going to regret it. So you just play to avert the regret that you would feel if you would win, even though you're not going to because the odds are 1 in 292 million. Yeah.

So it sort of accidentally hooks people once you're playing, even though that doesn't happen all that often. And then the second part is exactly as you said, is I don't think it's a coincidence that as, you know, the word billionaire entered our lexicon, that lottery prizes hit a billion dollars for the first time. And Lotto, these rollover jackpot games, emerged in the 1980s, which also saw the birth of Fortune magazine and the Forbes 100 and sort of this culture of wealth and a celebrity CEO. And lotteries, big jackpots helped everybody feel that they had a stake in that wealth. And maybe if we didn't have it, maybe we didn't have these big jackpots, more folks might be willing to sort of set expectations that are reasonable about what the American dream

looks like that go back to this 1950s vision of a white picket fence rather than, oh, the American dream means a seven car garage and a mansion in Beverly Hills. Well, there are certain things about the American dream and the 50s and the white picket fence that I think we should do away with as well. Yeah, let's be careful about it. I don't mean to be nostalgic. How white is this picket fence? That's right. I'm nostalgic for a time of economic egalitarianism.

Yes. One that I agree should be multiracial in ways that it was not in the mid-20th century. I agree it should be multiracial in ways that it was not in the mid-20th century. But this belief that we're all in this together when at a time when worker-CEO pay was sort of relatively in line compared to the way it is now. And again, the lottery has helped inculcate this belief that, oh, eventually I'm going to get rich. And rich now means $2 billion, not just a couple hundred million. And that's been very harmful. Yeah, it's something that only one winner benefits from and this giant corporation benefits from. What if we were able to come up with a model

that actually increased our civic participation and made us feel like everyone was benefiting? Like, for instance, we started this talking about small town lotteries and raffles and things like that to say, hey, the local college wants to build a new dorm. The church is trying to build an annex or whatever. And it's clearly a fundraiser, right? When you go to that church raffle, nobody's expecting to get rich. You're expecting, hey, I'm going to win a date with a pastor who is so handsome. And so I cannot wait. And you know that you're helping out your community

and you're putting in money into something that you think you will benefit as well. It's an old-fashioned barn-raising kind of idea. And you're right, the modern lottery is really the opposite of that, and maybe there's that other ethos, that smaller, more egalitarian ethos that we can return to, hopefully.

And Spain does something sort of like this, where their lottery uh it's called el gordo but it's a massive jackpot uh sort of equivalent to the the billion dollar thing we'd have today but the game design is in such a way that you'd have like 1800 winners who get four million dollars each or something rather than one guy or woman in sacramento who gets two billion dollars and isn't that sort of emblematic of the American culture of individualism that we've sort of given this one person the $2 billion

rather than sort of spreading a smaller amount around to more people? Yeah, if we did something where you put the money in because everybody will be helped, not just you, like that's the big win is if we can all do it together. Like hell, what if you even did, when they're doing crowdfunding, they do stretch goals. Like, hell, what if you even did, you know, when you when you when you when they're doing crowdfunding, they do stretch goals. You know what I mean? Hey, if we raise this

much money, we can give everybody this benefit. You could do that on a state basis and say, hey, everyone, if we all buy lottery tickets like, you know, all the we can add music classes or whatever the fuck like that could be part of the point rather than you'd be a billionaire and you're you're set for life and all this sort of thing. Well, unfortunately, it is part of the point rather than you'd be a billionaire and you're set for life and all this sort of thing. Well, unfortunately, it is part of the appeal now where – this is more so states like New York. They do have this amazing commercial of this like someone buys a lottery ticket and then this like little kid comes out from behind the aisle and starts singing a song. And then the back of the convenience store opens and it's a whole choir of kids thanking them for being a friend by buying a lottery ticket. choir of kids thanking them for being a friend by buying a lottery ticket.

And again, technically it's true, as we talked about, the lottery does benefit education, but it is, again, trying to create this illusion that, oh, schools are just swimming in cash because of the lottery dollar, because every single one, you know, 99% of every lottery dollar goes to schools. So I take it back, but what if it weren't marketing? What if it were reality, you know? Wouldn't that be nice? What if we were reality? You know? Right, right, right. Wouldn't that be nice? What if we just figured out a way to tax people that, you know, they felt a little bit better about? And we could create a better, you know,

we could create a more transparent system of what our taxes are used for, and we could get rich people to pay their fair share, and how about that, you know? And we could have that sort of overall communitarian ethos. Yeah. In any case,

Jonathan, thank you so much for being on the show. The book is called For a Dollar and a Dream, State Lotteries in Modern America. Of course, you can get your copy at factuallypod.com slash books where every purchase will not make you a billionaire. It will instead support Jonathan's work, support this show,

and support your local bookstore. Thank you so much, John, for being on. And I'm sorry for calling you Jonathan because you told me at the beginning John was fine. But thanks for being on. It's all right. I'll never forgive you. But thanks and good luck to everyone.

Good luck and play my birthday. All right. Thanks so much, Jonathan. Really appreciate it. Thanks, Adam. So nice to meet you. Well, thank you once again to Jonathan for coming on the show. I hope you loved that interview as much as I did.

If you want to check out Jonathan's book, you can do so at factuallypod.com slash books. That's factuallypod.com slash books. I want to thank our producer, Sam Rodman, our engineer, Kyle McGraw, and everybody who supports this show at the $15 a month level on Patreon. I'm reading all the names this week. Here we go. I want to thank A, Adrian, Akira White, Alexei Batalov, Alison Liberato, Alan Liska, Anne Slagle, Antonio LB,

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