Headlines
As reported by The Hartford Courant, July 27, 2008.
Rattled Americans Try Their Lottery Luck in Hard Times
By Rinker Buck
Tom Meredith of Simsbury, a restaurant chef who commutes 20 miles to work in Goshen, doesn't think of himself as a bellwether of economic trends.
But in one respect — his $20-a-week habit of playing Connecticut Lottery games — Meredith personifies a financial anomaly of our times.
Even as soaring gasoline prices, mounting home foreclosures and bank losses throw the national economy into a tailspin, the lotteries of Connecticut and its neighboring states are booming.
Connecticut's 2008 lottery revenue of almost $1 billion is a new record, making Lotto tickets and scratch games a kind of reverse barometer of the U.S. economy.
Meredith's logic for buying lottery tickets typifies the curious rationale, national gambling experts say, of millions of Americans rattled by a shaky economy.
"The worse the economy gets, the more ridiculous my thinking becomes," Meredith said this week, taking a break from preparing chicken parmigiana specials at EDZ Restaurant in Goshen. "I say to myself, well I can spend $10 on gas, but that just buys me 2 gallons, or about 40 miles of travel — one day's commute.
"But if I spend $10 on the lottery, at least I have a chance of making $5,000, and then I could take a real trip. ... Times are tough and my only choice is to take a chance."
Psychologists who study gambling say most lottery players are aware that the odds are stacked against them, and realize they probably will win very little money. But blowing small amounts of cash on lottery tickets is an "irrational gratification" that gives players a semblance of control.
Economically vulnerable people often feel that they have lost control over many aspects of their lives — their job security, interest rates, the cost of food. Buying lottery tickets is an act of free choice, a kind of marginal discretion, available to the distressed.
Gambling Mentality
Psychologist Nancy M. Petry is a professor at the University of
Connecticut Health Center and the director of its Gambling Treatment
and Research Center, which has counseled more than 1,000 addictive
gamblers. She has conducted numerous studies, funded by the National
Institutes of Health, on gambling and drug addictions. Petry said
her research over the years has identified several major
"precipitants" of potentially hazardous gambling behavior, which can
affect even occasional players.
Those precipitating factors, Petry said, are: a lot of free, unstructured time; available cash (though not necessarily wealth); adverse moods, such as depression or loneliness; and family conflict.
"When you look at all those factors together they almost seem to be a portrait of people going through hard economic times," she said. "People who have just suffered a job loss, for example, suddenly find themselves with a lot of unstructured, unsettling, free time.
"Those of us who work treating gambling addictions are not surprised to learn that lottery revenues go up during hard economic times. Financial uncertainty plays a large role in the whole gambling mentality."
Financial uncertainty can be so confusing, Petry said, that an irrational response actually seems rational.
"We actually hear a lot of our patients [in gambling treatment programs] say, 'This dollar isn't going to buy much gas or food anyway, so why not throw my money at the lottery in the hopes of getting something more?'" Petry said.
Another characteristic of problem gamblers, Petry said, is the recent experience of personal or social trauma. First generation immigrants often turn up as destructive gamblers, for example, because they are compensating for traumatic events such as political persecution or a disruptive separation from their homeland, she said. But the lessons of extreme gamblers can also be applied to the whole gambling population.
"In problem gamblers, we can usually trace issues back to an identifiable trauma earlier in a patient's life," Petry said. "But that trauma could also be the recent loss of a job or fears of home foreclosure."
'Type T' Personality
Psychologist Frank Farley, a professor at Temple University in
Philadelphia who studies risk-taking, said recessions can often
distort consumers' decision-making.
"Rationally, during hard times, of course, people should be thinking about how they can save every penny," Farley said. "But having studied human nature over several decades, I can tell you that in this country we have a lot of people who I call Type T — for thrill-seeker — personalities. For these risk-takers, when the economy goes south, the mentality becomes 'why don't I take a chance?' With all the bank failures, home foreclosures and price increases, they are saying there is no security anyway."
To Farley, recession-era gamblers reflect the attitude of a legendary American risk-taker.
"It makes sense to these gamblers to try and game their way out of economic bad times," Farley said. "That's a common response to uncertainty. They remind me of Gen. Douglas MacArthur, who famously said, 'There is no security on this earth — there is only opportunity.'"
Lottery Up, Slots Down
The fate of lottery revenues goes well beyond academic or clinical
interest. In a year when Gov. M. Jodi Rell and the legislature
wrangled over competing plans to balance the state budget, lottery
proceeds were a bright spot in the state's fiscal health.
For the fiscal year ending June 30, the Connecticut Lottery reported record sales of $998.5 million, surpassing the previous record, set in 2006, of $968 million. This year's sales were up 4.3 percent over the 2007 fiscal year. The state's general fund received $283 million from the Lottery, about $4.5 million more than projected.
Connecticut Lottery officials say scratch tickets sales showed the most gain — up $24 million from 2007. They attribute part of their success to the popularity of the new Yankees vs. Red Sox scratch game, but say no single factor or new offering can explain the record revenues this year.
The conclusion that a national recession boosts lottery sales is supported by the experience of neighboring states.
In Massachusetts, fiscal year 2008 lottery sales were up by $237 million, a 4.5 percent increase over 2007. That's a significant bump, according to Massachusetts Lottery spokesperson Lisa McDonald, because in most years Massachusetts sees only a 2 percent gain in lottery sales.
Rhode Island has been particularly battered by the poor national economy. In June, the unemployment rate there jumped to 7.5 percent, its highest level in almost 15 years. (Connecticut's unemployment rate, 5.4 percent, closely tracks the national rate of 5.5 percent.) Gov. Donald L. Carcieri has said that Rhode Island is in recession, and both sales and income tax receipts have declined over 2007.
Significantly, however, Rhode Island's lottery receipts have jumped more than 25 percent this year, though the state's results include revenue from video lottery terminals, which can fluctuate widely year to year. In New York state, also suffering from a sputtering economy, lottery receipts since April 1 are up 4 percent over last year.
Conversely, an ailing national economy seems to have hurt the state's two casinos. Last month, the Foxwoods casino in Ledyard reported an 8.5 percent drop in slot revenue from June 2007. At Mohegan Sun in Uncasville, slot revenues were down 9 percent from June 2007. Executives at both casinos attribute their sluggish returns to "unstable economic indicators" and high gasoline prices, which deter gamblers from making the drive to southeastern Connecticut.
An Impulse Buy
But these counter-indicative results — lotteries up/slots down —
don't surprise the experts.
"The lottery is a populist institution available to every man and woman at their corner gas station or 7-Eleven store, what we call a 'convenience gamble,'" Farley said. "But there's a whole social psychology and image associated with casinos that is different than that. You have to plan to go to a casino, invest in the gas, make it a destination. So if you're trying to save money, you can eliminate a casino trip. Lotteries are an impulse buy."
In short, the same factor — in this case, gas prices above $4 a gallon — can produce entirely different outcomes for two kinds of gambling. During the morning fill-up, feelings of vulnerability about high prices can lead to the impulse buy of a scratch game, right there at the Shell store. But the same anxieties about money can discourage a weekend junket to Foxwoods.
Convenience store and gas retailers have noticed a big spike in activity since gas prices started their steep climb this spring. Jason Crespo, the daytime cashier at the Mobil Mart on Route 44 in Avon said that, ordinarily, monthly lottery ticket sales in Avon lag at least $30,000 behind those at the Mobil Mart in Plainville, where lottery games are more popular. But Avon is catching up.
"It's almost like these high gas prices cause a chemical reaction in people," Crespo said. "As soon as gas goes up to $4.45 a gallon, people start buying lottery tickets like crazy. And this is Avon. Even the wealthy are starting to feel the pinch."
Many lottery players are aware that gambling their way out of hard times is an entrenched American trait.
"It's the old coal miner's syndrome that I remember hearing about as a kid," said Jack Doherty, the owner-operator of Gates Dry Cleaners in Torrington, who calls himself an occasional lottery player. "The only way I'm going to get out of this terrible lifestyle I'm trapped in is to hit it big with the lottery. When the economy gets bad, more people feel that the lottery is the only way to keep up with inflation."
Meanwhile, back in Simsbury, chef Tom Meredith is making other decisions in a tough economy. He and his wife, Patti, are trading in their gas-guzzling Jeep Liberty for a new, more economical VW Jetta. They shopped carefully, choosing a dealer in Enfield to avoid what they considered pricier dealers in the wealthy Farmington Valley.
"Just because I can save money on gas with a new car doesn't mean that I'll change the way I buy lottery tickets," Meredith said. "I know that it doesn't make any sense. But I'm still hoping for that pot of gold at the end of the lottery rainbow."