Wednesday, August 26, 2009

"Big Wednesday"

I'm not a fan of (literal) gambling - I don't enjoy it and I'm not very good at it. Rather than play poker, I generally prefer just to give someone the $10 that I'm going to lose anyway, and then sit there reading a book. Or drinking by myself.

However, I've always had a particular dislike for Lotto. To me, it seems to have all the randomness and depression of going to the dog track, but without the fun of throwing your hat on the ground and stamping on it when you lose. As an 'investment', it's a terrible idea - you'd be better off hiding your money under a mattress or burying it in your backyard. As for 'entertainment'... well, quite.

The last time that Lotto itself was on the front page of the newspaper it was because of the giant jackpots that were on offer earlier this year. At the time, I bemoaned the articles - more or less Lotto propaganda - being written in the media about the draws, and the complete misunderstandings of statistics that accompanied them. Today, however, Lotto is on the front page of the paper for a different reason: it has made a record profit.
Thousands of community groups will benefit from the New Zealand Lotteries Commission's record profit of $189 million.

Sport and Recreation New Zealand, Creative NZ and the Film Commission - the three main beneficiaries of the Lottery Grants Board funds - learned last night they would receive more money than expected.

But a spokesman for Mr Guy said last night hundreds more community groups would also be in line for money.

Every year, hundreds of community groups who meet the grants criteria apply for money but are declined.

That's nice. But I'm curious about this notion of Lotto, and therefore the Lottery Grants Board, making a 'profit'. Like I keep having to say, I'm not economist, and I'm not denying that they have actually collected this surplus of money. My quibble is with the alleged benefits that this article claims Lotto brings to the community.

Lotto doesn't actually produce anything (other than, of course, 'entertainment'). The $189 million isn't a profit that New Zealand made, any more than the tax money that the government takes is the country's profit. Surely what it actually is is redistribution. The money that Lotto has 'generated' for community groups has come from - wait for it - communities. The question that remains is whether the redistribution is worth it or not.

Mr Guy said Lottery grants provided vital backing for social, community, arts, heritage, sports, recreation, and health research activities which had a positive effect on New Zealand communities.

"A lottery grant can be the difference between an organisation wanting to make something happen in its community and being able to make it happen. It means that ordinary New Zealanders can do amazing things for their communities."

I'm all for social cooperation, but the money that is given out in grants is just coming out of the pockets of the people it ends up being given back to - minus, of course, the marketing, staging and administrative costs of running Lotto, the Lotteries Commission and the Lottery Grants Board. I have no data on who tends to play Lotto, but my sneaking suspicion is that it's not the wealthy sitting there praying for a big win; they know to put their five dollars on the stock market. The fact that the three biggest 'winners' from lottery grants are Sport and Recreation New Zealand, Creative NZ and the Film Commission - all performing valuable but, especially the last two, primarily bourgeois services - leads me to believe that this redistribution isn't quite as progressive as the rather chirpy Herald article makes out. Sure, that's not always the case:

The Combined Beneficiaries Union in Auckland had $66,000 in Government funding cancelled.

But it also receives lottery grants, and can now expect to benefit from the profit jump.

Of course, "the profit jump" was just more people spending money on Lotto, so if those people were beneficiaries then the nett "benefit" might be less than the Herald suggests.

This year's profit is likely to help offset Government funding cuts which have hit many community groups and organisations.
Yes, just like me taking ten dollars from your wallet and giving it to you offsets the loss of ten dollars from your wallet.

Don't read too much into this - I'm not claiming that Lotto should be banned, or that it's any worse than, say, Sky City, which constantly trumpets its charitable and community work - which of course happen to be its statutory obligations under its gambling licence. But the rather rosy picture of what is just, when you strip off the shiny-yet-humble veneer, another form of gambling painted by today's lead Herald article I found as distasteful as the first time you walk onto the gaming floor at the Auckland Casino: where you thought everyone would be wearing tuxedos, it turns out they're all wearing trackpants.


  1. Lotto are also considering introducing a new game called 'Bullseye' which basically follows the formula of "I'm thinking of a number between one and one million" - I wonder if the Herald will need to consult a mathematics professor to work out the odds of winning that one?

  2. Summary - there are no winners. FAIL.

  3. But no one is forcing poor people to play Lotto. There are several forces out of our control through which people become poor, but Lotto is not one of them - that's a self-inflicted wound.

    In a way they should be thankful some of that money's coming back to them. If they didn't spend it in the first place, perhaps they wouldn't need it.

  4. Sorry James, but.. well.. BUH. Lotteries are just voluntary taxation. Usually on the poor and/or morons.

    But to paraphrase Nevil Shute in "A Town Like Alice" (and from a failing memory).. "if it weren't for the lottery, we wouldn't have a hospital".

  5. To buy a lotto ticket, you are admitting to yourself that you will never be able to achieve your financial goals through hard work and god given talents.

    I buy two lotto tickets a week.

  6. *I* know all this. *You* know all this. The point of my post was that *the Herald* doesn't seem to know it.

  7. Good point, I too would like to see more of these proceeds go towards those essential and very needy social services, as opposed to those bourgois sectors out there such as Arts and Recreational activities. In times like this, the need is far greater for them and there is a huge amount of funding no longer available this year.

  8. Top read thanks James!

  9. the herald knows full well, james, given that it had the sense to ask a gambling association what it thought, and point out that grants have been cut.

    you don't really read the newspaper. you read in to stories what you want to raed.

  10. "raed"

    You fell over.
    You fell over.
    You fell over.

  11. oh how embarrassing.

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