The National Lottery and the Individualisation of Gambling in Britain

Dr. Gerda Reith, University of Glasgow, United Kingdom

1. Introduction

 Since its introduction in November 1994, the National Lottery has become a massive success. It was launched amidst huge media coverage and political fanfare with the intention of revitalising the economy, increasing the popularity of the then Conservative government, as well, of course, as providing a chance to win millions on a harmless 'flutter'. It is now recognised as the biggest and most successful lottery in the world: around 70% of the population play every week, and have so far spent over £28 billion and raised £8 billion for good causes.

 At the moment, the lottery is enmeshed in the complicated and sometimes acrimonious process of renewing its license, with both Camelot and Richard Branson's 'People's Lottery' battling over the franchise. The publicity surrounding this has brought many issues concerning the lottery into the public eye, and I want to focus on some of these. Basically, I want to take a broad look at the role of the NL today; look at its role in social and political life - who plays it and what's done with the money they spend on it- and put this in the historical context of lotteries more generally. I also want to highlight some issues that I think tend to be overlooked in discussions about the lottery. One of the most significant of these is what could be called a move towards the individualisation of gambling. I mean this in 2 senses -

 ·        one is the sense that the problems the lottery creates tend to be seen as problems with addicted, 'pathological' players who cannot control their gambling and get into personal difficulties. This emphasis can marginalise the wider social problems that can be created by the regressive nature of lotteries.

 ·        the second sense is related to this and it involves a gradual shifting of opinion about what lottery money should pay for, which can be called the 'individualisation of public services'. Gradually, more and more services are being re-defined as 'good causes' which are therefore by definition, desirable or voluntary, but not essential. It also means that individuals are essentially paying for these services when they buy a lottery ticket. At the same time, we're starting to see a decline in government funding in these areas.

 This type of thing is not unique to Britain of course. It is typical of the effect of lotteries world-wide and throughout history, but it raises questions about the role of the state in relation to lotteries which are only just beginning to be addressed in this country.

2. The Historical Use of Lotteries

 At this point, it is useful to step back a little and look at the lottery in historical context. The fact that Britain had a state sponsored lottery for 257 years is often overlooked, but the existence of this lottery, and other European ones like it, can be extremely useful for giving us a broader perspective on the issues surrounding our present game.

 Historically, lotteries have been utilised as tax raising devices by states who were either unable or unwilling to pay for public services. In the 15^th and 16^th centuries, European states didn't have well enough developed economic systems to raise revenue through things like taxes, and so they introduced lotteries to do it instead. In Britain, proceeds from the lottery were used to fund the colonies in America and to build up the infrastructure of the country, paying for things like roads, hospitals, public sewage and water works.

 When lotteries are utilised in this way, the good works that they pay for are emphasised, and this tends to ease people's consciences and persuade them that they aren't really gambling at all, but are rather making a philanthropic gesture.  In Britain, playing the lottery was seen as a patriotic act; a charitable donation to a good cause, and this helped redefine the image of gambling as a positive social pursuit. On the other hand, when they are no longer needed, the 'immoral' or 'wasteful' aspects of lotteries are emphasised. Between the 18^th and 19^th centuries the British state had developed a sophisticated system of taxation and so no longer needed the less reliable funds from its lottery. Also, lotteries undermined the prevailing ideology of the Protestant work ethic, which was based on hard work and saving, not 'something for nothing'. In this climate the association with patriotism and charity disappeared; the lottery came to be seen as an immoral vice and was completely banned in Britain in 1826.

 So, we can see that the banning and encouragement of lotteries is related to economic and political expediency - out of a desire not so much to protect the individual as to boost government funds.

3. The Re-introduction of the Lottery in Britain

 The lottery that was re-introduced in 1994 has quickly come to fulfil similar functions to those of its predecessor - the chance of winning unimaginable wealth, of course, but also serving as an institution that could pay for 'good causes'. These are selected by the government and so far include Charity, Sport, Heritage, the Arts, the Millennium Fund and, from 1998, the New Opportunities Fund. 

It could be said that raising money for these causes has become the most prominent function of the lottery; certainly the one that has most public and government support. The result is that many people feel they're contributing to charity as much as gambling when they buy a lottery ticket or a scratchcard. The emphasis on good causes gives the lottery its rationale, and the language, which is very euphemistic, reflects this orientation - it is all about having 'a flutter'; it is not really gambling; and gamblers are not really gamblers, they're 'players'. This is all very removed from the hard reality of losing money and chasing losses.

4.The Individualisation of Gambling

 In this climate, we can turn to look at the gradual individualisation of the way we see the lottery. 

(i) The individualisation of players

 Interest in the lottery tends to focus on individual winners, on big jackpots, on the few who commit suicide and on the ones who develop pathological habits. This is all more newsworthy and more dramatic, than the study of broader, social developments, which tend to be more subtle and played out over the long term.

 Likewise, the focus of much research into gambling activity tends to concentrate either on a problematic minority or on a majority that is seen as an unproblematic average. Either way, it tends to ignore broader social trends. For example, the British Gambling Prevalence Survey[1], which was published this year, used two scales, DSM 4 and SOGS, to test for problems. SOGS estimated that 1.2% of the population had problems with the lottery, and 1.7% with scratchcards, while DSM found 0.7% with lottery problems and 1.5% with scratchcard problems1

 The majority of the playing public are seen as being fairly homogenous: the study found that 65% of the population spend an average stake of £2.80 a week on the lottery, and 22% spend between £1 - 5 on scratchcards. (This is the range, or the mode, of spending, since the questionnaire asked about expenditure rather than stake). Other studies2 - including the Lottery Commission's Social Research Report - have also found that participation and spending is fairly evenly spread throughout the population, with both increasing gradually with income.

 However, this does not tell the whole story. It is not enough to look only at aggregate participation, as these studies have done. Rather, actual spending expressed as a proportion of income also has to be looked at. When this has been done in other countries, it has been shown that, although lotteries do have a fairly even demographic base, playing is concentrated amongst the poorest social groups - the low paid, the unemployed, the elderly. Since lottery money is used to fund public services, this makes it essentially a regressive form of taxation, with lower social groups contributing proportionally more than higher ones.

 This is also the case in Britain and the difference can be seen by comparing two sets of the same data interpreted differently. Graph 1 is adapted from the Lottery Commission's research3 and shows spending on tickets by income. Spending does increase with income, as can be seen in a gentle slope upwards, with the lowest income groups (<£4,500 annual income) spending £2.20 a week on tickets; rising slightly to £2.42 in the highest income groups (> £25,000). But when we look at the same spending as a proportion of income the picture is very different - the mythical 'average' player disappears, and you see a steep rise as income declines in Graph 2.

Graph 1

Graph 2

 This dual focus on individual problem players and an unproblematic average majority means these wider social trends tend to get overlooked, and I think this represents a way of seeing the lottery that tends to be very focused on the individual, both as a 'problem' player and as an 'average' player.

 (ii) The individualisation of revenue

The other sense of individualisation is related to this trend. This involves the way that certain services are increasingly coming to be seen as 'good causes' - as something with charitable status that can be paid for voluntarily, by individuals, rather than publicly, with taxes raised by the state.

Lotteries and state funding

This leads us on to the contentious issue of what is done with lottery money. To encourage participation, their contributions towards popular social programs are emphasised - these are what one executive5 called 'three big Es' - education, environment and economic development;- the same projects lotteries were historically used for. But it is been found that this money tends to end up replacing rather than actually supplementing state funding of these things. For example, in the first three years of the Irish Lottery, government spending on areas that received lottery money dropped by 56%, leading to criticism that described it as 'a slush fund for inadequate Treasury spending'6

 By 1991, 13 states in America received most of their education budgets from their lotteries, which made them heavily dependent on ticket sales. This meant that, in practice, if lottery revenue fell, so did their budgets. So, for example, when sales in California fell from $1 billion in 1988 to $500 million in 1991, the education programme was in serious trouble.

 The British government promised that a situation like this could never happen here, by outlining two assurances in 1992. One was the principle of additionality - the promise that lottery money would not replace public spending but would be on top of, or additional to, it. The second one was that lottery proceeds would go to services that were 'desirable rather than essential', and would not be directed towards 'main areas of public expenditure'. They stated that 'it would be inappropriate for the lottery to be seen as a way of funding the NHS, education or other similar major programmes' 7. This explicitly ruled out lottery money for key public services.

The effect on 'good causes'

But, research is beginning to show that, as in other countries, areas subsidised by lottery money are starting to lose out in funding from other sources - state funding as well as the private sector.

 Charities

This has happened most plainly in the case of charities (although all the 'good causes', in effect, have semi-charitable status). There is been a 31% reduction in donations since 1994 which means that, taking into account the allocation of lottery proceeds, charities have still suffered a net loss of around £31 million since the introduction of the lottery 8.

 Culture, Arts and Sport

There is a similar trend in areas of state funding. Research has shown that government spending on the arts, media and sport has also fallen since the introduction of the lottery. The budget for these areas, expressed as a share of national income, has dropped by a third, from 0.16% of national income in 1993-4, to 0.11% in 1998-9 9

The New Opportunities Fund

More worrying are the funding issues raised by the New Opportunities Fund. This is the largest single good cause, which receives twice as much revenue as all the others. It was introduced by the government to generate support for popular programmes such as health and education, and to deflect criticism that the existing causes - for example the Royal Opera House, the Tate Gallery and the disastrous Millennium Dome - were elitist and unpopular.

 The specific programmes it funds are chosen by the government, and so far include £925 million for teaching training and the improvement of key skills such as literacy and numeracy in schools, £425 million to improve the quality of the natural environment and £150 million to be spent on cancer equipment, treatment and care. This is the most controversial feature of the NOF, as it has been argued that the treatment of cancer is the remit of the National Health Service, not the National Lottery.

 This is the crux of the problem. Obviously some causes are better than others, but I would argue that while health and education are undoubtedly important services, bringing them into the remit of lottery funding sets a dangerous precedent. Spending on these areas breaches the principle that lottery money should be used only for things that are desirable but not essential - and education and health are essential key services, not desirable extras. There is growing evidence that it could also breach the promise of additionality, where the government stated that lottery money would not replace 'main areas of public expenditure' but would be on top of it.

 We have seen this to be the case in other countries, as well as in this country in areas that lottery money is used for. Although the government strongly denies lottery money is being used as a substitute for Treasury spending, research has found that expenditure in these areas has actually fallen. The Department of Health budget has fallen from 4.67% to 4.46% of national income since 1994, while the Department of Education and Employment budget has fallen by almost a fifth, from 2.12% to 1.74% in the same time. It is impossible to establish a causal relation here, but this does represent a significant fall, which the researchers stress is 'highly suggestive' and cause for concern.10

5. The Creation of a 'Lottery State'?

 The concern is that this could lead to a 'lottery state' where certain services are redefined as 'good causes' which are desirable rather than essential, and where spending on them is at least partly determined by how much can be raised by the lottery.

 This creates a very unstable climate, because lottery money is an unreliable source of revenue. We've seen what can happen in the American example if playing declines - services become underfunded and whole communities suffer. Once states become dependent on lottery revenue, the only way to increase funding is to encourage more gambling which increases the pressure to relax restrictions and introduce new types of games. 

Before the lottery, the stimulation of gambling was prohibited by the 1968 Gaming Act, which only allowed promoters to meet existing demand. But, as the lottery is sanctioned by the state, this regulation was overturned in 1994, and it was allowed to advertise from the start - on TV, newspapers, and with widespread media coverage of winners and rollovers and jackpot sizes.

 Encouraging gambling to raise the maximum money for good causes has become the most high profile issue in the competition for the new lottery franchise. Both bidders - Camelot and Richard Branson's People's Lottery - have been trying to out-do each other over how much they can stimulate playing to revive ticket sales, and are promising to introduce more games, more publicity, bigger jackpots and increasingly sophisticated technology to disperse it all.

 Both of them plan to make the lottery available on the Internet, on interactive TV and via mobile phones. This will increase access and availability, and make lottery gambling potentially unlimited and unregulable. Such a move makes the lottery into a much harder form of gambling than it was before, with a higher event frequency and faster turnover, which is in danger of attracting more under-age players and creating far more problem gamblers.

 The consequences of all this raise questions about the role of the state in gambling enterprises. Ultimately, the role of government is shifted from a paternalistic regulator to a promoter and beneficiary of the lottery - what the economist Robert Goodman calls the role of 'government as predator'.11 Because good causes are picked by the government, they are inextricably tied into a political agenda which could in effect make the lottery into a fundraiser for the state.

 Like its historical predecessors then, the British Lottery is essentially used as a revenue-raising device which, because it is regressive, draws the bulk of its funds from those least able to afford it. Here we end up with a situation where the poorest and most vulnerable in society are paying for services that the government itself should be paying for. The real danger of lotteries then, doesn't just lie in the individuals who become addicted or get into debt with them. It lies in whole societies who become impoverished by the reduction in state funding that's brought about when services are turned into 'good causes', with the state as the main beneficiary12.   Ultimately we should remember to count the overall cost of lotteries in social, as well as individual, terms.