THE PROPOSED TENNESSEE LOTTERY:
PROS AND CONS
by Deborah S. Hyden
“[T]he race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favor to men of skill; but time and chance happeneth to them all.” Ecclesiastes 9:11 (KJV).1
INTRODUCTION
In November, 2002, the people of the State of Tennessee will be given the opportunity to cast their ballots for or against a proposed amendment to the Tennessee Constitution. This amendment would allow the State Legislature to authorize a state lottery, the proceeds of which would be earmarked for education. 2 The issue before the people is whether or not the type of “chance” involved in a state lottery is in the best interests of the people of Tennessee.
The author’s purpose is not to take a position on the ethical implications of a state lottery, but, rather, to impartially examine both sides of the issue. In Part I of this paper, the author will explore the history of gambling and lotteries. Part II will analyze the current prohibition against lotteries in the Tennessee Constitution, and will review some relevant Tennessee case law. Part III will focus on the proposed constitutional amendment. Part IV will present arguments against a state lottery in Tennessee, while arguments in favor of the lottery will be discussed in Part V. Finally, the author will draw a conclusion based on the research conducted in this study.
I. HISTORY OF GAMBLING AND LOTTERIES
The word, “gambling,” is derived from the English word, “gamen,” which meant “to amuse oneself.”3 Gambling consists of three elements. 4 The first element is consideration. In the case of a lottery, the cost of the ticket provides consideration.5 The second element is chance. Since lotteries are based on randomly selected numbers, rather than the player’s skill, chance is involved. The Supreme Court of Oregon, in State v. Coats, distinguished a lottery “from a game where some substantial element of skill or judgment is involved.”6 The third element is reward. The reward would, of course, consist of the winnings of the lucky player. In Horner v. United States, the Supreme Court defined a lottery as “a scheme for the distribution of prizes by chance ...”. 7 Therefore, the courts have defined a lottery as a form of gambling.
Gambling has an extensive history. It existed among the ancient Egyptians, Chinese, Japanese, Hebrews, Greeks, and Romans.8 In Chapter 26 of the Biblical Book of Numbers, Moses used a form of lottery to distribute the land among the tribes of Israel. (There was no money involved in this distribution, however, and, therefore, the element of consideration is missing.) “[T[he land shall be divided by lot: according to the names of the tribes of their fathers they shall inherit.” Numbers 26:55 (KJV).9 The Hun Dynasty of China, in 100 B.C. used lottery proceeds to build the Great Wall of China.10 Loaded dice were found among the ruins of Pompeii, and dice, estimated to be 2,000 years old, were discovered in British excavations.11 Governmental regulation of gambling dates back to at least 321 B.C. in India. 12 There are indications that gambling was practiced during the time of Christ. In fact, at His crucifixion, the soldiers gambled for his garment. “[T]he soldiers, when they had crucified Jesus, took his garments and made four parts to every soldier a part; and also his coat: now the coat was without seam, woven from the top throughout. They said, therefore among themselves, Let us not rend it, but cast lots for it...” John 19:23, 24 (KJV). 13 Also, in the Book of Acts, the Apostles chose a successor for Judas by casting lots, (although there was no money, and, thus, no consideration involved here). “And they [cast] their lots; and the lot fell upon Matthias.” Acts 1:26 (King James). 14
In 1530, a state-sponsored lottery was created in Florence, Italy. In fact, the word, “lottery,” is believed to be a derivative of the Italian word, “lotto,” which meant fate or destiny.15 In 1567, Queen Elizabeth I established the first state lottery in England. Four hundred thousand tickets were sold.16 Interestingly, King James I authorized a lottery in London in 1612, the proceeds of which benefitted the first British colony in America, Jamestown, Virginia. 17
Perhaps, then, it should come as no surprise that many of our founding fathers participated in early colonial lotteries.18 Among them were George Washington, Thomas Jefferson, and Benjamin Franklin.19 John Hancock rebuilt Boston’s Faneuil Hall with funds raised by lottery.20 Public lotteries helped to fund many of our notable academic institutions, including Harvard University.21 From 1746 through the Civil War, lotteries helped to establish or improve schools such as Yale, Kings College (Columbia University), Princeton, Rutgers, Dartmouth, Rhode Island College (Brown University), the University of Pennsylvania, the University of North Carolina, and the University of Michigan.22 In Trustees of Dartmouth College v. Woodward, the Supreme Court held that, under the Contract Clause of the United States Constitution, a state had no power to revoke a charter or contract once granted.23 Therefore, “[o]nce a state granted a charter for a lottery, the operation was self-sustaining and probably immune from state revocation of its charter.” 24 “Thus, it is clear that the lottery has historically been an effective mechanism to fund public projects such as education.”25
During this same period, lottery proceeds helped to finance road construction, hospitals, jails, lighthouses, and the construction of some churches.26 Between 1790 and 1833, the Pennsylvania lottery contributed to Lutheran, Presbyterian, Episcopal, Reformed, Baptist, Catholic, and Universalist churches, as well as Jewish synagogues. The Pennsylvania Quakers, however, opposed the lottery.27
After the Civil War, many of the southern states enacted lotteries as a means of rebuilding devastated lands.28 Louisiana’s lottery, however, was allegedly run by organized crime figures, and came to be known as “The Serpent.” Shortly thereafter, Congress banned lottery tickets from interstate commerce and the mail.29 Following New York’s lead, all states except Louisiana enacted statutes or constitutional provisions prohibiting lotteries by 1878. After 1905, no state operated a lottery for the next sixty years. 30
By the 1930’s, however, twenty states had legalized betting at horse tracks. Then, in 1931, the State of Nevada legalized casino gambling.31 The Desert Inn, Nevada’s first gambling casino, is said to have “marked the beginning of the City of Las Vegas.”32 Then, New Jersey authorized gambling as a means of financing urban development.33 Known as one of the leading lottery states, New Jersey had lotteries as early as 1727. In fact, Alexander Hamilton prepared a document entitled, “Idea Concerning a Lottery,” which contained suggestions for running the 1793 New Jersey lottery.34
In 1964, the State of New Hampshire founded the first legal state lottery in the twentieth century. New York followed in 1967. The first scratch-off ticket was offered by Massachusetts in 1974. In 1985, the first multi-state lottery was attempted by Maine, New Hampshire, and Vermont.35 By 2000, thirty-seven states, as well as the District of Columbia, had state lotteries. These lotteries have raised over $140 billion dollars for various governmental programs.36
II. ANALYSIS OF THE CURRENT TENNESSEE CONSTITUTION, THE PROHIBITION AGAINST LOTTERIES, AND THE RELEVANT TENNESSEE CASE LAW
Prior to 1835, the lottery was a legal and acceptable form of raising revenues in the State of Tennessee. After the declining popularity of state lotteries in the U.S. during the 1800’s, the Tennessee legislature enacted laws prohibiting them. In 1835, the voters of Tennessee ratified Section 5, of the Tennessee Constitution’s Article XI.37
Article XI, Section 5, of the Tennessee Constitution reads, “The legislature shall have no power to authorize lotteries for any purpose, and shall pass laws to prohibit the sale of lottery tickets in this state.”38 This provision prompted the termination of all lotteries in the State of Tennessee. In compliance with the Constitutional directive, all existing laws authorizing lotteries in the state were repealed.39 This resulted in the case of Bass v. Mayor of Nashville.40 Bass was in the process of building Union Street in Nashville. This road was being constructed with lottery funds. Bass had already incurred expenses in the road construction in reliance on the lottery proceeds. When the lottery ceased operations, Bass sued for specific performance. The Tennessee Supreme Court found that the lottery could not continue, in light of the newly ratified Constitutional provision and resultant legislation. The court ruled that the defendants were immune from criminal prosecution for their operations prior to the new legislation, but immunization subsequent to the Constitutional prohibition would no longer be applicable. Therefore, even though the proceeds were to benefit the citizens of Nashville, the Constitution forbade the continued operation of the lottery.41
Then, in McKinney v. Memphis Overton Hotel Co., the Tennessee Supreme Court held that corporations are not exempt from the restrictions of the Tennessee Constitution, even if deemed to benefit the public good.42 “These are the provisions of the general law of the land, enacted by the Legislature, as fulfilling the requirements of the Constitution...”43 Corporations were, therefore, also banned from operating lotteries.44
In 1972, in State v. Netto, the Tennessee Supreme Court deemed Article 11, Section 5, of the Tennessee Constitution a “blanket prohibition against lotteries.”45 The resultant Tennessee statutes were “designed to proscribe all marketing plans of any description which are in the nature of lotteries.”46 The Tennessee Constitution, Tennessee statutes, and Tennessee case law all seemed to support this blanket prohibition of lotteries in any form, (exempting, as described below, certain charitable organizations.)
What was not clear was the precise definition of what constituted a lottery. For example, in State ex rel. District Attorney General v. Crescent Amusement Co., the Princess Theater, in Columbia, Tenn., offered an “Opportunity Night” where the theater awarded a cash prize to the holder of a “lucky ticket.”47 The state alleged that this practice violated the state’s lottery laws, and declared the offense to be “against good morals and the public welfare.”48 The Court ruled that the sale of the movie tickets did not constitute a lottery. Although the Court opined that the practice might be “hurtful to the public morals,”49 the decision rested on the fact that the “statute does not attempt to define what is, or shall be considered, a lottery.”50
Another questionable aspect of the definition of a lottery centered around the element of chance. Many games that fall under the heading of gambling involve a degree of intellectual skill, rather than mere reliance on chance or random selection. An example of a skill oriented game might be certain card games.51 “The Court has failed to address adequately the issue of skill and intellectual ability as an element of potentially permissible gambling, even though that very element is critical to the definition and understanding of what forms of gambling constitute ‘lotteries’...” 52
This lack of a precise definition was apparent in Secretary of State v. St. Augustine Church/St. Augustine School.53 The state legislature had enacted “charitable bingo” statutes to legalize the playing of Bingo for charitable, religious, and other non-profit organizations. The Court, however, found that Article XI, § 5 had terms that were “sweeping and absolute. It simply removes from the General Assembly the authority to authorize lotteries for any purpose – charitable, public, private, or any other.”54 The Court went on to recognize “that the constitutional provision did not prohibit all types of gambling. Except for lotteries, there is nothing in the constitution of the State prohibiting gambling, and the regulation of other types of gambling, except lotteries, is a matter for determination by the General Assembly.”55 Although, the Court continues, the General Assembly termed “the consideration paid by a customer as a charitable contribution rather than a wager, ... [t]his ... is an ineffective means to circumvent the constitutional prohibition, so long as the other elements of prize and chance are present.”56 The Court then ruled that a bingo game “clearly constitutes a lottery within the meaning of the Tennessee Constitution.”57
It was within this same time period that Tennessee was experiencing the “Rocky Top” scandal. This involved the criminal use of state charters of legitimate Tennessee charities to conduct bingo games. Very few of the proceeds actually went to the charities. The legitimate charities were, in essence, being used as fronts for illegal gambling. A federal investigation ensued, during which two state officials committed suicide.58
The relevant portion of Tennessee Code Annotated that exempted charitable organizations from the blanket prohibition against bingo and raffles was Tenn. Code Ann. §39-6-609. This section said that the prohibitions “shall not apply to any bingo game, raffle, or similar game of chance conducted by a religious or charitable organization exempt from taxation...”59 It only applied “if no part of the receipts from such activity enures to the benefit of any private shareholder, member, or employee of such organization; and only if all proceeds, after necessary and reasonable costs, be used for charitable or religious purposes, including educational and youth programs...”60 Abuses of this exemption resulted in a large federal investigation called “Rocky Top” and was conducted in all three federal districts of Tennessee. Many cases were prosecuted, and the section exempting charitable organizations was repealed in 1989.
The precise definition of a “lottery” seemed to still be unclear. Until 1997, the Tennessee cities of Knoxville, Chattanooga, and Kingsport held annual rubber duck races to benefit local charities. In Knoxville, proceeds from the annual event went to support the Boys & Girls Clubs of Greater Knoxville, Inc. In the 1996 event, more than 40,000 yellow rubber ducks were “raced” down Fort Loudoun Lake. Participants won more than $45,000 in prizes. A purchase was not necessary, but a $5 donation per duck to help the Boys & Girls Club was suggested. Expenses included $37,570 to Great American Duck Races of Scottsdale, Arizona for their services. The event, which lasted only one day, grossed almost $212,000 for the Boys & Girls Clubs. However, after a local Knoxville bingo hall was closed upon being deemed in violation of the state constitution’s ban on lotteries, the duck races came under attack. In March of 1997, state Attorney General John Knox Walkup opined that the annual duck race constituted an illegal lottery under the Tennessee Constitution. According to the Knoxville News-Sentinel, Senator Steve Cohen advised the people of Tennessee that, instead of being angry with the attorney general’s opinion, they should support efforts to change the constitution.61
The Tennessee Code Annotated currently defines the word “lottery,” as it applies to Article XI, § 5, as “the selling of anything of value for chances on a prize or stake.”62 It also defines “gambling” as: risking anything of value for a profit whose return is to any degree contingent on chance, or any games of chance associated with casinos, including, but not limited to, slot machines, roulette wheels and the like.
For the purpose of this chapter gambling does not include:
(A) A lawful business transaction;
(B) Annual events operated for the benefit of charitable § 501(c)(3) organizations that are authorized pursuant to a two-thirds (2/3) approval of the General Assembly, so long as such events are not prohibited by the state constitution; or
(C) A state lottery of the type such as is in operation in Georgia, Kentucky, and Virginia in 2000 and authorized by amendment to the Constitution of Tennessee, if such lottery is approved by the General Assembly. 63
III. THE PROPOSED CONSTITUTIONAL AMENDMENT
The Tennessee General Assembly has been struggling with finding solutions to Tennessee’s financial dilemmas. A proposed state income tax, as well as an increase in the state sales tax, have been on the agenda for consideration. Perhaps the timing is right to place a referendum before the Tennessee voters amending the Constitution to allow the Legislature to authorize a state lottery. Senator Steve Cohen, of Memphis, proposed a resolution calling for such a referendum. The resolution passed both in the state Senate, and in the state House of Representatives, where the bill was sponsored by Rep. Chris Newton, of Cleveland, Tenn. The resolution calls for a comma at the end of Article XI, § 5, and for the following new language to be added: “except that the legislature may authorize a state lottery if the net proceeds of the lottery’s revenues are allocated to provide ...” [for education.] 64 The proceeds of the lottery would primarily assist Tennessee citizens by granting scholarships to post-secondary academic institutions within the State of Tennessee. Excess allocations would be directed to K-12 building projects, and to early learning and after school programs.65 Lottery proceeds would be used “to supplement, not supplant, non-lottery educational resources for educational programs and purposes.” 66 The Resolution specifically states that the Tennessee Lottery would be patterned after the state lotteries operating in the year 2000 in the neighboring states of Georgia, Kentucky and Virginia. The amendment will be presented to the citizens of Tennessee in November 2002, at which time an election for governor will take place.67
The resolution also permits non-profit organizations to hold an annual event in which raffles or lotteries would be allowed for fund-raising purposes. Such an exemption would require a two-thirds vote of all members of the state Legislature.68 According to the text of the resolution, other types of gambling, such as slot machines, roulette wheels, or other games associated with casinos would not be authorized by the proposed Constitutional amendment.69
Senator Cohen has promoted a state lottery in Tennessee for 16 years. The state Senate had traditionally been the main obstacle to the resolution’s passage. One stumbling block was fear that a lottery would open the doors to the operation of gambling casinos on Indian Reservations. This concern prompted Sen. Randy McNally to seek an opinion from the state attorney general as to whether the governor could be forced to negotiate with Native American Indian tribes to authorize casino gambling on Native American lands. According to the Opinion, issued on April 24, 2001, “it would not be a gateway to Indian casino gambling in Tennessee. The State would not be required to negotiate with an Indian tribe about casino gambling, nor could the tribe sue the State without its consent to force the negotiation.”70
As reported by the Knoxville News-Sentinel, Cohen referred to the passage of the Resolution as “a victory for the people of Tennessee.” 71 He called the “chance to have college scholarships ... the greatest legacy that ... the ... senators and the House members could ever have to give to the people.”72
If the citizens of Tennessee approve the Constitutional amendment, the issue would then return to the legislature. The legislature would be responsible for setting regulations for the state lottery. The earliest date the lottery would be in operation would probably be in the middle of 2003.73 The lottery is expected to raise about $200 million in state revenues.74
IV. ARGUMENTS AGAINST A STATE LOTTERY IN TENNESSEE
The historical foundation of lotteries in this country cannot be ignored. “The nature and operation of lotteries in the early years of this nation is of no great mystery.”75 They enjoyed early favor among the states and local governments who considered them an alternative to taxes. However, the historical fraud and abuses of lotteries has led to concerns that their operation may not be the best alternative for governments to pursue.76 “Thus, before relying on lotteries, policymakers should examine the effectiveness of modern state lotteries as a tool to raise revenues and balance that against any possible adverse side-effects from the lottery.”77
State lotteries were not without their early critics. The Old Farmer’s Almanac of 1813 referred to lotteries as the “path that leads down to the gloomy pits of ruin.”78 An 1814 popular book, The Wonderful Advantage of Adventuring in the Lottery, written by the Reverend Samuel Wood, portrayed John Brown, the main character, whose lottery activities led to the eventual ruin of his life.79 There were books for children written about the evils of the lottery.80 The Society for the Prevention of Pauperism in the City of New York published a report in 1818 in which it named lotteries as a leading cause of poverty. Three years later, the city of Baltimore, issued a report also enumerating lotteries among the social evils leading to poverty.81 There are early examples of churches taking a stand against lotteries. In 1823, lotteries were condemned by the Baptist General Convention, followed by the Presbyterian General Assembly in 1830. 82
Critics of the modern state lottery cite similar concerns:
1. Many feel that the lottery is immoral. When a vote came before the citizens of Alabama in October 1999, calling for a state lottery, churches in that state united in their efforts to defeat the lottery on moral grounds. The proposal was defeated by over 100,000 votes.83
The Tennessee Eagle Forum, a religious organization, held a recent press conference in which they voiced concerns that a state lottery could lead to other types of lottery games, such as bingo, and cake walks. They warned that the provision allowing charitable organizations to hold annual lotteries for fund-raising purposes would probably flood the legislature with requests to hold their annual events.84 Interestingly, both religious groups and lobbyists from Mississippi casinos simultaneously lobbied the legislature against the lottery. 85
There is a counter-argument to the moral issue surrounding the lottery. Citizens do not have the option of choosing which governmental activities to support and which not to support through their tax monies. Participation in the lottery, on the other hand, is strictly voluntary. Those who object on moral grounds are not compelled to purchase tickets. 86
2. Many fear the lottery will cause some participants to become compulsive gamblers and will offer opportunities to gamble for those already addicted to the habit. This can result in costs to society. The National Council on Problem Gambling has recently released figures indicating the average pathological gambler costs society $13,600 annually. This includes loss of income due to gambling, costs of prosecution and incarceration of the gambler for related crimes, and money given by others to help compensate for losses. Others have indicated the cost may be much higher.87
Gamblers Anonymous estimated there to be 10 million compulsive gamblers in the United States in 1994. Other statistics have been gathered surrounding the circumstances of the compulsive gambler and his or her family. One of five compulsive gamblers may attempt suicide. Female spouses of male compulsive gamblers have reported eight times more stress-related physical illnesses than the general public, and three times more attempted suicides than female spouses of non-compulsive gamblers. Children of compulsive gamblers are twice as likely to attempt suicide than their peers, are more likely to suffer from depression, have more problems with alcohol and drug abuse, have more gambling or eating disorder problems, and generally do worse in school than other children. Additionally, two out of three problem gamblers eventually commit other crimes to finance gambling activities or to pay gambling debts. 88
Harvard Medical School estimated in 1998, however, that only 1.6 percent of adults in the United States and Canada had ever actually had a pathological gambling problem. Also, several studies suggest that about 50% of compulsive gamblers also have problems with either drug or alcohol abuse. Other studies have found a correlation between compulsive gambling and high rates of depression, and other psychological conditions, leading some to conclude that compulsive gambling may often be a symptom of other problems, rather than a condition in and of itself.89 In addition, according to a recent survey by the National Survey on Gambling Behavior, no relationship was found between the number of compulsive gamblers and the presence of a lottery.90 Problem gamblers are often more attracted to games involving more sensory stimulation, an element of skill, and a more immediate reward than offered by state lotteries.91 Indications may be that compulsive gambling is not a widespread problem, and that the lottery does not have a significant impact on the pathological gambler.
3. The presence of a state lottery may encourage children to become involved in gambling. Teenagers and children are usually barred from casinos. Convenience stores, however, are readily accessible to all. A recent study in New Jersey reported that 43% of high school students in that state had played the lottery. The National Council on Problem Gambling has reported an increase in recent years in the number of adolescents with gambling problems. This increase could be due to the widespread availability of legalized lotteries in this country.92
The National Opinion Research Center found only 1.5 percent of 16 and 17 year old children were pathological gamblers. That was half of the figure they reported among adults. The study also found, however, that young persons were slightly more likely than adults to have serious problems with gambling.93 States with lotteries typically criminalize the sale of lottery tickets to minors. 94 This is obviously something the Tennessee legislature needs to consider when setting regulations for the lottery if the resolution passes.
4. Gambling can lead to the commission of other crimes. Pathological gamblers have often financed their activities through illegal activities. Most incarcerated compulsive gamblers have admitted committing other crimes to replace lost finances, or to obtain money for gambling. Some view the state as hypocritical in outlawing certain types of gambling while legalizing
others. 95
5. Some opponents of the state lottery view it as a regressive tax. They contend that the poor spend much more money on the lottery than the wealthy. They also contend that lottery money simply replaces other forms of revenue, and results in the state deriving its educational revenues from the lottery, rather than the previously used sources.96
“A tax is regressive if: as a percentage of income, it falls as income increases.”97 A New Jersey study conducted in 1988 indicated that poorer citizens spent a greater percentage of their income on lottery tickets than did their wealthier counterparts.98
A 1997 poll, however, conducted by the Washington Post, found middle income citizens to be the most likely to purchase lottery tickets. A 1997 Gallup Poll also reported citizens with an income range of between $45,000 and $75,000 to be the most likely to play the lottery, while citizens earning less than $25,000 were the least likely.99 Additionally, a 1999 Gallup Poll Social Audit Survey on Gambling in America, indicates that those in the higher income brackets and with a higher educational level tend to play the lottery more than those with lower incomes and less education.100 According to a 1994 poll conducted by the University of Tennessee’s Social Science Research Institute, 64% of Tennesseans making more than $25,000 annually had purchased lottery tickets, while only about one-third of those making less than $12,500 yearly had purchased tickets. Also, 66% of college graduates from Tennessee reported buying lottery tickets, compared to only 42% of those lacking a high school diploma.101 Regardless of which figures one follows, it stands to reason that poorer citizens also spend a greater percentage of their income on food, clothing, and other basic needs than do their wealthier counterparts.
It should also be noted that, in the Resolution passed by the Tennessee state legislature, there is specific language which states, “such net proceeds shall be used to supplement, not supplant, non-lottery educational resources for educational programs and purposes.” 102
6. A related concern is that people in the lower income brackets may lack knowledge as to better alternatives to investing money. Lack of information is related to lack of education. It is also a function of finances, however. The less money an individual possesses, the less his or her need to learn about various options. “It is an interesting fact that the lower income groups who play lotteries tend to invest quite conservatively when they save, typically in bank deposit accounts or certificates of deposit.”103
The stock market has been compared to a lottery for the rich. “State-run lotteries, offering a simple game, low minimum investments, and wide availability, may be the poor person’s (only) stock market.”104
7. Many have voiced concerns that the provision allowing for the annual lotteries to be held by non-profit organizations will lead to fraud and corruption such as was experienced during the Rocky Top Scandal. This was the scandal discussed earlier in this paper where bingo operators used legitimate charities to front illegal gambling operations.105
Lessons drawn from the past should help the legislature to more carefully scrutinize these charitable lotteries. The fact that these non-profit lotteries are only exempted once annually also limits the possibility of corruption.
8. Some are afraid that the legalization of a lottery in Tennessee will open the door for other types of gambling, such as Native American Indian casinos. However, the Attorney General’s Opinion alluded to earlier in this article, said that the Tennessee lottery will “not be a gateway to Indian casino gambling.”106 Also, the language of the Resolution does not authorize games associated with casino gambling.107
9. Finally, critics of the proposed lottery maintain that it will not solve Tennessee’s financial problems. Although it is estimated to generate $200 million in its first year of operation, the state needs much more than that amount to meet its obligations.108 Simply adopting a lottery does not mean that a state income tax or increased sales taxes will not have to be enacted in the future in order to meet the financial needs of the state.
V. ARGUMENTS IN FAVOR OF A STATE LOTTERY IN TENNESSEE
While there are many critics of a state lottery, it is important to examine the successes of the states surrounding Tennessee who have enacted lotteries. Perhaps this was the legislature’s intention when it indicated that the lottery would be patterned after those in operation in Georgia, Kentucky, and Virginia.109
Proponents enthusiastically cite various reasons why they feel a state lottery would be in the best interests of the citizens of Tennessee:
1. State lotteries are an excellent source of revenue.
Lotteries are more popular sources of revenue than taxes because lottery participation is voluntary. A source of revenue should be predictable, inexpensive and easy to collect, and should not place a disproportionate burden on the poor. Lotteries have raised enormous amounts of money for needed state projects and have eased the burden on state taxpayers. 110
Tennessee’s neighboring state of Georgia contributes about $1 million dollars every day to education within the state.111 In 2000, $1.3 billion dollars were allocated to the HOPE scholarships, $1.38 billion dollars went to Georgia’s pre-kindergarten program, and $1.6 billion dollars went for capital outlay and technology for primary and secondary schools. In 2000, the Kentucky Lottery contributed $214 million dollars to education, $32 million dollars to Vietnam Veterans, $1.1 billion dollars to the general fund, $3.6 million dollars to Kentucky Education Excellence Scholarships, $9 million dollars to Affordable Housing Trust Fund, and $3 billion dollars to Literacy Programs. Virginia has generated $2.8 billion dollars for its general fund from 1989 through 1998, $645.4 million dollars from 1999 to the present to the general fund to be used only as a direct aid to public education, (grades K-12), $91.6 million dollars to the library fund for school construction additions and renovations, and $8.4 million dollars to its debt set-off collection. Missouri generated $955.79 million dollars for public education in 2000, and the general revenue fund received $542.54 million dollars in lottery proceeds.112 It is difficult to dispute that this is definitely a strong source of revenues for these states.
2. The Tennessee Lottery would help education in the state. The Resolution calls for a scholarship, similar to that used in Georgia, where Tennessee students could attend post-secondary academic institutions within the state.113 (Currently, in Georgia, students with a “B” average are eligible for the scholarship.) Excesses would go to grades K-12 and to pre-kindergarten and after school programs. If the proposal is ratified by the voters, these funds would be earmarked for these purposes. Additionally, they would supplement, not supplant any revenues now earmarked for educational purposes within the state.
3. The lottery is a type of “painless tax.” Not mandatory on the citizens, people choose to participate.114 Additionally, many people enjoy playing the lottery. Most do not view purchasing a lottery ticket as a form of investment. They are no more expensive than tickets to sports events or movies.115
4. Tennesseans are flooding to neighboring states and purchasing their lottery tickets, or participating in their legalized gambling activities. Kentucky, Virginia, Missouri and Georgia, all of which border on Tennessee, have state lotteries. The Kentucky Lottery Commission has estimated that it would lose $83 million dollars or 18% of its lottery revenues if Tennessee enacts a lottery.116 All that Tennesseans need do is cross the border to participate in some form of legalized gambling. The Knoxville News-Sentinel reported that, according to a survey conducted in 1995 in Chattanooga by Croxall Associates, Inc., 22.4% of Chattanoogans had played the Georgia lottery since it began in 1993. The survey indicated that the people of Chattanooga spent $15,376,572 per year on the Georgia lottery from 1993 to 1995.117 Proponents reason that the monies spent should be benefitting our citizens, as opposed to those of our neighboring states.
5. Public opinion favors a lottery. A national Gallup Poll conducted in 1999 reveals that 75% of adults favor gambling as a source of state revenues.118 The public opinion polls conducted by the University of Tennessee’s Social Science Research Institute from 1988 through 1998 have shown a majority of Tennessee citizens who responded favoring a lottery.119 The Chattanooga Area Business Climate Survey 2001shows that 79.1 % of Chattanooga businesses responding to the survey would support a Tennessee state lottery if its revenue were designated for a specific purpose, such as education, (which the Resolution calls for.) 120
6. State lotteries can actually provide help for compulsive gamblers. Although it is an issue of debate whether or not state lotteries are a temptation to compulsive gamblers, many state lotteries contribute to problem gambling services. For example, Georgia is mandated to send up to $200,000 of unclaimed lottery prize money to the Georgia Department of Human Services to support problem gambling hotlines. Additionally, stickers advertising the hotlines are posted at all locations where tickets can be purchased. The campaign’s theme is “Play Responsibly.” Kentucky’s theme is, “Play responsibly. Remember, it’s just a game.” This slogan appears on all Kentucky lottery related materials. The Missouri River Boat Gaming Association donates $1 million dollars to gambling hotline service and appropriated $250,000 to the Missouri Department of Mental Health for problem gambling issues. Additionally, Virginia has a “Play Responsibly” theme. Virginia also has included messages to heighten awareness that it is illegal to sell lottery tickets to minors.121 Tennessee might do well to follow Georgia’s example in providing unclaimed prize funds to agencies to help pathological gamblers.
7. The people of Tennessee should have the opportunity to vote on the issue. The referendum gives Tennesseans the choice of whether or not to authorize the Constitutional amendment. According to the Knoxville News-Sentinel, Sen. Cohen, when addressing his fellow senators, remarked, “The issue is this. One, do you put this to the vote of the people? Do you empower all of the Tennesseans of this state to interact with their constitution and approve this resolution and trust them to have the wisdom to vote and have their wisdom expressed on this issue? And, two, if they should vote positively ... do you trust this institution (Senate) and the House to act responsibly?”122
CONCLUSION
“In these days, it is doubtful that any child may reasonably be expected to succeed in life if he is denied the opportunity of an education.”123 These famous words from Brown v. Board of Education, are no less true today than when first spoken in 1954. If the children of Tennessee are to succeed in life, they, too, must be given every available opportunity to pursue a quality education. The question presented is whether a Tennessee State Lottery can provide the revenues to make this a possibility for Tennessee’s children.
There has been much support, as well as much opposition, surrounding the issue of a state lottery in Tennessee. Regardless of an individual’s personal convictions on the issue, however, it seems fair that Tennessee’s citizens should be given the right to voice their opinions through the referendum. Should the citizenry approve the lottery, careful planning to circumvent the concerns expressed by its opponents is essential.
ENDNOTES
1. Ecclesiastes 9:11 (KJV).
2. 2001 Tennessee Ballot Measure No. 1, Tennessee 102nd General Assembly (Senate).
3. Ronald J. Rychlack, “Lotteries, Revenues and Social Costs: A Historical Examination of State- Sponsored Gambling,” 34 B.C. L. Rev.11, 14 (Dec. 1992).
4. Id.
5. FCC v. Am. Broad. Co., 347 U.S. 284, 290 n. 8 (1954)(citing Stone v. Miss., 101 U.S. 814 (1879)).
6. State v. Coats, 74 P.2d 1102, 1106 (Or. 1938).
7. Horner v. U.S., 147 U.S. 449, 460 (1893)(citing Governors of the Almshouse, etc. v. Am. Art Union, 7 N.Y. 228 (1852)).
8. Rychlak, supra, at 15.
9. Numbers 26:55 (KJV).
10. Lottery History, North American Association of State & Provincial Lotteries (2001) (visited July 4, 2001) http://www.naspl.org/history.html
11. Rychlak, supra, at 16.
12. Mike Roberts, “The Constitutionality of Gaming in Tennessee,” 61 Tenn. L. Rev. 675, 677 (Winter 1994).
13. John 19:23, 24 (KJV).
14. Acts 1:26 (KJV).
15. Lottery History, supra.
16. Id.
17. Rychlak, supra, at 24.
18. Roberts, supra, at 677.
19. Id. at n. 21.
20. Lottery History, supra.
21. Roberts, supra, at n. 21.
22. Rychlak, supra, at 25.
23. Trustees of Dartmouth College v. Woodward, 17 U.S. 250, 298 (1819).
24. Roberts, supra, at 677.
25. Patricia Kathryn Carlton, “All Bets are Off: An Examination of Alabama’s Proposed Lottery and the Educational Inadequacies it was Intended to Remedy,” 51 Ala. L. Rev. 753, 760 (Winter 2000).
26. Rychlak, supra, at 25.
27. Carlton, supra, at n. 46.
28. Roberts, supra, at 678.
29. Id.
30. Lottery History, supra.
31. Roberts, supra, at 678.
32. Id. at n. 33.
33. Id. at 678.
34. Rychlak, supra, at 29.
35. Lottery History, supra.
36. Carlton, supra, at 763.
37. Roberts, supra, at 683.
38. Tenn. Const. art. XI, § 5.
39. Roberts, supra, at 681.
40. Bass v. Mayor of Nashville, 19 Tenn. 419 (1838).
41. Id.
42. McKinney v. Memphis Overton Hotel Co., 59 Tenn. 104 (1873).
43. Id. at 104.
44. Roberts, supra, at 684.
45. State v. Netto, 486 S.W.2d 725, 728 (Tenn 1972).
46. Id.
47. State ex rel. Dist. Attorney Gen. v. Crescent Amusement Co., 95 S.W.2d 310 (Tenn. 1936).
48. Id.
49. Id. at 313.
50. Id.. at 312.
51. Roberts, supra, at 685.
52. Id. at 690.
53. Secretary of State v. St. Augustine Church/St. Augustine Sch., 766 S.W.2d 499 (Tenn. 1989).
54. Id. at 499.
55. Id. at 500.
56. Id. at 501.
57. Id.
58. Rebecca Ferrar, “Some Worried by Lottery Resolution,’ Knoxville News-Sentinel Nashville Bureau, Feb. 7, 2001, available in LEXIS, News Library, Knoxville News-Sentinel File 0100304922.
59. Tenn. Code Ann. § 39-6-601 (repealed 1989).
60. Id.
61. See Wesley Loy, “Knox Not the Only City in Deep Water Over Duck Race,” Knoxville News- Sentinel, Oct. 6, 1996, available on LEXIS, News Library, Knoxville News-Sentinel File; See also Wesley Loy, “State Says It’s Illegal Lottery, So Duck Race Off: Boys & Girls Clubs Lose Fund- raiser,” Mar. 20, 1997, available on LEXIS, News Library, Knoxville News-Sentinel File; See also Wesley Loy, “Lottery Debate Gets Louder; Duck Race Demise could Spur Change in Constitution,” Mar. 30, 1997, available on LEXIS, News Library, Knoxville News-Sentinel File.
62. Tenn. Code Ann.§ 39-17-501 (5) (1997 Repl. & Supp. 2001).
63. Tenn. Code Ann §39-17-501 (1) (Supp. 2001).
64. 2001 Tennessee Ballot Measure No. 1, Tennessee 102nd General Assembly (Senate).
65. Id.
66. Id.
67. Id.
68. Id.
69. Id.
70. 01 Op.Tenn.Att’y Gen 64 (2001).
71. Rebecca Ferrar, “Tennessee Leaps Lottery Hurdle; 22-11 Senate OK Comes as Surprise,” Knoxville News-Sentinel Nashville Bureau, Feb. 8, 2001, available in LEXIS, News Library, Knoxville News-Sentinel File.
72. Id.
73. Tom Humphrey, “Senate Panel Oks Lottery Proposal,” Knoxville News-Sentinel Nashville Bureau, Jan. 31, 2001, available in LEXIS, News Library, Knoxville News-Sentinel File.
74. Rebecca Ferrar, House Gets Lottery Ball Rolling; Lawmakers Hear First Reading of Three, Knoxville News-Sentinel Nashville Bureau, Feb. 9, 2001, available in LEXIS, News Library, Knoxville News-Sentinel File, 0100305127.
75. Michael William Eisenrauch, “Video Poker and the Lottery Clause: Where Common Law and Common Sense Collide,” 49 S.C. L. Rev. 549, 573 (Spring 1998).
76. Id.
77. Rychlak, supra, at 48.
78. Id. at 33 (citing John Samuel Ezell, “Fortune’s Merry Wheel: The Lottery in America” 23, at 184 (1960)).
79. Id. at 33, 34 (citing Rev. Samuel Wood, “The Wonderful Advantage of Adventuring in the Lottery” (1814)).
80. Id. at 34.
81. Id.
82. Id. at 36.
83. Theotis Robinson, Jr., “Lottery Won’t Fix Tennessee’s Problems,” Knoxville News-Sentinel, Feb. 12, 2001, available in LEXIS, News Library, Knoxville News-Sentinel File.
84. Rebecca Ferrar, supra, note 58.
85. Rebecca Ferrar, supra, note 71.
86. Did You Know? North American Association of State & Provincial Lotteries (2001) (visited July 4, 2001) http://www.naspl.org/faq.html
87. Larry L. Page, “Con: The Case Against Legalized Gambling Economics 101,” 30 Ark. Law. 28 (Spring, 1996).
88. Id.
89. Problem Gambling FAQ, North American Association of State & Provincial Lotteries (2001) (visited July 4, 2001) http://www.naspl.org/compgamb.html
90. Did You Know? supra.
91. Id.
92. Rychlak, supra, at 69.
93. Problem Gambling FAQ, supra.
94. Rychlak, supra, at 69.
95. Id. at 71.
96. Richard Fossey, and Todd DeMitchell, “Gambling for Schools: State Lotteries and Public Education Finance,” 98 West’s Educ. L. Rep. 19 (May 1995).
97. Todd A. Wyett, “State Lotteries: Regressive Taxes in Disguise,” 44 Tax Law. 867, 873 (Spring, 1991).
98. Id. at 876.
99. Duane V. Burke, “Testimony to Gaming Study Commission, Top Ten Myths about Lottery (and Why They are Not True),” North American Association of State & Provincial Lotteries (2001) (visited July 4, 2001) http://www.naspl.org/burke899.html
100. Jack Ludwig, “Charge that Gambling Industry Preys on the Poor Not Borne Out in Gallup Survey, The Gallup Organization,” (July 8, 1999) (visited July 4, 2001) http://www.gallup.com/poll/releases/pr990708.asp
101. Jim Balloch, “More Upper-Income Are Likely to Gamble,” Knoxville-News-Sentinel, April 10, 1994, available on LEXIS, News Library, Knoxville-News Sentinel File.
102. 2001 Tennessee Ballot Measure No. 1, Tennessee 102nd General Assembly (Senate).
103. Edward J. McCaffery, “Why People Play Lotteries and Why it Matters,” 1994 Wis. L. Rev. 71, 107 (1994).
104. Id. at 108.
105. Rebecca Ferrar, supra, note 58.
106. 01 Op.Tenn.Att’y Gen 64 (2001).
107. See 2001 Tennessee Ballot Measure No. 1, Tennessee 102nd General Assembly (Senate).
108. Theotis Robinson Jr., supra, note 83.
109. See 2001 Tennessee Ballot Measure No. 1, Tennessee 102nd General Assembly (Senate).
110. Rychlak, supra, at 48, 49.
111. Georgia Lottery Corp. Background (2001) (visited June 23, 2001) http://www.lotteryinsider.com.au/lottery/georgia.htm
112. Where the Money Goes, North American Association of State & Provincial Lotteries (2001) (visited July 4, 2001) http.//www.naspl.org/benefits.html
113. See 2001 Tennessee Ballot Measure No. 1, Tennessee 102nd General Assembly (Senate).
114. Richard Fossey and Todd DeMitchell, supra, at 19.
115. Did you Know? supra.
116. Rebecca Ferrar, supra, note 71.
117. Betsy Kauffman, “State’s Lottery Players Flock to Georgia,” Knoxville News Sentinel, April 5, 1995, available in LEXIS, News Library, Knoxville-News Sentinel File.
118. Social Audit - News Release, Gambling in America, The Gallup Organization (2001) (visited July 4, 2001) http://www.gallup.com/poll/socialaudits/Gamblingrelease.asp
119. Randy Krenner, “Majority of Tennesseans Say Playing Lottery Good Bet for State,” Knoxville News-Sentinel, Mar. 15, 1998, available on LEXIS, News Library, Knoxville News-Sentinel File.
120. Chattanooga Area Business Climate Survey 2001 (2001) (visited July 1, 2001) http://www.chattanooga-chamber.com/climatesurvey2001/newsurvey2c.html
121. Problem Gambling Services, North American Association of State & Provincial Lotteries (2001) (visited July 4, 2001) http://www.naspl.org/contribs.html
122. Rebecca Ferrar, supra, note 71.
123. Brown v. Bd. of Educ., 347 U.S. 484, 493 (1954), supplemented by 349 U.S. 294 (1955).
