How Massachusetts became the lottery capital of America

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The following is a lightly edited transcript of the March 19 episode of the “Say More” podcast.

Shirley Leung: Welcome to “Say More” from Boston Globe Opinion. I’m Shirley Leung.

The Massachusetts Lottery is kind of a big deal.

Some of us remember the excitement on TV. We watched colorful balls bouncing down a slide while the host called out the winning numbers.

Dawn Hayes (TV clip): Let’s see if it’s your lucky night. Our first number for the evening is number four. Next we have number 13...

Leung: And then came pictures of people beaming with oversized checks.

Even now, you might see ads on the train, YouTube, even during the Super Bowl.

Mass Lottery Ad (Superbowl 2024 clip): To endorse the Mass Lottery’s new 50 instant ticket, we got the one name everyone is talking about. That’s right, it’s Taylor! Shane Taylor from our marketing team…

Leung: But the Mass Lottery is not just fun and games. It’s serious money. Turns out, it’s all by design. Here in the studio are two reporters who’ve been thinking about this issue. Ian Coss is the producer and host of a new eight-part podcast series from GBH called “Scratch and Win.” Esmy Jimenez is a Boston Globe reporter who covers the racial wealth gap.

She has a recent investigation on who spends the most on the Mass Lottery and where the money goes. Welcome, both of you.

Leung: Ian, in your new podcast, you start with the number 1,037. What’s the significance of that number and why does it matter?

Ian Coss: What that number represents is the average amount that adults in Massachusetts spend on lottery tickets every year.

If you look across the nation, you sort of map out average lottery spending per adult. Massachusetts is a total outlier. So you have states, a lot of very rural states like Wyoming and North Dakota, sometimes it’s less than $100 per adult. California, Texas, Michigan are in that $300-$500, maybe $600 range.

And then you have Massachusetts. All on its own, way off the charts, over $1,000 per adult.

There were two things that struck me about it. One was that it just seemed high. Like, if you’d asked me to guess, I never would have guessed that high. And I think the other piece was, why Massachusetts?

I think there’s something about this story that does not comport with the mental image that a lot of people have in Massachusetts, right? They think colleges, they think professors and doctors, they think Puritans, right? They do not think of the lottery capital of America. But it is also that.

Leung: Esmy, I assume you came across very similar statistics in your reporting. So what inspired you to investigate the lottery from an equity perspective?

Esmy Jimenez: I should preface that I’m a relatively new person to the Boston area. I’ve been here for about a year, but I remember I was walking down Dot Ave. [in Dorchester] and I noticed every single bar I walked by — the restaurants, I even saw a laundromat— they were all selling lottery tickets. And I found that so weird. I was just like, “Why? Is it just me, or do they have a lot of lottery ticket sellers here?”

So I looked around, and I found that number that Ian’s referencing [$1,037 spent on lottery tickets every year in Massachusetts] and was like, “That’s nuts. Why are we doing that here? What’s going on?”

So I sent off a records request to look at licenses and how they were distributed throughout the state.

Obviously, when a business owner decides to apply for a license to sell lottery products, that’s their choice. They’re seeing a demand. They are filling that need. But I’m really curious about what dynamics are occurring at the community level.

What’s happening there that people are spending 5-10 bucks? Even when they don’t have that much money. But the dream is big, right? The dream of maybe becoming a millionaire.

Leung: Ian, why do Massachusetts residents spend so much more money on the lottery than other states? Why do we want to get rich quick?

Coss: The way I look at it, there’s sort of two buckets of factors. The first bucket is structural factors, demographic, geographic factors that are always going to make Massachusetts a strong lottery state.

To give a few, quick examples, it’s a heavily urban state. The majority of the population is concentrated in a single metro area, a single media market. Urban areas tend to spend more on lottery. Another interesting factor that was totally unexpected for me is that if you look at the earliest lottery states, they are all heavily Catholic states.

Leung: That was really fascinating. Walk me through that, because you would think Catholics would think that gambling is a sin and playing the lottery is a sin.

Coss: Protestants think that even more. In fact, much, much more.

Leung: But not the Catholics?

Coss: Well, the Catholic Church institutionally has not had a hard line on gambling.

The policy always tends to be “If it’s not harming your personal life, it’s okay.” And that’s part of the reason why you see church hall bingo, which has been around for decades and in many states preceded the creation of state lotteries and helped kind of grease the skids towards more legalized gambling but also just created a culture around it.

In one of the episodes, I went to a church in Revere, to the bingo hall, and I was talking to folks and they’re like, “Yeah, we’d go when there was dog and horse racing. We’d go to the track on Saturday and then we’d go to church on Sunday. We’d play bingo on Monday.”

Those things were all bound up in a culture in which that was fine. It was not stigmatized in the same way that it was in many Protestant churches. And that’s why you see in the Deep South, like Alabama, some states do not have a state lottery.

So for all those reasons, I think it is likely that Massachusetts, like Maryland, like Pennsylvania, like Michigan, were always going to have a big lottery. But then none of those factors can explain why we are so far out ahead of the pack.

And really, I believe the answer to that comes down to innovation, risk taking, and leadership. However you feel about it, we did have a lottery that, from the very beginning, was willing to try things that other states weren’t and push the envelope in ways that other states weren’t. Many other states followed, in fact.

To me, that’s really the key to understanding it.

Leung: As you’ve listened to the podcast, were there other ingredients that made Massachusetts such a big and successful lottery system?

Jimenez: Yeah, for sure.

I had talked to one researcher who was brilliant and knew a lot about state lottery systems: Jonathan Cohen. He mentioned some of the lecture halls to build Harvard many, many years ago were created through lottery systems. So I think the lottery is not just this sinful, terrible thing, but also this communal thing, right?

We all pull in together, some of us might win, but with them, we get to build really cool things like churches or universities. And so in that sense, it’s very human to me. It’s just very communal.

Leung: Can you explain that one more time? How did Harvard lecture halls and lottery come all together?

Jimenez: Well, so the lottery is very ancient. It’s before Massachusetts. It’s in the Bible as well. This idea that people take lots. Some of the earliest buildings for Harvard campus were built through a lottery system.

Coss: At Yale as well.

Jimenez: Yeah.

Leung: What do you mean by lottery system? I would buy a five dollar lottery ticket in hopes of helping?

Coss: It’s the same principle as the lottery today, except they were more tied to specific projects. They did this for the Washington Monument, I believe parts of the Erie Canal.

The idea is you say, “Okay, we want to build a dorm. We need to raise a bunch of capital. So we’re going to have a lottery to fund the building of the dorm. Tickets cost ‘x’ amount.”

It’s done like a 50-50 raffle. Everybody pays in.

Leung: So do you get the lecture hall? What’s the prize?

Coss: The winner gets maybe half the pot or some percentage of the pot. The other half of the pot goes to the public.

Leung: Oh, I get it. You know what? This is so interesting. I think I’m doing a lottery for our Milton baseball team. I just bought $100. And you know what the pot is?

Coss: What’s that?

Leung: $10,000 cash.

Jimenez: So you do participate in the lottery!

Leung: I’m participating in a local lottery! I get it now. So this is a really, really old concept.

So Ian, in your podcast, you do a really great job of outlining how one of the reasons why lottery is legalized here is that the revenue goes into the state coffers.

Can you talk about how much money the lottery raises and what does it fund here in Massachusetts?

Coss: Yeah, I believe the total revenue is somewhere around six billion dollars a year. And of that, roughly one billion is distributed in direct local aid to cities and towns. Does that sound roughly right?

Jimenez: I believe so.

So those are big numbers, but it’s important to note that as a piece of overall state revenue, that is a very small percentage. I think it’s like a $45 billion state budget. So this is not where most of your school department budget or your bus programs or whatever are coming from.

I think the other thing that’s important to point out is that Massachusetts is totally unique among all the lottery states. There’s something like 45 states now that operate lotteries. Every state has a slightly different formula or approach to using those lottery funds, but Massachusetts’ revenue goes directly to its unrestricted local aid to municipalities, cities, and towns.

And part of what we argue in the podcast is that’s what created a very strong political constituency that really wanted that lottery revenue to grow, unlike a lot of other states.

Leung: Esmy, in your investigation, you show where this billion dollar goes, right?

And you showed that it’s not distributed equitably. It’s not a very fair system. Explain what you found.

Jimenez: What I ended up doing is tracking where people were buying tickets and then how much is that municipality getting back. So you can think about those two buckets, the in and out.

So Chelsea, for example, in 2023 sold about $50 million in lottery products. They got back about 20%. They got 9.5 million dollars.

A city like Brockton? They sold $120 million worth of tickets, and they got back $24 million. So, for the most part, places like Chelsea and Brockton, they lost money. The stuff that they put into the bucket versus what they got out, significantly less.

And so I was curious about what does it mean then if communities that are predominantly Latino or Hispanic, lower income, black, working class are putting in a large pot of money, but then not getting much of it back.

So who is getting it? And then I found other towns like Harvard, Massachusetts, a pretty wealthy town. They do not participate in the lottery. They do not sell tickets within the actual municipality. Yet, they still got 2 million in aid in 2023 because of the formula that we have here in Massachusetts, which says all 351 municipalities get a cut of this big giant pot.

But if some people are putting in more into the pot than others, that’s where I was curious. Well, is that really fair?

Leung: Reading your story was pretty outrageous. If residents of a town spend $50 million on lottery tickets, you should get 50 million in municipal aid back.

Lawmakers have been trying to change the law. But it hasn’t worked out that way, right?

Jimenez: So there’s a couple different arguments as well. One of the arguments that I often hear is just because someone is buying tickets in this specific municipality doesn’t mean they’re from that municipality.

If you’re buying tickets in Chelsea because you just happen to work there, but you actually live in Dorchester, there might be that mismatch. There’s also folks that maybe come down from New Hampshire and actually buy tickets across the border because they see the Massachusetts state lottery system is much more lucrative. They think their chances are better over here.

So that’s where it gets kind of tricky. And you get into the weeds of being like, “Okay, so what is fair?” And when we’re talking about helping the most vulnerable communities, how are we defining vulnerable? Is it just looking at property values? Is it looking at whether there’s kids getting free and reduced lunch in the schools? Is it looking at any number of factors to think about, really, who’s the most needy in Massachusetts?

Leung: And critics will say that the lottery system functions almost like a regressive tax on the state’s poorer residents.

Do you think that’s a fair assessment, Ian?

Coss: It’s certainly regressive.

I think the part of it that’s debatable is whether you consider it a tax or not. I think proponents of lotteries, and I spoke to many of them in the course of the show, one that stands out, championed liberalizing gambling.

His argument and others' argument is that this is more of a libertarian issue of, if people want to spend their money on gambling, they should. Who are we, the state, to tell them how to spend their money? And if you think of it that way, and the state is able to collect a little bit of revenue off of it, just like the state collects revenue off of alcohol sales or cigarette sales, then that’s a good thing if you think of it as primarily a revenue source.

And I think to me, there’s a difference between cigarettes and gambling in that the state operates a lottery. The state is actively promoting and putting up billboards and ads on the backs of buses, encouraging the growth of the lottery. It was designed and created to be a source of revenue for the state.

If you look at it in those terms, compared to an income tax, it is definitely a regressive way to raise money.

Leung: Esmy, what about you? Do you think it’s a regressive tax?

Jimenez: The better question, though, is asking who are we willing to sacrifice in our community to make money for the rest of us?

I think when we can legally debate what is a tax, and what is not, it’s someone’s choice, right? I grew up in a family where we played the lottery. I think we finally stopped playing the lottery when I was in my 20s, once we lost lots of money.

But I do remember a time my mom got $200 and we ate very well that day. We had our nicest dinner ever. So I totally get the desire to want to gamble and people have the right to decide how to spend their money, of course. But when you do look at patterns of who buys lottery tickets, it’s predominantly folks that have not finished college, predominantly folks that are low income, and folks who also get caught up in gambling addiction, as well.

I think those are big things that we should also think about because the irony about the Massachusetts State Lottery is that there’s a pot of money that they tag for folks that become addicted to gambling. So part of those funds go right back. And that’s kind of fascinating, isn’t it? The thing that we use to make money for all of us, is also the thing that makes some people become sick enough that they need to look for help to break out of their addiction.

Leung: So, Esmy, is there a solution here? What would be a fairer system in distributing lottery funds and creating a better lottery that doesn’t prey on the most vulnerable and poor citizens?

Jimenez: Yeah, I’ve thought a lot about that. And luckily, there are people that are much smarter than me that have written white papers both at the Boston Federal Reserve and a bunch of other think tanks. They have ideas on how to do this more equitably. Also, as Ian pointed out, we’re the only state that does it this way. So there are other models that we can just copy paste. That’s one way to start. Then, at the very least, there’s been representatives at the state level who’ve been wanting to make sure there’s just a commission to study, like what does fairness look like? What do we want to do moving forward? I think all legislators should be looking at that.

Leung: What’s preventing change? Who are the people or forces that want to keep the lottery system as is?

Coss: I think there are two realities going on. One is that state political leaders have become accustomed, you could even say addicted, to that lottery revenue.

And I’ve talked with a lot of political leaders, folks who certainly identify as progressive in their politics, but have made their peace with the lottery as a piece of the revenue picture in an era where there’s so much resistance to increasing taxation and so much need for government services. I think the other side of it is the reality of gambling politics. There is a minority of people who want to gamble and a majority of people don’t care.

If you look at gambling side by side with cigarettes, which again I was mentioning is sort of like two things we might consider vices, in 1960 you could smoke on planes and in restaurants. You could advertise smoking anywhere, say anything. If you look at the trajectory of smoking, it’s more conservative, more restricted, and decreasing utilization.

And if you look at gambling in 1960, there was not a single casino outside of Las Vegas. There was not a single state lottery sports betting. Since then, we have seen the opposite. I think that says something about how we view these things.

Whereas the collectivized costs of cigarettes are very evident, especially in the form of secondhand smoke, I think that we look at the cost of gambling differently.

Leung: More of my conversation with Ian and Esmy after a short break.

Ian, one of the things that made a deep impression on me in your podcast is when you talked about how in the 80s, there was this shift in thinking about the American Dream. As wealth inequality got worse, people started to feel like working hard was no longer a guarantee to make it in America.

If you want to make it, you should play the lottery. That’s how you get rich in America now. So can you talk about this shift?

Coss: Yeah, and one of the people who pointed this out to me was a man who listeners might know as Jack Connors, one of the founders of a legendary advertising agency here in Boston known as Hill Holiday, among many other things he did in life.

Jack Connors’ firm had the lottery advertising contract in the 1980s. The way he described it to me was that era was the first time in modern American history when the American Dream was feeling out of reach.

If you work hard, your children will do better than you. And their children will do better than them. That idea was faltering.

The way Connors put it to me was that it was a good time to ‘get rich quick.’ In 1984, Gallup did a poll about Americans and how they saw their economic opportunity.

And 20 percent of Americans believe that the lottery was their best chance to get ahead.

That is the decade when we see state lottery revenue explode in Massachusetts and elsewhere. In 1984 to 1985, Mass state lottery revenue increased by 100%. It doubled from one year to the next year.

Leung: Esmy, during your reporting and talking to people who play the lottery did you get that sense that this is why they were playing? Because this was their shot at the American Dream, perhaps their only shot?

Jimenez: Absolutely. Lillian, one of the women that I interviewed from Chelsea. She works cleaning at Fenway. But it’s a seasonal job. It’s not full time, it’s not year round. And I was like, ‘What would you do if you won a million dollars?’

She was like, ‘Shoot, I’d buy a house. I’d be able to stay in Chelsea. I’ve moved, I have four kids. The rent is very expensive. I could have a house. That would change everything.’

So it’s not like people are thinking ‘Oh, I’m getting a mega yacht.’ They’re like, ‘I just want a home.’

Leung: Ian, what about you? Who are the types of people you met along the way in your reporting?

Coss: So the lottery store I spent the most time at was this place called Joe’s Market Place in Quincy, which has the distinction of being one of the top lottery retailers in the state.The lottery players I would talk to, the really serious folks who are spending hundreds of dollars a day, they’re not doing it ignorantly. They understand how the game works, they understand what the odds are, they understand that it is probably not a good investment, but still for many of them, they have arrived at this place where it feels like their best chance.

I spoke with a mechanic who worked in an auto body shop nearby who’s 75 years old and he said he’d spent so many years playing the lottery that he never saved for retirement. At this point, he didn’t feel like he could stop working, and he felt like it was too late to start saving for retirement.

So that was just what he had pinned his hopes on. Over the course of his lunch break, 15-20 minutes, I watched him spend $500 on scratch tickets.

Leung: Do he ever win big at all?

Coss: Well, while I was standing there with him, he won a hundred bucks, which for you and me would be very exciting. For him, that’s nothing. He’s chasing a much, much bigger prize.

Leung: Ian, how do you think the lottery will continue? Will it continue to be as big as it has been now that we have casinos and sports betting thriving over the past decade?

Coss: And I would add to that list of competitors, things that you might not obviously think of as gambling, but things like cryptocurrency, video games, meme coins, and meme stocks.

Part of what we’re seeing now is just in terms of the demographics, the day and day out lottery players do tend to be older and younger people are more drawn to sports betting, crypto, or prediction markets.

So it’s an uncertain moment for the lottery, whether it will be able to maintain its market share, I guess to put it in economic terms.

In the 70s, they were locked in competition with the mob for market share. Now the state is locked in competition with Encore and with DraftKings.

The opening up of online lottery sales this year is a part of that effort to stay relevant.

I think it’s a very open question whether the lottery will be able to do it.

Jimenez: I think if they capture the next generation, which is what they’re trying to do right now with the online move, there’s a whole other market and that group of people is going to grow older with it.

Leung: So Esmy, how do you think the gambling culture will change?

Jimenez: Well, I think it going online is certainly going to be a big thing. I also wanted to point out, I can’t remember if it’s UMass Boston or UMass Amherst. There was a whole group of folks studying essentially whether or not having a place like the Casino Encore would take away from the market share of the actual scratch lottery tickets.

They actually do not compete. They’re slightly different pools of people. We’re just spending more.

And that’s good news for the state. They love that, right? That means you have two different markets. They do not compete with each other. You’re in fact making more money. And I think that’s possibly true with sports betting. That group tends to be a lot younger, a lot more male, and a lot more white. You’re looking at anywhere from like 18 to 24-year-olds, I think up to 26-year-olds, who are really the main market for sports betting. So that’s the other interesting thing, that each of these gambling tactics kind of taps into different demographics.

Leung: So Esmy, did the reporting on the lottery change the way you think about whether the state should depend on a form of gambling as a source of public revenue?

Jimenez: Yes and no. I guess for me, I’m strong about being like, “I do not know what I do not know.”

I’m both not a public policy expert and I’m not even a Boston native. I’m interested in hearing from other voices about what needs to be done in this community.

But I do think there’s some glaring issues here that everyone needs to take a hard look at and figure out, ‘Is this the way that we want to continue?’ Because what does this world — and by world, I mean Boston and Massachusetts — look like specifically 10 to 20 years from today, if this is the track that we’re on.

Leung: What about you, Ian?

Coss: I don’t want to go back to a world where all gambling was illegal and you had underground lotteries run by the mob and you have offshore companies running sports betting on the internet. I don’t think that prohibition was ever the answer.

I think that deriving some revenue from these businesses for the government is fine. I do think there’s a weird conflict of interest that happens when the same state government is so invested in growing gambling revenue and also maintaining the welfare of folks who have gambling addiction problems, especially folks who cannot afford to have gambling addictions.

There are some contradictions baked into the idea of a state lottery that are problematic.

Leung: Ian Coss is a podcast host and producer. His latest series is called “Scratch and Win” from GBH. I highly recommend it. And Esmy Jimenez is a reporter on the Money, Power, and Inequality team at the Boston Globe.

You can find more information about Coss’s live event on March 26th about the inner workings of the Mass State Lottery here.

Listen to more “Say More” episodes at globe.com/saymore and wherever you get your podcasts. If you like the show, please follow us and leave us a review. You can email us at saymore@globe.com.

Kara Mihm of the Globe staff contributed to this report.

Shirley Leung is a Business columnist. She can be reached at shirley.leung@globe.com. Esmy Jimenez can be reached at esmy.jimenez@globe.com. Follow her @esmyjimenez.