Steven Walters
The State of Politics

What Powerball Losers Pay For

Those losing $2 lottery tickets pay for property tax relief -- and quite a few other things.

By - Jan 18th, 2016 10:36 am
Sign-up for the Urban Milwaukee daily email
Powerball

Powerball

Okay, so those 20 Powerball tickets you bought for $2 each didn’t win the Big One, the huge, billion-dollar jackpot. You’re back to work today, with all those how-I’d-spend-it-fantasies – and tickets – shredded. Sorry.

Maybe this is a small consolation: Of the $40 you blew on Powerball tickets, $12 will help lower December property taxes on owner-occupied Wisconsin homes.

Why $12 and where does the rest of the money go? The recent head-exploding record Powerball jackpots – $1.6 billion for last Wednesday’s drawing, for example – raised such questions for all of us losers.

So where exactly did my $2 go, anyway? Officials of Wisconsin’s Lottery, a division of the State Revenue Department (DOR), answered that question, which (of course) is a bit complicated:

*Because Wisconsin is one of many states participating in the national Powerball game, Wisconsin must contribute 31.29 percent of state Powerball sales to the national jackpot.

That’s big money, because Powerball ticket sales in Wisconsin in one recent jackpot-swelling week were $21.7 million – or about 20 times more than sales in the slowest week.

*Overall, 56.5 percent of all lottery ticket sales – Powerball and all other lottery games – go toward prizes. So about $22 of that $40 in Powerball tickets you bought last week subsidized all the winners.

Wisconsin offers three types of lottery games – on-line lotto, scratch-off tickets and pull tabs. Every year since the lottery started in 1988, more tickets were sold for scratch-off and pull tab games than for on-line games, according to the Legislative Fiscal Bureau.

*Almost 31 percent of all lottery sales go to offset property taxes on owner-occupied homes. Each fall, the state Department of Administration (DOA) certifies what amount of lottery sales will go to lower December property tax bills. Last September, DOA said $161.4 million in lottery profits could be subtracted from owner-occupied home tax bills. That amounted to a tax property credit of about $109 on a median-valued Wisconsin home, according to an October summary from the Fiscal Bureau.

That memo also stated the obvious: “Large jackpots, which occur randomly, can result in significant sales increases. Although difficult to project, jackpot-related fluctuations are factored into the DOR sales projections model.”

Nobody, however, could envision Powerball jackpots of $1.5 billion, and the record lines of chase-your-dreams ticket buyers that would result.

What irony: By buying $40 worth of lottery tickets, you not only lowered – slightly – property taxes on your home. But you also lowered property taxes on the home of that neighbor who has never – never! – bought a lottery ticket.

*6.6 percent of lottery sales go to operate Wisconsin’s lottery. That was $2.64 of the $40 you spent on Powerball tickets.

*6 percent of lottery sales  – or $2.40 of that $40 – went to retailers as incentives to sell lottery tickets. If a retailer sells a $1 million ticket, for example, the retailer gets a tiny  percentage of that – and the right to brag about being a “lucky” spot to buy tickets.

Between the 1988 start of the lottery and mid-2015, total sales were $12.55 billion. Property tax credits totaled $3.7 billion – or 30.8 percent of total sales, DOR officials said.

Lottery proceeds might have been higher, but there are two “thou shall not” limits on Wisconsin’s lottery. They are little known because the restrictions were added more than 25 years ago. First, the 1987 constitutional change that authorized the lottery said cash from ticket sales cannot be spent on “promotional” advertising. Second, advertising on Wisconsin’s lottery can only include information “about the prize structures and chances of winning.”

These restrictions have been controversial in the past. There was once a comical Capitol hearing over whether the legendary “dancing cows” lottery ads were illegal.

Whatever the impact of ads, total Wisconsin lottery sales jumped by 19 percent over the last five years, rising from $480.9 million to a record $574.6 million last year.

Democratic Sen. Fred Risser, of Madison, is the only legislator who fought the lottery in the late-1980s who is still in the Capitol. Risser helped put those spending restrictions in place. A lawmaker since 1957, Risser still hates the lottery and has never bought a ticket.

“When Wisconsin voters approved the lottery, they opened the floodgates to legalized gambling – something I opposed then and still do,” Risser said last week.

Risser, by the way, is the longest-serving state legislator in the nation, so you might say he provides the long view on the lottery. “As far as the billion-dollar Powerball lotteries are concerned,” he declares, “I believe society would be better off if this money were spent otherwise. “

Steven Walters is a senior producer for the nonprofit public affairs channel WisconsinEye. Contact him at stevenscwalters@gmail.com

Leave a Reply

Your email address will not be published. Required fields are marked *