Lottery Property Tax Credits Decline in 2015

MADISON—The Wisconsin Lottery generated $155.6 million in 2015 to help reduce property taxes on residential properties. That amount was less than the $171.4 million and $166.5 million generated in 2013 and 2014, respectively, according to a new report, “Has Legal Gambling Plateaued in Wisconsin? Evidence From the State Lottery and Tribal Gaming,” from the Wisconsin Taxpayers Alliance (WISTAX). Now celebrating its 85th year, WISTAX is a nonpartisan research organization dedicated to citizen education.

Lottery credits relieved 2.1% of residential levies in 2015-16 (2016). That percentage was up slightly from an average of 2.0% during 2001-16. Credits were 2.3% of levies in the prior two years, but were less than 2.0% in each year during 2008-13, WISTAX said. During the 1990s, lottery relief was generally above 3.5%.

Wisconsin is one of 41 states with a lottery and ranked 32nd in per capita sales ($99) in 2013. Among neighboring states, per capita sales in Michigan ($229), Illinois ($220), and Iowa ($110) were greater, while those in Minnesota ($98) were slightly less.

Not only are Wisconsin lottery sales below average, they are growing slightly less than elsewhere. During 2001-13, per capita lottery sales nationally rose an average of 3.0% per year, from $151 to $215. Wisconsin sales increased an average of 2.9% per year, from $70 to $99 per resident. Wisconsin’s growth rate ranked 20th of the 37 states with a lottery during each of those years.

WISTAX researchers also examined the efficiency of the lottery as a way of producing government revenue. In 2014, the lottery generated $241 million to pay for property tax relief ($171) and administrative costs ($73 million); the remainder was paid to winners. Thus, administrative costs were 30% of the revenues kept by the government. By comparison, to collect $12.7 billion in state sales and income taxes, the state Department of Revenue spent just under $50 million, or 0.4% of the total.

Two decisions in 1987 forever linked the Wisconsin Lottery with tribal gaming in the state. That was the year voters approved a constitutional amendment allowing the lottery. Also that year, the U.S. Supreme Court ruled that states regulating certain forms of gambling could not prevent tribes from also offering them. Instead, governments would have to negotiate compacts with the tribes, detailing how gaming would function in a state.

Following approval of the first compacts in 1991 and 1992, tribal gaming revenues grew rapidly. During 1994-2007, they rose 145.4%, or an average of 7.2% per year, from less than $500 million to $1.22 billion. However, unlike lottery sales which continue to grow modestly, tribal gaming revenues have since declined to $1.15 billion in 2013.

Under recent amendments to compacts, tribes pay the state a percentage of revenues, which have averaged about $52 million per year since 2010. Wisconsin tribes operate 25 gaming establishments, of which 17 are full casinos and eight offer only electronic games.

For more information, a free copy of The Wisconsin Taxpayer report, “Has Legal Gambling Plateaued in Wisconsin? Evidence From the State Lottery and Tribal Gaming” is available by calling 608.241.9789; emailing wistax@wistax.org; visiting www.wistax.org; or writing WISTAX at 401 North Lawn Ave., Madison, WI 53704-5033.

NOTE: This press release was submitted to Urban Milwaukee and was not written by an Urban Milwaukee writer. It has not been verified for its accuracy or completeness.