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Stop Tinkering With "Good Causes" And Just Have An Auction To Decide Lottery Ownership

Originally published 21 November 2000

University of Warwick Economist Professor Ian Walker has called on Lottery Commissioners to stop worrying about how the two bidders will fund good causes and simply hold an auction to decide ownership of the Lottery. He says

"The Lottery Commissioners' choice is made by a "beauty contest". The trouble with beauty is that it is in the eye of the beholder and frequently skin deep. Here the beholders are intelligent, hard working, successful individuals who offer some of their valuable time, for token payments, as an act of public service. They have little industry expertise and their ability to discern the bone structure behind the gloss is limited. The bids do not bind the operator to actually deliver what they forecast. Thus there is little to stop bidders from widely exaggerating the likely revenues and no way for the Commissioners to make quantitative evaluations of what is being proposed."

He continues

"The decision required from the Commissioners is a risky one and one they are not well equipped to make. It does not have to be like this, a straightforward solution is available - an auction. This makes the "good causes" revenue essentially risk-free for the Commissioners. The downside of such an arrangement is that it transfers the risk to the operator."

Professor Walker will present his research at a University of Warwick Policy Briefing at the University's London Office in 11 Tufton St Westminster on Tuesday 21st November. His lottery research will also reveal that, while the public has strong views on how the money for good causes raised by the National Lottery is spent, those feelings do not affect the rate at which they buy tickets. He will note that over two thirds of those sampled by the Consumers Association disagreed or strongly disagreed with how the money is allocated while British Social Attitudes Survey data showed that support for medical research, children, the disabled, the homeless, the environment and anti-animal cruelty initiatives had much more support from the public sampled as candidates for lottery funding than the arts or sports funding. Indeed arts funding received less support than those who advocated the money be spent on ex-prisoner rehabilitation. Despite these strong opinions Professor Walker finds little evidence that these concerns about how Lottery Money was divided among good causes, or indeed how much money was raised for good causes, made any difference to the amount of lottery tickets purchased by the public. He will also point to a survey, conducted by the Consumers Association in 1996, which showed that the numbers of those who agreed with the view that they would buy more tickets if the proportion raised for good causes was increased almost exactly matched the number who disagreed with that assertion.

Professor Walker also expresses some concern as to how globally there is evidence of a tendency for "good causes" money raised by lotteries to simply displace pre-existing government funding for that activity. He points to the State of Florida lottery where all the surplus revenue from the state lottery games is used for educational funding yet overall education funding in the state has grown no faster in Florida than it has in States which do not allocate all their lottery revenue to education.

For further information contact:
Professor Ian Walker
Tel: 024 76 523054
Home: 0121 244 9594
Mobile: 07785 538218


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