- Days left

Tennessee looks to cap lottery winnings at $600 for poor

The Tennessee Legislature is looking to make life a little more difficult for the poor.

A bill is scheduled to be discussed at a committee hearing Wednesday, April 8, that would prohibit anyone receiving state or federal assistance, sometimes called welfare, from winning $600 or more in the state lottery.

However, the author of the bill, Rep. Stacey Campfield, told me in a telephone interview on Wednesday morning that a subcommittee didn't have time to get to it, so the meeting on it has been delayed about two weeks. I'll check back with Campfield then for another update.
The thinking behind the bill is that if someone can't afford the basic necessities and is getting food stamps, for example, from the government, then they shouldn't spend money on something like the lottery. On the other side of the issue, people are saying that the government shouldn't tell them how to spend their money. Here's a video from wate.com, a TV news channel in Tennessee:

The bill doesn't say anything about preventing the unemployed from winning big in the lottery. It just prevents people getting public assistance from winning big -- even if they have jobs.

Studies have shown that poor people spend a larger percentage of their incomes on lottery tickets than wealthier people. Part of the draw is a last-ditch effort to get out of poverty, even though the odds of winning are very slim.

Prohibiting the indigent from winning more than $600 would lead to those people not playing the lottery, which would lead to less money for the state, since the state keeps much of the money spent on the lottery.

A state fiscal review of the Tennessee bill found that lottery sales would drop by approximately 2.37%, or 147,403 fewer players, if the law is passed. Net lottery ticket sales are projected to drop by $23,972,100 in fiscal year 2009-10.

And here's a figure that amazed me: The state's review found that half, or 294,805 individuals, of the people who receive food stamps from the state buy lottery tickets. Half of those people are projected to stop playing the lottery if the bill passes.

If those people stop playing Tennessee will lose $6.4 million in scholarships and grants that it provides each year from its proceeds.

But for the remaining half of food stamp recipients, or 147,403 people, who would continue to play the lottery despite being prevented from keeping their winnings over $600, the money would go to the state. They'd be playing for the state.

The Tennessee Education Lottery Corp. reported to the state that approximately 11% of the awarded prizes are for $600 or more. So if half of the food stamp recipients continue playing, and thus continue donating their winnings to the state, the after-school programs would gain more than $1.3 million a year.

As of February, Tennessee has a 9.1% unemployment rate, leaving 276,312 state residents out of work. It's a population almost equal to the number of people in Tennessee who receive food stamps.

Hopefully a legislator won't try to expand the bill prohibiting large lottery winners to people who receive state unemployment checks. Being unemployed is already difficult enough, but being unemployed and poor would be a lot worse.

Aaron Crowe is an unemployed journalist in the San Francisco Bay Area. Read about his job search at www.AaronCrowe.net

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

TurboTax Articles

5 Hidden Ways to Boost Your Tax Refund

Most of us are looking for ways to pay no more than we owe in taxes, or even boost our tax refunds. Here are five strategies that go beyond the obvious with tried-and-true ways to reduce your tax liability.

What, Me Worry? Last Minute Taxes

According to the Internal Revenue Service, 20-25% of all Americans wait until the last two weeks before the deadline to prepare their tax returns. At that late date, there are only two things you can do: File your taxes pronto, or request a tax extension.

Can't File by the Deadline? Top 3 Reasons to File a Tax Extension

The Internal Revenue Service allows taxpayers to file for a 6-month extension if they need more time to prepare their tax return. You can obtain a tax extension for any reason; the IRS grants them automatically as long as you complete the proper form on time. Check your state tax laws; some states accept IRS extensions while others require you to file a separate state extension form.

Add a Comment

*0 / 3000 Character Maximum