Robbing Percy to Pay Paul: How Lottery and Education Policy Reproduces Racial Inequality

Malcolm X would often tell his followers, “Racism is like a Cadillac, they bring out a new model every year.” Although newer models look much different than older ones, the fact of the matter is a Cadillac is still a Cadillac. Likewise, racism is still racism, regardless of how it has changed throughout the years. The works of Eduardo Bonilla-Silva and Joe Feagin, among others, have shown that racism is about how racial categories are central organizing principles of social circumstances and opportunities. Racial groups atop the hierarchy are enumerated numerous advantages, both symbolic and material, while other groups are disadvantaged. In the modern era, the racial rule persists in ways that are institutional, covert, and seemingly nonracial, but no less effective. I argue that the utilization of lotteries to finance public services, like education, exemplifies a new model of this racism.

In a neo-liberal age characterized by disinvestment of the welfare state, lotteries have become a viable alternative for governments to generate hundreds of millions, if not billions of dollars. Politicians are generally receptive to them, particularly when confronted with budgetary shortfalls, because they raise huge tax revenues for social services like education with little resistance from the public. Lotteries rely upon voluntary participation, but as Charles Clotfelter and Phillip Cook argue, they are nonetheless forms of taxation because these revenues carry the same value regardless of how the state collects and spends them. Often times, however, lottery revenues are not generated equally across social groups. Some groups contribute more to social services than do others though the lottery tax. When these revenues are redistributed in a way that transfers money from one community to another, one community’s fiscal gain comes at another’s expense. So the question stands: Who plays and who pays?
Recently, I completed a study that takes up this very question. Using Chicago as a case study, I simultaneously compared the generation and allocation of lottery revenues. My findings show that this money-exchange process is organized along lines of race (and class). The lottery is a racially regressive source of revenue (it collects much more money from blacks than whites), but the state spends these revenues on education without considering from whom they originated. When this occurs, resources are transferred from communities of color and spread across all communities.

After auditing financial records from the Illinois Department of Revenue, I found that lottery sales vary considerably by a community’s racial and class background. (See Figure 1 for an overview of bivariate statistics showing this pattern.) Consider, for example, one illustrative comparison of a few communities of relatively equal population size. During the early 2000s, communities of color and working class communities such as Avalon Park, Calumet Heights, Roseland, and South Shore generated well over $20 million of lottery sales annually, whereas white communities and middle- to upper-class communities like North Center and Lakeview generated only $4 to $5 million. Such trends remained consistent after performing regression analysis, in which I was able to test for independent and simultaneous effects of race and class while controlling other influential variables.

Once lottery sales are generated, nearly a third of every dollar is earmarked for public education in Illinois (see Figure 2). During the 2000s, the lottery’s contribution to state education amounted to nearly $600 million or more per year or roughly 10 percent of the state’s annual education budget (see Figure 3). It is placed in a general fund along with other sources of revenue and allotted to school districts based on three criteria: property tax levels, average daily attendance, and poverty levels within a district (see Figure 4). Illinois lawmakers intentionally designed the formula this way to ensure poorer districts receive more assistance than wealthier counterparts. Progressive intentions do not translate into progressive outcomes though, especially when lottery revenues are redistributed without considering from whom they originated.

In Chicago, money exchange between the lottery and education represents public policy that circulates money from those who need it most and spreads it around to everyone. This is especially true when lottery tax contributions outweigh other sources of money for education (e.g., property taxes). Under the worst circumstances communities of color are burdened with subsidizing public education, a service everyone is entitled. Public policy that circulates money in this way captures one mechanism for reproducing racially inequitable distributions of capital. Therefore, let us call this new Cadillac for what it is: Racism.

~ Kasey Henricks is a Ph.D. Student of Sociology at Loyola University Chicago and current Student Representative of the American Sociological Association’s Section on Racial and Ethnic Minorities. Contact can be directed to him at