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Children should be educated and instructed in the principles of freedom.

  • John Adams

He that would make his own liberty secure, must guard even his enemy from oppression; for if he violates this duty, he establishes a precedent that will reach to himself.

  • Thomas Paine

I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.

  • Milton Friedman


Volume 11, Number 2 May 2005


On Public Interest Issues

The Iowa Lottery: Gamble for the State or Not At All

Alicia Hansen

T h e I o w a L e g i s l a t u r e w a n t s t o c r a c k d o w n o n v i d e o g a m e s . W h y ? C o u l d i t b e because of pressure from worried parents? No. Concerns about public health and gambling addiction? No. The reason is simple: The state wants to be the sole provider of video games. They’re talking about electronic games of chance offered in taverns and convenience stores, not games played on home computers. The Iowa Lottery recently added video pull-tab machines to its wide array of lotto, numbers, and instant games. The machines have not generated as much revenue as expected, and one disappointed State Senator is proposing the solution that any rational business executive would consider: shut down the competition. There’s just one problem with this approach: The lottery is not a private business and should not operate as such.

The lottery’s competition comes from both legal and illegal

video games. The Legislature is considering a bill that would make it easier for the state to crack down on illegal game operators. But State Senator Matt McCoy (D) wants to go even further. He wants to ban non-lottery video games altogether to eliminate competition with the Iowa Lottery.1

McCoy’s suggestion underscores the monopolistic

aspect of state lotteries. Lotteries were illegal for the better part of

the last century, with prohibitions written into many state constitutions. In 1964 New Hampshire started the first state- run lottery of the 20th century, and other states soon followed suit, including Iowa in 1985. Many states held public referenda to remove the constitutional bans. Others, like Iowa, enacted lotteries through legislation alone. But when state governments removed lottery prohibitions, they did so only for themselves. Seeing lotteries as a potential goldmine for state

continued on page 4


Public Interest Institute, May 2005

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