NumBytes 38: Lottery vs. Corporation

Nine states -- Delaware, West Virginia, Rhode Island, Oregon, South Dakota, Georgia, Michigan, Ohio, and South Carolina -- raise more per capita state revenue with lotteries than corporate income taxes, according to the Tax Foundation, as reported by Reuters. Two more states -- Texas and Washington -- also pull in more lottery bucks than corporate tax because these states do not have corporate income taxes.

According to the North American Association of State and Provincial Lotteries, Americans spent $50.4 billion on lottery tickets, video lottery terminals, and the like in 2009. The 44 US states with lotteries, plus the District of Columbia and Puerto Rico, pocketed $17.6 billion of lottery profits. In fiscal 2010, profits rose slightly to $17.9 billion.

It is likely that lotteries will expand, not contract, ensuring a steady revenue stream for the convenience stores that sell most tickets. The big threat to that would come from online sales, which are, so far, illegal, although a handful of states let people go online to buy long-term subscriptions, where customers sign up in advance to play the same numbers week after week. However, even that has been complicated by credit card companies classifying the subscriptions as a gambling purchase instead of a government service, triggering additional fees and red tape for customers.