on state lotteries supports this hypothesis. It also suggests that government gambling policy is perverse.
People are gambling less, not more, in this downturn. That's good. As Samuel Johnson famously said, "Gambling is a tax on stupidity." In the old days, states criminalized gambling--probably a bad idea. (By the way, one of the first federal invasions on the reserved powers of the states was to make it a federal crime to transport lottery tickets across state lines--even if the state into which the tickets were brought allowed lotteries.) It might be best to leave people to learn Johnson's maxim for themselves, or perhaps to make gambling contracts unenforceable. But in the post-1960s, states went overboard in the other direction, and tried to collect the tax on stupidity themselves. (Of course, never to the point that they could eradicate private-sector gambling, because the private sector does it more efficiently--you can get better odds from your bookie than from the state. For an excellent analysis, see the relevant chapter in Hadley Arkes, First Things). Now, states have become gambling addicts themselves, and the gambling slump threatens state budgets. This may also be a good thing: Here's a straight line--a tax on stupidity is used to subsidize... public education.