J. Pepper Bryars: Time to stop daydreaming about a lottery
Lottery supporters were left saying “so close …” last week after the latest attempt to establish the game in Alabama collapsed under the weight of competing interests and power plays. It was reminiscent of the failed lotto player, successfully matching his numbers one-by-one until his hopes are dashed when that final digit proves ever elusive. But that’s what happens when you play a losing game. We’ve already heard the arguments against a lottery, from the financial risk of budgeting on a game of chance to the moral risk of a government enticing its citizens to play a game 99.9 percent of them will lose. I’ve written about it before, and the Alabama Policy Institute has a long history of opposing the lottery. But this time, the corrosive nature of gambling conspired to defeat itself.Here’s what happened. Vegas-style Casinos The lottery debate in recent years hasn’t centered on an actual lottery. That is, walking into a gas station and buying a paper ticket with a few numbers.No. There’s a strong pro-gambling lobby in Alabama that seeks to take advantage of any momentum behind a lottery proposal to include measures legalizing what’s known as Class III gaming – card tables, roulette wheels and slot machines. By including some specific language in a lottery bill, they could later artfully argue that expansion of gaming into Class III has already become law, thus giving them a green light to open casinos. And then there are those who have stakes in existing gaming facilities such as dog tracks and electronic bingo halls. They push hard to ensure that no legislation passes that could create competition. Point is, those who profit from the forms of gambling we have now, and who could profit from expanded forms in the future, see a simple lottery as a threat. They want to protect what they have, and then expand their offerings to keep existing customers and lure even more. Horse Trading Several lawmakers who favored a lottery in the past found themselves holding out for assurances that Alabama would adopt a key provision of Obamacare by expanding Medicaid, the insurance program for the poor and disabled. The issue here is that while the federal government pays for the first few years of the expansion, Alabama would eventually cough-up an increasingly higher percentage of an ever-growing expense. As the bill moved through the Legislature, it was reported that lawmakers were considering paying that additional cost with lottery revenue in a bid to collect more votes. Here’s the problem: the Legislative Service Agency estimated that the lottery would generate about $167 million a year in revenue after expenses and prizes were handed out, but estimates on the state’s share of expanding Medicaid range from $168 million to $250 million annually. So, we’d end up passing a lottery whose revenues could be swallowed up by Obamacare. How many politicians in Alabama want that etched into their electoral tombstone? Money Money Money Then there’s the question of how we’d spend whatever little is left. Some lawmakers wanted to send it all to the general fund. Others wanted some, if not most, to go toward education. And the teacher’s union, which remains a powerful force in Montgomery, wouldn’t budge. In the end, those who wanted more gambling, those who sought Medicaid expansion, and those aligned with the teacher’s union felt the status quo was preferable. Add them to traditional opponents of the lottery, and the bill died by a handful of votes. Let’s hope it stays that way. Alabama needs its leaders to focus their time on attainable solutions for problems that aren’t going away, and on opportunities that might if we refuse to focus. It’s about time they quit daydreaming about hitting the lottery. J. Pepper Bryars is a senior fellow at the Alabama Policy Institute and host of the 1819 podcast. Follow him on Twitter at @jpepperbryars.
Money talks: Campaigns draw millions in ‘outsider’ cash
It’s been eight years since the U.S. Supreme Court declared that political spending is free speech. The decision eased the way for corporations, unions or nonprofits to spend massive amounts to support, or more often, denounce candidates in tight races. Citizens United, as the ruling is commonly known, has transformed American political campaigns, most notably over the airways. But the flood of cash also pays for an army of field offices, canvassers, data miners and even good-old-fashioned opposition researchers, in a system designed to influence voters around the country. WHAT’S HAPPENING Today, a considerable portion of campaign activity voters see is paid for by donors who live elsewhere and, in many cases, contribute to some kind of political committee. Some of those committees must disclose where their money comes from; but others, the so-called dark money groups, don’t have to identify their sources of income. Certainly candidates are raising plenty of money, but they are subject to comparatively low donor limits. A single donor can give a single federal candidate no more than $2,700 in each round of an election cycle (the primary, any primary runoff and the general election). Party committees have much higher limits. Democrats’ enthusiasm this cycle has used that system to propel more than 100 House candidates to fundraising advantages over their rival GOP incumbents. But Republicans are more than making up for any gap through super PACs. The Congressional Leadership Fund, or CLF, for example, has raised more than $126 million, including huge checks from GOP megadonors like casino magnate Sheldon Adelson and his wife, Miriam. They each gave the fund $12.5 million this spring. To be clear, there are liberal megadonors, as well. Billionaire environmentalist Tom Steyer is spending tens of millions of dollars through one PAC that’s pushing for Trump’s impeachment and another that’s trying to drive up millennial turnout. The result of this financial flood is a cacophony of messaging on the airwaves and in digital advertising that voters must navigate in the closing weeks of the campaign. ___ EDITOR’S NOTE: Associated Press reporters are on the ground around the country, covering political issues, people and races from places they live. The Ground Game series highlights that reporting, looking at politics from the ground up. Each week, in stories and a new podcast , AP reporters examine the political trends that will drive the national conversation tomorrow. ___ WHY IT MATTERS Everyone complains about big-money campaigns — particularly outside money — and the negative advertising that follows as a result. But campaigns and outside groups keep using them for one reason: They work. And as digital advertising and data analyses of voter tendencies gets more and more sophisticated, political organizations are dedicating more and more money to those efforts. Quite often, that process starts before candidates’ own fundraising gets off the ground. For example, independent groups like Republicans’ Congressional Leadership Fund and Steyer’s NextGen America sometimes set up shop in a district or state long before general election campaigns. WHAT TO WATCH A good example comes in Kentucky’s 6th Congressional District, a Republican-leaning district where Democrats are making a strong push. Republican Rep. Andy Barr easily won his third term two years ago, but the district has alternated between the two major political parties five times since 1978, and Democrats have long seen Barr as an inviting target. GOP players in Washington fought to back their candidate, with Barr’s district drawing early investments from CLF, the GOP super PAC working to defend Republicans’ imperiled House majority. CLF has reserved more than $2.6 million in television air time in the district, including at least $940,000 in television advertising spent to criticize his Democratic opponent, former Marine Corps pilot Amy McGrath. Barr also has benefited from National Republican Congressional Committee spending and ad buys from the American Bankers Association and the National Association of Realtors. Democratic PACs have answered, even if in smaller amounts. For her part, McGrath has been a fundraising juggernaut. Her $6 million-plus haul is a staggering sum for a House race. Barr has raised $4 million, but has been far more dependent on PACs (more outside money). To be clear, lots of McGrath’s money has come from individual donors from outside the Kentucky district. But that kind of outside money flows directly to the candidate, who then decides how to spend it, as opposed to the third-party spending that neither candidate controls. Spending on her behalf has meant that McGrath has had no trouble keeping her pledge not to run attack ads. She can leave the attacks on Barr to the independent spenders like the House Majority PAC, which is Democrats’ counter to CLF. DON’T MISS Whatever the results on Nov. 6, there will be plenty of crowing from the outside groups that invested heavily to shape the Congress they want. CLF’s overall spending could top $150 million. The House Majority PAC could reach about $60 million. The various official party committees will add several hundred million more to the House and Senate ledgers. Of course, the losers aren’t likely to take the blame. For them, the voters will have decided. Republished with permission from the Associated Press.
Daniel Sutter: Money and March Madness
March Madness just concluded with Villanova winning the title. Given the ongoing college basketball bribery investigation, the bigger question may be whether the Wildcats will eventually vacate the title. The bribery case first broke last September with ten arrests, including four assistant coaches, based on an FBI investigation dating from 2015. The scandal has already claimed Louisville coach Rick Pitino, fired before this season. The extent of the bribery remains unclear. News reports have implicated twenty top programs as targets, and claimed that the FBI has hours of recorded phone calls. Of course these reports may prove inaccurate. Shoe manufacturer Adidas and sports agents funded the payments leading to September’s arrests. Adidas allegedly paid to lure top recruits to teams using their shoes and uniforms. The sports agents allegedly paid to get stars to commit to use them as agents when entering the NBA. The payments clearly violate NCAA rules, since college players are student-athletes, not professionals. Of course, the NCAA basketball tournament is big business. March Madness earns over $1 billion annually in ticket sales, broadcast rights fees, and sponsorships. Universities and the NCAA market basketball and football like commercial properties. Some sports economists claim that the NCAA is a cartel. A cartel is a group of independent businesses which coordinate to act like a monopolist, restricting production to increase profits. OPEC, the Organization of Petroleum Exporting Countries, is probably the world’s best-known cartel. OPEC sells a product to consumers, while the NCAA “employs” players. So the NCAA tries to suppress players’ “salaries.” Successful cartels must resist competitive pressures. Sellers of oil want to cut their price a little to sell more oil, while college teams want to pay top recruits to win more games and championships. Economic theory highlights why cartels form and collapse. Being the only cheater on a cartel agreement is the best of all possible worlds for an oil exporter or basketball program. Consequently a cartel tries to detect and punish cheating, but doesn’t always succeed. The fear of cartels, or trusts, led to the passage of our anti-trust laws outlawing anti-competitive collusion. Research shows, however, that cartels are not terribly successful, except under certain circumstances. The diamond cartel, sustained by a small number of mines, is probably the most effective. Cartels also succeed by “capturing” government agencies tasked with regulating businesses. Railroads, trucking, and airlines in the U.S. used regulation to maintain cartels until deregulation in the late 1970s. The NCAA has successfully argued that sports are an element of education. Indeed, sports certainly help student-athletes learn valuable life lessons. And athletes receive scholarships, room and board, tutoring help, and now cost of attendance as compensation. Players clearly do not get paid a competitive share of the revenue they generate. Economics identifies the effects of not fairly compensating players. One is increased spending on other elements of sports programs, like coaches’ salaries and facilities. Another is the use of athletics revenue to pay for other university programs, like non-revenue sports and music (through marching bands). Perhaps the most unfair element of college sports is preventing a talented three point shooter or defensive lineman from pursuing a sports career if they cannot succeed in unrelated academic tasks like conjugating a verb or calculating the slope of a line. The NFL effectively makes playing college football a requirement by restricting draft eligibility to players three years out of high school. The NBA’s “one and done” draft rule has a similar impact. Still, few Americans get very angry about any injustice done to college athletes. More serious harms connected to college sports, like sexual abuse or assault, represent the greatest cost of not paying players. The culture of secrecy which hides illicit payments to athletes seems to enable predators like Michigan State’s (and USA Gymnastics’) Dr. Larry Nassar and Penn State’s Jerry Sandusky. Athletes get paid to play and benefit, while the victims of sexual predators are scarred for life. The façade of amateurism in college sports would be farce if not for the real harms it shields. ••• Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.
