ST. LOUIS — States that have higher per capita incomes are more likely to adopt a lottery, while opposition from some religious groups tends to inhibit states from adopting a lottery, based on an analysis from the Federal Reserve Bank of St. Louis.
Those are just two of the conclusions from an article in the May/June issue of the Review, the Federal Reserve Bank of St. Louis' bimonthly publication of economic and business issues. The authors of the analysis are the St. Louis Fed's Cletus C. Coughlin, deputy director of research, research officer Thomas A. Garrett and senior economist Rubén Hernández-Murillo. The publication is also available online at the St. Louis Fed's web site: http://www.stlouisfed.org.
Since New Hampshire introduced the first modern, state-sponsored lottery in 1964, 41 states and the District of Columbia have followed. Lottery ticket sales in the United States in 2004 topped $48 billion, with state governments reaping nearly $14 billion in net lottery revenues. Coughlin, Garrett and Hernández-Murillo reviewed geographical, economic and political factors to analyze whether—and when—a state institutes a lottery.
"The spread of state lotteries," they said, "coincides with changing attitudes toward legalized gambling, growing state and local government expenditures, and growing public opposition to both new taxes and increased rates for existing taxes."
Coughlin, Garrett and Hernández-Murillo identified four main factors to explain states' adoption of a lottery:
With branches in Little Rock, Louisville and Memphis, the Federal Reserve Bank of St. Louis serves the Eighth Federal Reserve District, which includes all of Arkansas, eastern Missouri, southern Indiana, southern Illinois, western Kentucky, western Tennessee and northern Mississippi. The St. Louis Fed is one of 12 regional Reserve banks that, along with the Board of Governors in Washington, D.C., comprise the Federal Reserve System. As the nation's central bank, the Federal Reserve System formulates U.S. monetary policy, regulates state-chartered member banks and bank holding companies, and provides payment services to financial institutions and the U.S. government.
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