I like The Tax Foundation. They advocate some really smart tax policy in the US. They also have a good blog that regularly keeps me up on US tax, which isn’t something I ever need to know in my job, but is inter­esting nonetheless. They blogged about one of their Background Papers titled Gambling with Tax Policy: States’ Growing Reliance on Lottery Tax Revenue recently:

Lotteries are a source of implicit tax revenue and exemplify poor tax policy for a number of reasons. They are not econom­i­cally neutral; they are regressive; they lack trans­parency; they unnec­es­sarily complicate the tax system; earmarked funds are often not used as promised; and lotteries are a business for the private market, not a state government.

I don’t think too many people view lotteries as taxes, but they should. Bad taxes. The part above about lacking trans­parency hits close to home, as Ontario has experi­enced scandal lately because a dispro­por­tionate share of winners are store clerks:

Roughly 60,000 lottery ticket sellers in Ontario, retailers won nearly 200 times in the past seven years, with an average prize of $500,000. A statis­tician with the University of Toronto called those numbers a statis­tical anomaly, saying there is a “one in a trillion, trillion, trillion, trillion” chance of that many retailers winning.

And my province isn’t the only one with a problem:

The head of B.C.‘s Lottery Corpo­ration was fired last week, three days after a scathing ombudsman’s report, which found that the Crown-owned corpo­ration was not doing enough to prevent unscrupulous retailers from fleecing the system.

Priva­ti­zation is one option the BC is looking into, and the pressure is growing in Ontario to consider the option as well. What do you think? Should the lottery be a tax tool used by govern­ments or a revenue tool used by private (for-profit or not for-profit) organizations?