Analysis: Texas Lottery Targets Poor Minorities To Increase Sales

An ad by the Texas Lottery urges players to “unleash the power of luck” by buying $20 scratch tickets. Its website is awash with jackpots and  promotions. Data suggest the Texas Lottery specifically targets poor minorities to increase sales.

The Texas Lottery has been the state’s primary gambling option since 1992. Lottery ticket sales have generated billions of dollars over the last three decades, some of it funding education and providing assistance to veterans.

Lotteries exist in all but five US states. They combined for $105 billion in sales in 2021. Much of that comes from scratch tickets. And, studies show, many of those players are Black and Latino.

Who plays the Texas Lottery the most?

While this analysis will focus on lower-income black and Latino players, it should be noted that a University of Houston demographic survey found that white, married, fully-employed homeowners who make more than $100,000 a year and have one or zero children living at home bought the most tickets.

A similar demographic of retirees is right behind them. Together, the two account for more than half of all lotto players in Texas. But those groups don’t play as often as minorities. In fact, when looking at frequency of play and monthly median money spent on lotteries, those demographic groups all but fade away. 

Texans with lowest income spend most on Texas Lottery

In Texas, the lottery players spending most of their monthly income on tickets are people with incomes under the poverty line. 

Lotteries understand and exploit this fact. A study conducted by the University of Maryland’s Howard Center found that “lottery retailers are disproportionately clustered in lower-income communities in nearly every state.” 

The data suggest the heavy reliance on lower-income players. It also shows the impact the lottery has on the unemployed, who regularly outspend people who are either part- or full-time employed.

More African Americans and Latinos play lottery than don’t

UH’s study found that, unlike white, Asian or Native Americans, African American and Latinos would rather play the lottery than hold off. 

Five percent more Black people play than don’t, while 4% more Latinos play compared with those who don’t play. Black and Latino players also play at a disproportionately high rate. The opposite is true of white players.  

In Texas, the state lottery has leveraged the Latino playing population with the introduction of high-value Texas Lotteria scratch tickets. The Howard Center found that the Texas Lottery Commission has spent $3 million on a four-year marketing campaign to sell these high-value tickets ($20 and $50 scratch-offs) to “ethnic markets.” 

The campaign resulted in a record $4.85 billion in scratch-off sales in 2021 for the Texas Lottery. For players, though, the enticement of the high-dollar tickets has left them short on basic necessities “many times.”

The median spending data show the impact of monthly spending on, particularly, the Latino community in Texas.

Highest sales from most disadvantaged

The three districts with the highest monthly amount spent on lottery tickets in 2020 were:

• El Paso
• McAllen
• South Dallas

In looking at the demographic information for these regions, a few trends stand out. 

• They are all predominantly minority communities
• They’re all over the state’s average poverty level (17%)
• They’re all under the state’s annual average income ($59,674)

Comparing them against the three districts with the lowest monthly amount spent on lottery tickets – Austin, Lubbock, and West Houston – these trends are almost uniformly the opposite.

Texas Lottery’s messaging can be confusing

Texas Lottery officials have language in the law requiring that lottery ads not be “of a nature that unduly influences any person to purchase a lottery ticket.” This law was enacted to combat arguments by lottery opponents concerned with problem gambling.

One can hear its effects in the ambiguous Texas Lottery slogan: “Play the games of Texas.”

Conversely, a player is forced to wade through pop-ups and flashy type on the Texas Lottery’s homepage to find any information on responsible gaming.

Furthermore, the flamboyant lottery homepage promising “guaranteed prizes” and “better odds” generates cognitive dissonance with the Texas Lottery’s responsible gaming guidance about not “becoming overly preoccupied with gambling.”

Every month, the Texas Lottery also sends retailers a “Retailer Round Up,” with updates on games and reminders for how point-of-sale displays should look. The reminders regularly reference where to place key marketing promotions to sell their highest earning products. One example:

“Place TRY ME stickers at the top of $1 million jackpot and $750 million winner’s circle bins.”

Nowhere on the display would a player find references to meaningful, responsible gaming information. 

That reality is in keeping with studies that show lottery players have trouble finding concrete guidance on what responsible gaming even looks like. The same players also hardly review the odds of winning written on the back of lottery scratchers. Only 20% of players in a University of Memphis study interpreted the odds correctly.

Lotteries relatively free from ad regulations

As a state agency that doesn’t practice interstate commerce, lotteries are exempt from Federal Trade Commission regulations about misleading and deceptive advertising. As such, they’re left with the relative freedom to over-stimulate and under-educate lottery players.

And the players who most regularly buy into the dream are those with the lowest education levels.

Looking at the data, people with the lowest levels of education (less than a high school diploma) are spending in some cases more than double what educated players are spending.