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Does Lottery Advertising Exploit Disadvantaged and Vulnerable Markets?

Abstract: Is it unethical to advertise lotteries? Many citizens think that states should not be actively promoting and encouraging the public to spend hard-earned dollars on a bet that they are virtually guaranteed to lose. Perhaps more importantly, business ethicists are concerned that lottery advertising may be targeting the most vulnerable markets: households with the lowest income and education levels. If this were true, then it would increase the already disproportionately large burden of lottery taxes on the poor. Fortunately, our research finds no evidence to support the contention that advertising is responsible for high rates of lottery participation and expenditures by lower income groups or that low-income groups are more affected by advertising than high-income groups. On the contrary, awareness of lottery advertising seems to be associated with a higher probability to play Lotto only for the middle income group. This means that lottery advertising may actually reduce the regressivity of lottery taxes.