The Redistributive Effects of Lotteries: Evidence from Canada

Abstract

The purpose of this article is to determine the income-redistributive effect of lottery programs in western Canada. This requires estimation of both the tax and the expenditure incidence of lottery profits. Previous research has been limited to measuring the tax incidence. The lotteries examined are found to be regressive in collecting public revenue, but considerably less regressive than the U.S. lotteries examined in the literature. In addition, the distribution of benefits resulting from the expenditure of lottery profits mildly favors upper-income groups. Thus lottery programs in western Canada are a regressive form of income redistribution.