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The evidence in the scholarly literature regarding lottery incidence has universally supported the notion that the tax inherent in the lottery is regressive. Our results confirm this conclusion, but go a number of steps further. Results of a study of 518 Illinois state lottery winners indicate that the regressivity of the lottery tax remains when one investigates the lottery's budgetary incidence. Specifically, deducting the benefits of education (the budget recipient of lottery revenues) received by the average lottery playing household in Illinois from their lottery ticket expenditures reduces the regressivity but falls far short of eliminating it. In addition, the results imply that age, race, and place of residence affect the propensity to play the lottery, and that it is likely that the statutory recipient of the lottery revenues is unlikely to be the actual beneficiary.
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