Gambling and Income Inequality in the States

Since the early 1970s, income inequality in the United States has increased dramatically. We examine the impact of gambling on income inequality in the American states from 1976 to 1995. Using state‐level data over time to evaluate the effects of various types of legalized gambling, from slot machine parlors to lotteries, we find clear evidence that lotteries foster inequality but no evidence of a similar effect for other types of gambling. These results suggest that the increasing prevalence of various forms of nonlottery gambling will have little effect on income inequality.