The Most Expensive Lottery Tickets in the Country?

Thanks to a Depression-era law, Michigan may have the most expensive state lottery tickets in the country.

Public Act 153 of 1937, dubbed the State Printing and Bidders' Requirement Act, mandates that state printing be done by firms whose workers belong to a printing trade union or pay its workers the "prevailing wage." Since "prevailing wage" means the wage rate paid to unionized workers, the effect of the law is to prevent competition for state printing contracts from any firm that doesn't pay union-scale wages.

Instead of shopping for the lowest price, the law says that the State must go with the bid that includes the highest-priced labor. Printing is relatively labor-intensive, so the extra cost to the State is not insignificant.

Michigan purchases about 275 million lottery tickets each year and pays $21.99 per 1,000 tickets under a contract which complies with the 1937 act. For the same-size ticket in similar quantities, other states which do not restrict bidding to a favored few get a comparative bargain. Indiana pays only $12.95. Kentucky pays $12.62. New York and New Jersey pay $13.88.

In other words, lottery printing costs Michiganians about one-third more than it costs the people of those other states. Figures from the office of the Commissioner of the State Lottery Bureau indicate that our State would save over $2.4 million annually if the Commissioner could shop for the best price in a competitive market.

Aside from the lottery, Michigan spends approximately $7 million in other printing. Assuming that the costs of all that printing is inflated to the same extent as with lottery tickets, the State might save at least another $2 million by simply repealing the State Printing and Bidders' Requirement Act of 1937.

This printing example illuminates a larger point: When state government purchases goods or services, good stewardship of the public treasury requires a process of open and truly competitive (non-rigged) bidding. Any supplier who tries to "strike it rich" in this process with high bids will find himself underbid by more realistic rivals. Taxpayers would not likely support a scheme to directly subsidize selected printers with a check from the government, so why should they be forced to support that very thing under another guise?

In fact, state law does mandate competitive bidding under most circumstances. The Department of Management and Budget is required to "solicit competitive bids from the private sector whenever practicable to efficiently and effectively meet the state's needs." (Michigan Compiled Laws Annotated Sec. 18.1261). The 1937 act referred to above simply creates an exception to the rule at the behest of a special interest group. Another exception is the "Prevailing Wage Act" of 1965, which says that construction projects in Michigan which receive even partial funding from state government must also pay union-scale wages.

Among those who wish to sell their wares to the State, there is a powerful temptation to claim, "Competition is great for everyone else but I'm special and shouldn't have to compete." The members of a special interest who secure the votes in the legislature to secure for themselves an artificial, legislated advantage pocket abnormally high profits or wages at the expense of the far more numerous taxpayers, each of whom is thereby made a little bit poorer.

Some people might suggest that anyone who questions these laws is simply anti-worker and in favor of lower wages. That ignores some very real but not always obvious costs. Because the State must spend more than necessary on what these laws require, more urgent needs go unmet and taxpayers have less of their own earnings to stimulate other activities and businesses of their choosing.

If someone came along and told you that in the future you would be forced to patronize the most expensive restaurant in town, or forced to fill your gas tank at the highest-price filling station, you would be justifiably upset. The people of Michigan should be just as upset that the State allows itself to be forced to spend their money at the most expensive printers in town.

This is an issue of basic decency and fairness that should transcend partisan politics.