By Stephen J. Leacock Barry University – Dwayne O. Andreas School of Law

University of Miami Inter-American Law Review, Vol. 45, No. 1, 2013

Abstract:

This article explores the remarkable success of lotteries as a voluntary and “painless” tax in the U.S. and the Commonwealth Caribbean. It also discusses the common law principles of public policy applicable to lotteries in the U.S. and the Commonwealth Caribbean, proposing that American public policy approaches will be embraced and emulated by the Commonwealth Caribbean territories. Part I introduces the topic. Part II discusses lotteries as prospective tax vehicles. Part III analyzes how public policy is conceived and enunciated by the U.S. judiciary and how it will be emulated by the Commonwealth Caribbean territories on a case by case basis as the need arises. Part III also analyzes the origins of public policy as it is applied to lotteries in the U.S. and will probably be applied in the Commonwealth Caribbean as well. It explains that the U.S. fracture from Great Britain preceded the Commonwealth Caribbean’s later separation from Great Britain by almost two centuries. This section anticipates the Commonwealth Caribbean’s embrace and emulation of the U.S. experience now that freedom from Great Britain has been attained. Part IV explores the evolution from past to present of legislative statutory enactments applicable to lotteries in U.S. law and refers to the Commonwealth Caribbean’s engrafting of these U.S. solutions onto modern Commonwealth Caribbean legislative measures.

Part V discusses instances where the judiciary may decline to nullify lottery agreements in some factual settings. Part VI chronicles the history and legal significance of lotteries in U.S.and Commonwealth Caribbean law and highlights the tax-substitute dependency on lotteries in the U.S. Part VII focuses on the impact of federal law on lotteries in the U.S., which has no counterpart in the Commonwealth Caribbean. Part VIII discusses the evolution of public policy relating to lotteries in the U.S. and assesses the judiciary’s success both in shaping public policy and applying it to lotteries in the U.S. It also discusses the prospects that the Commonwealth Caribbean will emulate and fully embrace the U.S. judiciary’s approach. Part IX adds aspects of federal law to the lottery law discussion.

Part X examines the legal impact of tax-substitution objectives on legislative policies leading to statutory changes in the law relating to lotteries and assesses the impact that these changes have on public policy as enunciated by the judiciary earlier in the article. Part XI compares and contrasts the approaches of courts that have nullified agreements pertaining to lotteries – on the one hand – and courts that have declined to nullify such agreements in appropriate circumstances on the other. It also assesses future prospects with regard to the judiciary’s application of public policy principles to agreements implicating lotteries. It then discusses the influence of tax factors on public policy and on lottery law in the U.S. and the Commonwealth Caribbean in light of the success of the lottery-proliferation phenomenon as a voluntary and “painless tax.”

JEL Classification: K23, K34, K40

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