How the Lottery Works
Lottery is a form of gambling in which the participants purchase tickets for a chance to win a prize. Prizes are typically cash or merchandise. Most states regulate the lottery, although it is illegal in some places. There are a variety of different types of lottery games, with some requiring a player to select specific numbers or symbols. Others require the player to choose a combination of letters or words. The earliest known lotteries were probably held in the 15th century in the Low Countries for town fortifications, help for the poor, and other purposes.
Government lotteries are a common source of revenue for state governments. In 2002, for example, the 34 states that had lotteries collected nearly $42 billion in revenues—more than double what they reported seven years earlier. Supporters tout the game as a simple and easy way to raise money without raising taxes. Opponents call it dishonest, unseemly, and irresponsible.
Many people have an inextricable urge to gamble, so it’s no surprise that state lotteries are popular. Billboards proclaiming huge jackpots of millions or even billions dangle the promise of instant riches to all those who pass by. But there’s more to lottery marketing than just appealing to an inborn human instinct to try our luck. It’s also about selling an image of the state as a place where you can make it big, where you can buy everything you want.
When state lotteries were first introduced, they were marketed as a quick and easy way for states to expand their array of services without the burden of raising taxes on the middle class and working class. It was a time of high inflation and soaring military expenditures, and states needed extra income to finance their growing programs.
Since New Hampshire initiated the modern era of state lotteries in 1964, virtually every state has adopted one. And the arguments for and against lottery adoption, and the structure of the resulting lottery, follow strikingly similar patterns.
The state legislature legislates a monopoly for itself; establishes a state agency or public corporation to run the lottery (as opposed to licensing a private firm in exchange for a share of the profits); begins with a small number of relatively simple games; and, under the constant pressure for additional revenues, progressively expands its operation by adding new games. Revenues usually skyrocket initially, then level off and even decline. But that’s not enough to deter legislators and the public from continuing to adopt new games, as they have done for decades.
Lottery advocates often argue that the proceeds of a lottery are “for the public good.” Studies, however, show that the popularity of a lottery has little to do with a state’s actual fiscal condition, as the games have frequently won broad approval in times of economic stress. But they have also won broad approval when the state is in good financial health, indicating that they are not simply an effective substitute for raising taxes.