Public Policy and the Lottery

A lottery is a game in which people pay a small sum to have a chance of winning a large jackpot. The winners are selected by a random drawing. Some governments outlaw lotteries, while others endorse them and organize state or national lotteries. Often the prizes are cash or goods. In the case of some states, the prize money is earmarked to fund specific public services such as education, or to alleviate fiscal distress. A lottery is a low-odds form of gambling, and is sometimes used in decision-making situations such as sports team drafts and the allocation of scarce medical treatment.

Lottery is a popular and profitable way for states to raise funds, but it also has serious social and economic consequences. Its supporters argue that it is a low-odds revenue-raiser that circumvents taxes without raising overall state costs; its opponents call it dishonest, unseemly, and unfair, and criticize it as a regressive tax on the poor.

The popularity of lotteries is often based on the perception that proceeds go to a particular public good, such as education. This argument has proven effective in gaining and maintaining support for lotteries, even in the face of state financial crisis, when it is difficult to justify increases in taxes or cuts in public programs. Moreover, studies have shown that the relative size of a state’s lotteries has little relationship to its objective fiscal condition.

Many of the problems associated with lotteries stem from the fact that they are run like businesses, with a strong emphasis on marketing and advertising to maximize revenues. This approach runs at cross-purposes with the social mission of government. While maximizing revenues is an important goal, the public interest should be balanced against the negative impact that lotteries have on poor people and problem gamblers.

The earliest records of lotteries date back to the Han dynasty, with one Chinese text describing how “the winners were determined by lots.” Lottery has been used in a variety of contexts throughout history, including determining property distribution in biblical times (Moses was instructed to take a census of Israel and divide the land by lot); giving away slaves in ancient Rome; and entertaining guests at dinner parties with games such as the apophoreta, in which pieces of wood bearing symbols were distributed to partygoers and the winner took home a prize. Modern-day lotteries have become a ubiquitous part of American life, and almost half of all Americans play them. The player base is disproportionately lower-income, less educated, and nonwhite. It is estimated that around half of all lottery players are addicted to gambling, and the number of addicts is growing rapidly. The average addict spends $2,445 per year.