The lottery is the most popular form of gambling in America, and state governments promote it as a way to raise tax revenues. But just how much the public really benefits from those revenue streams is up for debate. And there is a broader issue at play here: the ability of states to manage a business that profits from promoting compulsive gambling and other forms of problem behavior.
The introduction of the lottery in virtually every state has followed remarkably similar patterns: a state establishes a monopoly for itself; creates a state agency or public corporation to run the lot (as opposed to licensing a private firm for a percentage of sales); begins operations with a small number of relatively simple games; and then, because of constant pressure to increase revenues, progressively expands the lottery in size and complexity. These expansions have taken many forms, but one common feature is that they typically begin with dramatic expansions in ticket sales and then level off or even decline over time. This is due to a basic law of gambling: once people get bored with a game, they stop buying tickets.
Lottery games have a long history in the United States, beginning with colonial-era lotteries, which raised money for various public and private ventures, including paving streets, building wharves, and funding churches and colleges. George Washington sponsored a lottery in 1768 to finance a road across the Blue Ridge Mountains. During the American Revolution, the Continental Congress voted to hold a lottery to fund the revolution’s army.
In modern times, state lotteries owe their origin to the rise of anti-tax movements that prompted lawmakers to seek out alternatives to raising taxes. Lotteries were seen as a painless form of revenue because players voluntarily spend their money on the hope of winning a prize. State officials argued that lottery revenue could be used for a wide range of public and social needs, from paying down debt to addressing budget deficits.
But the popularity of lotteries has also been fueled by widening economic inequality, a sense of newfound materialism that asserts anyone can become rich if they work hard enough or have the right luck, and by the fact that it feels like a meritocratic pursuit in which everyone’s odds are as good as everybody else’s. These factors help explain why lottery sales tend to be more heavily concentrated among lower-income people than among those with greater incomes.
The federal government regulates the conduct of state lotteries. In addition to prohibiting the mailing of promotional materials and the transport of lottery tickets in interstate commerce, federal law outlines several other rules governing state lotteries. Lottery tickets must contain three elements: a prize, consideration, and chance. Prizes can vary, but must be a value that is at least equal to the amount paid for the ticket. Consideration must be a form of payment, such as cash or merchandise. And chances must be a random process, such as a drawing or matching lucky numbers.
