Lottery – Is it Right For Government?

Lottery is a form of gambling in which money or goods are awarded by a random procedure. While lottery games have a long history in human society, a modern state-run lottery is a relatively new development. Yet the debate over whether such a scheme is desirable has not been resolved, and many of the arguments for and against it are strikingly similar. Indeed, the arguments for a lottery appear to be driven by political considerations more than by economic ones. This is evident in the structure of the resulting state lotteries, their evolution over time, and the way in which they are promoted.

Those advocating the adoption of lotteries have been quick to emphasize the non-gambling aspects of the activity. These include the fact that a ticket costs nothing and that participants are not forced to purchase it. They also point out that players can easily avoid committing illegal or immoral acts by choosing to purchase only legitimate tickets. In contrast, critics have focused on the alleged regressive impact of lottery revenue on lower-income groups and the problem of compulsive gamblers.

These criticisms are not inherently valid, but they do reflect a fundamental change in the rationality of people’s behavior with respect to gambling. In the past, the advocates of a lottery would have argued that since people were going to gamble anyway, they should be allowed to do so at government expense. This argument was particularly effective in times of fiscal stress, when the threat of tax increases or cuts in public services could be used to justify a lottery.

In the latter half of the twentieth century, state governments became increasingly concerned about budget deficits, and a lottery appeared to be the ideal solution. Lottery profits were projected to be sufficient to pay for a range of essential services, including education and public safety, without the need to raise taxes or cut popular programs. Lottery promoters emphasized this message to sway voters who were traditionally opposed to raising sales or income taxes.

While the casting of lots has a long and noble record in human history (with several examples in the Bible), the use of lotteries for material gain is considerably more recent, with the first public lottery for prize money being held in the fourteen-hundreds in Bruges, Belgium. It raised funds for municipal repairs, and was soon adopted in England, where Queen Elizabeth I chartered the first national lottery in 1667.

The lottery’s popularity in the US surged after 1964 when New Hampshire established a state game. The success of the New Hampshire model inspired 13 other states to follow suit within a few years, and today there are 37 state-run lotteries.

Despite the fact that people are more aware of how unlikely it is to win, the enthusiasm for the games remains strong. This is in part due to the regressivity of the revenue generated by the lotteries, as well as to the appeal of the slogan that playing the lottery is “just a game.” Moreover, lottery play is correlated with socio-economic status: whites play more than blacks and Hispanics; women and young people play less than middle-aged people; and educational levels decline as lottery play does.