If you have ever listened to people talk about their lottery playing habits, you’ve likely heard them describe how they play a certain number every week or so, usually with a few extra tickets to increase their chances of winning. These aren’t the typical people you hear on TV complaining about how they’re irrational or stupid for spending $50 or $100 a week to buy a ticket and hope to win a few thousand dollars. Rather, they’re usually people who have been doing this for years and are quite accustomed to the way things go.
Lotteries, in their various forms, are a major source of public revenues. State governments have a long record of using them to raise money for everything from municipal repairs to schools, roads, and even the war effort. At the time of the Revolutionary War, the Continental Congress even used lotteries to try to raise money for the Colonial army. While this strategy failed, private lotteries were very common in England and the United States, and were viewed as a form of “voluntary taxes.”
The casting of lots to determine fates and possessions has a long history, including several instances in the Bible. It was also a popular way for ancient Romans to give away property and slaves, and it was a favorite dinner entertainment in the 18th century at Saturnalian feasts. The modern-day lottery has become one of the most popular gambling activities in the world and is a key source of revenue for many states.
State lotteries are very similar to commercial casinos and other private gambling establishments, except they’re run by the government for its own benefit rather than privately by a company in return for licensing fees. The states create a monopoly for themselves, establish a public agency or corporation to run the lottery, and start with a modest number of relatively simple games. Over time, revenue and popularity expand, prompting the addition of new games to maintain and even increase revenue.
These innovations have created some controversies over how they target lower income consumers, increase opportunities for problem gamblers, and so on. The result is that some critics of the lottery argue that the industry is unregulated, unaccountable, and uncontrolled.
In addition, when state lotteries pay out a respectable percentage of sales as prize money, they reduce the amount available for the general state fund and other purposes such as education. In effect, the lottery becomes a hidden tax on the public and the vast majority of consumers aren’t aware of the implicit price they’re paying for the chance to win.
In any event, the fact is that the objective fiscal situation of a state seems to have little bearing on whether it adopts a lottery. Lotteries have won broad popular support even when the state is in good financial condition. This is largely due to the way they are presented to voters, as an attractive alternative to taxes and cuts in essential public services.
