Public Benefits of the Lottery

The casting of lots for the distribution of money and other valuables has a long history, although its use for public profit is much more recent. The modern state lottery, in the form of drawing numbers for a prize, was first introduced in the United States by New Hampshire in 1964 and has since been adopted by 37 other states.

Lottery advocates emphasize its value as a source of “painless” revenue, the profits from which are earmarked for a specific public good (often education). The argument is especially effective during times of economic stress, when voters perceive state governments to be in financial trouble and are thus more willing to accept higher taxes or cuts in other programs. However, studies show that the popularity of state lotteries is not correlated with the objective fiscal condition of the states.

Despite the popularity of these arguments, there is little evidence that the public benefits promised by the lottery are actually delivered. Indeed, there is growing concern that the lottery is a form of gambling that increases problem gambling and promotes addictive behaviors. In addition, the advertising and marketing strategies of most state lotteries are highly questionable and may be seen as deliberately misleading. For example, many lottery advertisements present winners as “overnight millionaires,” while others exaggerate the amount of the jackpot or inflate the actual value of the money awarded (because it is typically paid out over equal annual installments over 20 years, inflated by taxes and inflation).

The evolution of state lotteries demonstrates how little consideration is given to general public policy when a new state-sponsored activity is established. Instead, the decision to introduce a lottery is often made by legislative committees and then implemented by individual agencies with little or no input from other government officials. As a result, the resulting state lottery has little or no coherence and is subject to pressures from within and outside of its operations that are frequently at cross-purposes with the broader public interest.