The Lottery and Public Policy

Lottery is a familiar fixture in many states, providing a modest but steady stream of revenue that goes into the general fund. The games are popular, the prizes substantial and varied. But the way state lotteries have developed over time raises questions about their legitimacy, and the ways public officials may be using the proceeds of these games to advance their own goals.

Almost everybody plays the lottery, at least occasionally. In fact, fifty percent of Americans buy a ticket every year. But the number who regularly play is far larger—and these players are disproportionately low-income, less educated, nonwhite and male. These people know the odds are long for a win. But they play because they get value from the game, even when it costs them money. They have a couple of minutes, hours or days to dream and imagine what they might do with a big jackpot. This hope, however irrational and mathematically impossible, may be their only one-way up.

Lotteries are ancient; they date back at least to biblical times, with the casting of lots used for everything from distributing land in Israel to divining God’s will. They were also popular during the Roman Empire, where Nero liked to hold lotteries as part of Saturnalian feasts and other entertainments.

The first modern state-run lotteries began in the Low Countries in the fifteenth century, with public drawing for tickets and prize money. In those early instances, the purpose was to raise money for town fortifications and the poor. State officials may have hoped that the development of a lottery would help them overcome their reluctance to increase taxes.

Since 1964, when New Hampshire introduced the first state-run lottery, thirty-seven have followed suit, most of them in the Northeast and Rust Belt. Lotteries are often sold to voters as a replacement for higher taxes or cuts in public programs. This argument is persuasive, but studies show that the popularity of a lottery does not depend on a state’s objective fiscal health.

Critics of the lottery often charge that its advertising is deceptive. They point to the presence of the word “prize” in the name; the fact that prizes are often paid out in equal annual installments over twenty years (with inflation dramatically eroding the present value); and the ways in which lottery advertisements exaggerate the size and frequency of winnings. Those critics are right, but it is also true that the process of adopting and managing a lottery has led to its own set of problems.

Lotteries are a classic case of policy making by piecemeal, incremental steps, with little or no overall overview. Lottery officials have authority and pressures that are fragmented across legislative and executive branches and within each branch, with the result that the general welfare is often neglected. This is particularly true when the lottery industry evolves, as it has in states that have had a long history with the game.