Public Policy and the Lottery

A lottery is a game in which players pay for a ticket, select numbers or have machines randomly spit out numbers, and win prizes by matching those numbers. While the casting of lots to determine fates has a long record in human history (including several instances in the Bible), modern lotteries are more specifically for material gain, and have become the dominant form of gambling. They are also an important source of state revenue, although critics argue that they divert resources from other needed public services.

Most states now run their own lotteries, which are often viewed as government-sponsored business enterprises. Typically, a state establishes a monopoly for itself, creates a government agency or public corporation to manage the lottery (as opposed to licensing a private firm in return for a percentage of the profits), and begins operations with a modest number of relatively simple games. As revenues increase, the lottery progressively expands in size and complexity, especially by adding new games. This expansion is driven largely by the need to compete with privately run lotteries and to maximize revenues, rather than by any objective public needs.

The resulting lottery system is characterized by the state’s involvement in all aspects of its operation and by a high degree of dependency on revenues, with the general public interest playing only a secondary role. Moreover, the evolution of lottery policies is a classic case of public policy being made piecemeal and incrementally, with little overall oversight. The establishment of a lottery is often preceded by intensive lobbying by groups with vested interests, such as convenience store owners; lottery suppliers (heavy contributions from these entities to state political campaigns are widely reported); teachers (lotteries are very popular in those states where proceeds are earmarked for education); and politicians, who quickly become accustomed to the new revenue stream.

While a few people may win the big jackpots, most of the tickets are sold to those who do not have much chance of winning. For example, a large proportion of lottery players come from middle-income neighborhoods. And those who choose their own numbers tend to pick personal numbers like birthdays or sequential numbers. In contrast, those who play the “scratch” or instant-win games tend to choose more common numbers.

Lottery advertising promotes the message that lottery proceeds are being used for a public good, and this can be very effective in obtaining broad public approval. But it also obscures the regressivity of the lottery and its role in promoting problem gambling among certain segments of the population. As an example, lottery advertising in the United States regularly stresses the notion that a winning ticket is “just another way to make money,” which reflects an understanding that for most people, purchasing a lottery ticket is not simply a gamble but a substantial investment in a future with uncertain returns.