The Lottery and the State


Lottery involves buying tickets and then waiting to see if your numbers match those randomly chosen by a machine. Many people play for the fun of it and have developed quote-unquote systems about which stores and times of day to buy tickets. Others play because they believe that winning the lottery will change their lives for the better. In any case, the lottery is responsible for billions of dollars in ticket sales every year.

The practice of making decisions and determining fates by casting lots has a long history (see the Bible for one example). The modern use of lotteries as a form of money raising or other material gain, however, is of more recent origin. The first recorded public lotteries distributed prize money in the Low Countries in the 15th century for such purposes as town fortifications and aid to the poor.

In the United States, state governments introduced lotteries in 1964 in response to the economic challenges posed by inflation and the cost of the Vietnam War. They saw them as a way to increase the range of services they provided without significantly increasing taxes on middle-class and working-class citizens.

It was a successful strategy. The number of state lotteries grew from 11 to 37, and revenues increased as well. But this arrangement began to crumble as the era of cheap oil and high-inflation came to an end. The lottery was a source of “painless” revenue, which state governments became increasingly dependent on, with pressures to raise the yearly proceeds.

Moreover, the success of the lottery gave rise to a second issue: how government at any level should manage an activity from which it profits. It is an enormous task to promote gambling while attempting to balance that activity with other state interests. In addition to the financial and moral problems raised by gambling, there are those related to problem gamblers, poverty and other social and environmental issues.

As a result, the promotion of gambling by the state can have serious consequences that cannot be simply dismissed as a matter of the lottery’s inherent monopoly power and the need for revenue. State agencies that run the lottery are required to set advertising policies that maximize profits, and this necessarily runs at cross-purposes with the state’s social responsibility.

Furthermore, a large part of lottery advertising is designed to deceive consumers. Lottery ads typically present misleading information about odds of winning, inflate the value of prize money (prizes are often paid out in annual installments over 20 years, with inflation and taxes dramatically eroding the current amount), and so on. These distortions are problematic in a society that is based on a principle of free and fair competition, but the most significant problem is that lottery advertisements are at direct odds with state policies to protect the health, safety and welfare of all its citizens.

Posted in: Gambling