Public Policy and the Lottery

A lottery is a form of gambling in which numbers are drawn at random to determine the winner of a prize. In modern times, state governments sponsor a variety of lotteries. Some of these are traditional lotteries, in which people purchase tickets for a future drawing; others are more like scratch-off games, in which the ticket buyer scratches off a coating to reveal a prize amount. Lotteries have broad public support; in states with lotteries, more than 60 percent of adults report playing at least once a year. In addition to the general population, lotteries have extensive specific constituencies: convenience store operators (the usual vendors); lottery suppliers (heavy contributions to state political campaigns are routinely reported); teachers (in states in which lottery revenues are earmarked for education); and, of course, state legislators (who quickly become accustomed to the extra revenue).

A central argument used in support of state-sponsored lotteries is that they provide a source of “painless” revenue: voters want their states to spend more money, but are unwilling to pay higher taxes; therefore, the lottery provides a “free tax” on those who play. This argument has some validity, but it also has an ugly underbelly: lottery players are essentially paying themselves for a chance to win a big prize; the odds of winning are so low that even the most optimistic person would have a hard time believing that they will actually win.

Most states run lotteries as a business, and they are primarily concerned with maximizing revenues. As a result, they tend to promote the lottery in ways that are at cross-purposes with the general public welfare.

In the United States, for example, the majority of lottery revenues are spent on advertising. This subsidizes a form of gambling that has been shown to have negative effects on the poor, the disabled, and problem gamblers. Furthermore, it is possible that the promotion of lotteries contributes to an overall culture of excessive spending and financial irresponsibility.

Lottery critics have argued that the money raised by state-sponsored lotteries is better spent on other forms of public assistance, such as education. However, these critics have often overlooked the fact that state lotteries are a classic example of public policy being made piecemeal and incrementally, with little or no overall overview. As a result, state officials have often inherited policies and dependences on lottery revenues that they are unable to control or change.

The most significant issue with state-sponsored lotteries is that they encourage unwise spending and addictive behavior by providing a false sense of hope to impulsive, low-income consumers. In addition, the enormous tax implications of winning a lottery can quickly wipe out the accumulated wealth of many winners. For these reasons, Americans should think twice before purchasing a lottery ticket and use any money that they win to build an emergency fund or pay off credit card debt.