As states struggle to balance their budgets, some are turning to the lottery to raise money. But how meaningful that revenue will be and whether it’s worth the trade-offs to people losing their hard-earned cash deserve more careful scrutiny.
The concept behind lotteries is simple: Participants buy tickets that match numbers drawn in a random process for the chance to win a prize, which is usually some amount of cash or goods. The first known public lotteries were held in the 15th century in the Low Countries, where towns used them to fund town fortifications and to provide assistance for the poor. Since then, lotteries have become a fixture in many societies, raising enormous sums of money for everything from education to infrastructure projects.
In the United States, state lotteries have proliferated in recent decades. Currently, 37 states and the District of Columbia operate them. Although arguments for and against their adoption vary considerably, the structures of these lotteries are strikingly similar: A state legislates a monopoly for itself; establishes a publicly owned agency or corporation to run the lottery (as opposed to licensing a private firm in return for a share of revenues); begins operations with a modest number of relatively simple games; and, in response to a desire for additional revenues, progressively expands the number and complexity of its offerings.
The expansion of the lottery industry is driven by a combination of factors, some related to the nature of the products sold and others that reflect the broader political economy in which state governments are operating. For example, lotteries are popular in times of economic stress because they offer an alternative to higher taxes or cuts in public services. However, the popularity of lotteries is independent of a state’s actual fiscal health, and lotteries also win broad public support when a state’s finances are strong.
Once a lottery is established, debate and criticism typically shifts to specific features of its operations, such as the problem of compulsive gambling or the alleged regressive impact on lower-income communities. However, in the case of the state lottery, the policy decisions made at the time of its establishment are soon eclipsed by the ongoing evolution of its operations.
In many cases, lottery play is highly idiosyncratic and often reflects the peculiar and irrational characteristics of individual gamblers. For instance, some players consciously choose the same numbers every week or buy their tickets from lucky stores or at certain times of the day. Others develop elaborate, quote-unquote, systems for predicting which numbers will be winners and which are losers. In spite of all these differences, there is a common denominator among lottery players: each has a small sliver of hope that they will be the one who wins the big prize. While irrational, this hope may be an important psychological factor in the success of the lottery.