Lottery Profits Shape State Policy
The lottery is a popular form of gambling that allows players to win money by matching numbers. The name of the game comes from an Old English term meaning “drawing of lots,” which refers to a method of distribution that relies on chance. People can also be selected by lottery to receive benefits, such as subsidized housing units or kindergarten placements. In the United States, people spent upward of $100 billion on lottery tickets in 2021. This makes it the most common form of gambling. But state lotteries are more than just games of chance; they also shape public policy.
In the article “Lottery is a Gamble,” Adam Sobel and Joshua Stacher look at the many ways lottery profits affect state policies. They argue that the way state lotteries are run, and the message they send to citizens, is problematic. The two major messages that lotteries promote are 1) that they’re fun and 2) that they raise money for the state. These messages obscure how much money people are spending on tickets and what the regressive nature of these taxes is. They also rely on the idea that buying a ticket is a “civic duty,” but it’s unclear how meaningful this revenue is in overall state budgets.
The first recorded lotteries in Europe were in the Low Countries in the 15th century, with records of a lottery in Ghent dating back to 1445. These early lotteries were designed to raise money for town fortifications and to help the poor.
Eventually, state governments began offering their own lotteries to increase tax revenues. Lottery profits are allocated to various state projects, including education. These allocations have a long history, with some scholars tracing them back to the ancient Chinese keno slips of the 205–187 BC Chinese Han dynasty. Other historians have traced lotteries to Roman emperors who gave away slaves and property through an event called the apophoreta, during which dinner guests would be given pieces of wood with symbols on them, and the hosts would then draw a number from the audience for each symbol that was drawn.
In order to establish a lottery, a state typically legislates a legal monopoly for itself; sets up a state agency or public corporation to run it; and starts operations with a modest number of relatively simple games. Then, as demand grows and pressure on state budgets increases, the lottery progressively expands its size and complexity.
Today’s state lotteries have grown into huge enterprises that offer hundreds of millions in prizes and generate billions in profits each year. These profits are spent on things like education and subsidized housing, but they also divert resources from private savings. In addition, a large percentage of lottery winnings must be paid in taxes. These costs are often borne by lower-income Americans, who spend $80 billion on lottery tickets each year. That’s money that could have been saved for a home or retirement, or used to pay off credit card debt.
