The Public Benefits of Lottery Revenues


Almost all states have lotteries, where people pay a small amount of money to have a chance to win a large sum of money in a random drawing. The prizes are often millions of dollars. Many critics argue that lotteries promote addictive gambling behavior and are a major regressive tax on lower-income groups. Others say that the government should not be in the business of promoting gambling. Yet the fact is that most states rely on lottery revenues for a substantial portion of their budgets.

State lotteries typically raise billions of dollars each year, and are a major source of revenue for many public services. In addition, they provide substantial profits for their operators and suppliers. This income helps to support local governments, which may not have the capacity or willingness to tax citizens for additional funds. Lottery advocates assert that these benefits justify the social costs of a relatively painless tax on those who participate in the lottery.

Lottery supporters also stress the specific public goods that state revenues help to fund, such as education. Whether or not these claims are credible, they are effective in winning broad popular support. Lottery support is often strongest in times of economic distress, when voters are concerned about the possibility of higher taxes and cuts in public services.

However, it is important to note that the emergence of a lottery does not necessarily indicate a change in a state’s financial situation. As the economists Clotfelter and Cook point out, lotteries have gained popularity even when a state’s financial health is robust.

One of the most interesting aspects of lotteries is the way in which they are structured. The state legislates a monopoly for itself; establishes a public corporation to run the lottery; begins operations with a limited number of relatively simple games; and then continually introduces new games in an attempt to maintain or increase revenues. This ongoing evolution is one of the main reasons that few, if any, state lotteries have ever been abolished.

The casting of lots to make decisions and determine fates has a long record in human history, including several instances recorded in the Bible. Lotteries for material gain, on the other hand, are of more recent origin. The first recorded public lotteries were held in the Low Countries in the 15th century to raise funds for town repairs and to provide assistance for poor citizens.

Lottery games are games of chance, and there is no such thing as a “lucky” number. In reality, any set of numbers is just as likely to win as another. As such, a player’s chances of winning do not improve the longer he or she plays.