The Public Benefit of a Lottery


The drawing of lots to determine ownership or other rights has a long record in human history, including several instances recorded in the Bible. When governments first introduced state lotteries after World War II, they were sold to the public as easy fundraising tools that would funnel millions of dollars into schools and other public projects.

Since that time, lottery revenues have grown rapidly. As a result, many states are now expanding into new games, such as keno and video poker, and are putting more money into promotion. While this may seem like good news, it raises several concerns. For one, the promotion of gambling can have negative consequences for poor people and problem gamblers. Moreover, by focusing on raising revenues, state lotteries can run at cross purposes with the broader public interest.

Despite these warnings, state lotteries continue to grow. In 2004, they raised $53.6 billion, compared with $36 billion in 2000, according to the National Gambling Impact Study Commission. Nevertheless, many critics are concerned that the states have come to rely too heavily on lottery revenues, and that the profits are being diverted from important public priorities. In addition, they argue that lottery advertising is often deceptive, presenting misleading odds of winning the jackpot and inflating the value of the prizes (lottery prizes are generally paid in annual installments over 20 years, with inflation dramatically eroding the current value).

The establishment of lotteries is typically a process undertaken by legislative and executive branches of a state government. This fragmented approach can lead to a situation in which the state does not have a single coherent “gambling policy” or “lottery policy.” Moreover, the initial decisions made during the development of a lottery are often overwhelmed by the industry’s evolution.

As a result, few states have comprehensive public policies that address issues related to the development, regulation, and control of lotteries. Consequently, the public’s interests are often ignored, and problems are allowed to accumulate.

In order to win and retain public approval, a lottery must be seen as providing a particular public benefit. This argument is particularly effective in times of fiscal stress, when voters fear tax increases or cuts in public programs. In fact, however, research has shown that the objective financial health of a state has little relationship to its adoption of a lottery.

Lottery revenues tend to support many specific constituencies, from convenience store operators and lottery suppliers (heavy contributions by these companies to state political campaigns are routinely reported) to teachers (in those states in which lottery revenues are earmarked for education). These special interests quickly become accustomed to the flow of funds and may have difficulty seeing that it is in their best interest that this flow should cease. In addition, the proliferation of state lotteries has encouraged a culture of complacency and dependence in which government officials believe that gambling revenue is a natural resource. As a result, they neglect to regulate this source of revenue and ignore the many social and economic costs associated with it.