The Public Benefits of Lottery Revenue


A lottery is a form of gambling where numbers are drawn for prizes. It is a common method of fundraising for public projects and charities. State governments typically regulate lotteries and oversee their marketing and promotion. In addition, they set minimum prize amounts and establish the rules for determining winners. Some states also prohibit certain types of games or require that they be played in a specific way.

Making decisions and determining fates by drawing lots has a long history in human culture, including several cases mentioned in the Bible. In the West, public lotteries are documented as early as the reign of Augustus Caesar for municipal repairs in Rome and by the end of the 17th century in France. Throughout the years, lottery revenue has been used to help finance projects as diverse as the construction of the British Museum, the repair of bridges, and several American colleges including Harvard, Dartmouth, Yale, William and Mary, and King’s College (now Columbia).

Regardless of whether people play to win the jackpot or to support a particular cause, there is no doubt that lotteries have become one of the most popular forms of gambling. In fact, it is estimated that Americans spend about $32 billion per year on lotteries. This is about half of the money that is spent on casino games and more than three times the amount invested in horse racing.

Lottery revenues have a tendency to expand rapidly after a state introduces a game and then level off or even decline. To maintain or increase revenues, states must constantly introduce new games. In the 1970s, the introduction of “instant games” such as scratch-off tickets exploded the lottery industry. These games offered lower prize amounts than traditional lotteries but much higher odds of winning, as high as 1 in 4.

A prevailing argument in support of state lotteries is that they are a source of painless revenue—that lottery players voluntarily spend their money while helping to fund public programs. This view is especially attractive to voters during times of economic stress, when politicians face the prospect of raising taxes or cutting public services. However, it is important to note that studies have shown that the popularity of a lottery is not correlated with a state’s objective fiscal condition.

While the argument that lottery revenue is a painless way to raise taxes may seem convincing, it does not address many moral concerns surrounding the practice. In an era of limited social mobility and income inequality, it is not easy to justify dangling the promise of instant riches to a large segment of the population. Moreover, running a lottery is inherently a profit-driven endeavor and it is not clear that the benefits outweigh the costs.