The Lottery and State Budgets

Sep 3, 2023 Gambling

lottery

The lottery is a hugely popular form of gambling, and people spend billions of dollars on it. Many state governments promote lotteries, and they are generally seen as a useful source of revenue. But how meaningful that revenue is in broader state budgets and what the trade-offs are for people who play are questions worth asking.

Lotteries have a long history in Europe and the United States. The first recorded public lotteries were held in the Low Countries in the 15th century to raise money for town fortifications, charity, and other purposes. Privately organized lotteries were also common, especially in the American colonies, where Benjamin Franklin sponsored a lottery to raise funds for cannons for the defense of Philadelphia and Thomas Jefferson attempted a lottery to help pay off his massive debts.

Modern lotteries have evolved significantly from those early days. They are now a multibillion-dollar business, offering hundreds of different games and millions of tickets per draw. Although a small percentage of people win big prizes, most players simply buy a ticket and hope for the best.

One of the biggest reasons that lotteries have become so popular is that they offer a cheap, easy way to gamble without having to pay taxes or purchase an expensive game. This has a particular appeal to people from middle-income neighborhoods, who participate in lotteries at disproportionately higher rates than people from high- or low-income neighborhoods.

Another reason is that people simply like to gamble, and there’s nothing wrong with that. Those who are committed lottery players—the kind you see on billboards along the highway, spending $50 or $100 a week—certainly do not take it lightly and they certainly aren’t “duped.” In fact, they know that the odds are bad and they are willing to make that trade-off.

Lottery advocates argue that state-adopted lotteries are a relatively painless way for governments to raise revenue, because they allow people to choose their own winning numbers (instead of having the government decide them) and they provide an opportunity for everyone to have some fun and a chance to change their lives. But these arguments overlook a fundamental aspect of the lottery: winning numbers are determined by chance and are no more or less lucky than any other number. It is, therefore, entirely appropriate for the state to set aside a portion of its revenues to give away prizes to players who are willing to risk their own money in exchange for the chance to improve their lives. That is why the lottery is a legitimate enterprise and should be defended by those who believe in its value.