Public Policy and the Lottery

Public Policy and the Lottery


The lottery has long been a popular source of public funds. It raises billions of dollars each year for state governments and local agencies, and draws millions of players who dream of reversing their financial fortunes by winning big jackpots. Yet critics argue that the lottery promotes harmful gambling behavior, inflates ticket prices and is a regressive tax on lower-income groups. State officials respond that lotteries provide important revenues to state government and the public welfare and are essential tools for raising funds for education and other purposes.

The casting of lots to determine fates and other matters of importance has a long history in human culture, and public lotteries were first established for material gain in the mid-fifteenth century in Europe. They soon became a major source of public revenue, providing money for towns, wars, and other public works projects.

State lotteries are a classic case of policy-making and administration involving a large number of fragmented actors with little or no overarching authority or overview. The initial establishment of a lottery usually involves a narrowly focused legislative and executive branch decision, and the subsequent development of the lottery is often driven by the need to generate new games and maintain existing revenues. As a result, few, if any, states have a comprehensive gambling or lottery policy.

Critics complain that lottery advertising presents misleading information about the odds of winning, inflates prize amounts (typically paid in annual installments over a period of 20 years, with inflation dramatically reducing the actual value), and exploits vulnerable populations, particularly those with limited incomes. They also assert that state officials have a conflict of interest in their desire to increase profits and their duty to protect the public.

Since their introduction, state lotteries have evolved into a series of games with prizes ranging from cash and goods to sports team draft picks and automobiles. Some state lotteries have even teamed up with merchandising firms to offer a variety of brand-name products as prizes. Many of these promotions have generated substantial merchandising revenues for both the lottery and the companies that sign up for them.

Another major criticism is that lottery proceeds are often used for activities unrelated to the original stated purpose of the lottery, such as public-works projects, subsidized housing, and other government programs. This allegedly undermines the integrity of the games, and erodes confidence in the state’s ability to control its gambling activity.

Some states have reacted to this concern by requiring that the lottery proceeds be earmarked for specific purposes, such as educational funding. However, others have argued that this is not sufficient to prevent the use of lottery money for unrelated purposes. In addition, these critics charge that the state must weigh the benefits against the costs of the lottery before establishing one. They have also criticized the use of lottery money to fund illegal gambling operations and the exploitation of children. Nonetheless, most state legislators and governors continue to support the lottery.