Public Policy and the Lottery

Mar 29, 2024 Gambling


A lot of people love to play the lottery. There’s a sort of inextricable, in-built desire to gamble and potentially come away with something big. And in a society that places an increasing emphasis on meritocratic ideas like hard work and education, the chance of winning the jackpot is alluring. But there’s a lot more to lottery than just the simple fact that people like to gamble. Lotteries have become an integral part of American life, raising upwards of $100 billion each year. And as the largest form of gambling in the country, they’re a public policy that deserves some scrutiny.

States set up their own lotteries in order to raise money for specific institutions or projects. For example, a few of America’s first church buildings were built with lottery funds, and much of the campus of Columbia University in New York City was paid for by state lotteries. Lotteries were especially popular during the immediate post-World War II period, when states were able to expand their social safety nets without raising taxes on middle and lower classes or slashing public services.

As states continue to hold the lottery, their policies are subject to intense criticism. Criticisms typically focus on specific features of the lottery: its perceived regressive impact on low-income communities; its problems with compulsive gambling; and its effects on other forms of public finance. But critics fail to address the basic premise of a lottery: its inherently flawed structure.

The lottery is not a good way to fund government. It’s a poor substitute for paying taxes or borrowing from other sources. Moreover, the public does not see it as an alternative to other ways of funding government. In fact, studies show that lotteries can be just as popular when the state’s fiscal conditions are strong compared to when they are weak.

So why do we keep holding lotteries? Part of the answer is that state governments develop broad and deep constituencies for their lottery programs. These include convenience store operators (the main vendors); suppliers of prizes such as lottery tickets and scratch-off games; state legislators who are accustomed to the steady stream of new revenue; teachers (in those states where some of the proceeds are earmarked for education); and many others. These groups have a strong incentive to defend the lottery against criticisms that it’s not doing what it’s supposed to do.

Other parts of the answer are that lotteries have a built-in message that it’s fun and harmless. This is coded into the ads on TV and the billboards along highways. It’s meant to tell people that playing the lottery is a lighthearted thing, not some sort of deep commitment that requires serious thought and discipline. But that’s a false message. In reality, the lottery is a massively regressive tax on poor communities. The fact that it’s fun obscures this reality, and it also masks how much people are really spending on their tickets. In the end, we need to be honest about how this form of public finance is actually benefiting the nation.