Public Policy and the Lottery

A lottery is an arrangement in which one or more prizes are allocated to participants by means of a process that relies on chance. The most common form of a lottery involves numbered tickets that are drawn by computers, with the winning numbers matched against those printed on the ticket. Prizes may be cash, goods or services.

The casting of lots for decisions and determinations of fate has a long history in human culture, although lotteries that offer prizes of money or other material goods are relatively recent innovations. The first recorded public lotteries to distribute prize funds were held in the Low Countries during the 15th century, for purposes including town repairs and aiding the poor.

Lotteries have broad popular support, with the majority of states reporting that their citizens play regularly. But they also develop extensive specific constituencies, ranging from convenience store operators (for whom sales are often the primary source of revenues) to lottery suppliers (whose heavy contributions to state political campaigns are widely reported); teachers (in states that earmark their lotto revenues for education) and legislators.

A central issue is the nature of state-sponsored lotteries as gambling enterprises. Many commentators, especially those concerned about the social costs of gambling, argue that lotteries are not a legitimate function for governments. In their present form, state lotteries operate at cross-purposes with the public interest. They promote gambling, and do so in ways that ignore or distort the social consequences of that activity.

In addition, they are inherently opaque: state officials do not reveal the actual amounts of money that are spent on operations and on prizes, and they hide behind a veil of secrecy to protect their interests. They also fail to disclose the amount of money that is lost by players and the public as a whole, or even how much profit is made.

While lottery participation is generally high and increasing, the proportion of winning tickets is much lower than in previous decades. It appears that the popularity of lotteries has peaked and may decline in the future. Nevertheless, many state officials continue to embrace the concept as a way to raise revenues without directly raising taxes.

There are several reasons why state lotteries are not appropriate forms of public policy. The first is that they are inherently commercial enterprises, run with the goal of maximizing profits through the promotion of games and advertising. Consequently, they must constantly seek new customers to offset declining revenue and must promote their games in ways that are likely to alienate many members of the public.

A second problem is that state officials are often tempted to use their monopoly on gaming as an excuse to spend money on other things. They are often pressured by voters who want more state spending, and by politicians who view lotteries as a way to raise tax dollars for free. The result is that state lotteries are a classic example of the piecemeal and incremental development of public policy, with little or no overall oversight and coordination.