The lottery is an example of a public policy that has evolved piecemeal, with the result that few states have a coherent “gambling policy” or a “lottery policy.” Politicians, in both legislative and executive branches, often feel pressure to expand lotteries and their revenues, even when these efforts run at cross-purposes with the overall public welfare. Lotteries are also a classic example of a form of gambling that is difficult to regulate.
The first recorded use of lotteries to award money for tickets was in the Low Countries in the 15th century, where town records indicate that the proceeds were used for construction of walls and town fortifications as well as to help the poor. In colonial America, private and public lotteries played an important role in raising funds for colleges, canals, churches, and other public projects, including the American Revolution. The Continental Congress, in 1776, voted to establish a national lottery to raise money for the war effort against Canada.
Since then, state governments have established many lotteries and have redirected the proceeds to such purposes as education, welfare, infrastructure, etc. The lottery is a familiar feature in the lives of Americans and has grown to become one of our most popular forms of gambling. Its popularity and success have led to an increase in the number of games offered, the expansion into new types of gaming (including keno and video poker), and aggressive promotion by the state.
While many people who play the lottery admit that they know the odds are long, most of them say they still play because it is fun. Some people even believe that it is their civic duty to buy a ticket, or at least that they are doing something good for the state when they do so. This message, coded into the advertising, obscures the regressivity of lottery gambling and the serious risks associated with it.
Lottery advertising is often criticized for misrepresenting the odds of winning the jackpot (which can be paid out in annual installments over 20 years, with inflation and taxes dramatically eroding the current value); inflating the amount that can be won (the lottery can pay up to half of its prize money in taxes); and encouraging irrational gambling behavior by suggesting strategies like picking numbers based on birthdays and ages or purchasing multiple tickets. In addition, some critics have argued that the promotional activities of the lotteries violate federal and state laws against deception.
The question is whether lotteries are appropriate functions for government. The answer, of course, depends on what the state aims to accomplish. Lotteries have proven to be an effective tool for raising funds for a wide variety of public purposes, but there are important questions about how they operate as businesses, what impact they have on lower-income groups, and whether the lottery promotes gambling addiction. The answer to these questions is not clear, and the debate about state lotteries will likely continue for some time.