The Lottery and State Governments

The lottery is a peculiar beast. Its players buy tickets with the hope of winning a large sum of money, which they consider to be a meritocratic shot at a better life. But the odds are long, the prize pot grows and shrinks with each drawing, and the winners, on average, win only 40 or 60 percent of the pool.

The popularity of state lotteries grew rapidly in the immediate post-World War II period because they appeared to offer “painless revenue”: voters and politicians could increase state spending without raising taxes or cutting other programs. But that arrangement has largely fallen apart. State governments now rely heavily on lottery revenues to fund their budgets, and the pressure to increase lottery revenues is constant.

What’s more, lottery ads typically misrepresent the odds of winning, exaggerate the value of prizes (especially when jackpots are paid in equal installments over a period of years, with inflation and taxes dramatically eroding the actual amount); and promote irrational gambling behavior. As a result, critics argue that state lotteries encourage addictive gambling behavior and raise taxes on low-income people.

But supporters of the lottery say that state governments can manage an activity from which they profit, and that lotteries are good for society because they promote education, combat crime, alleviate poverty, and help people get out of debt. The lottery is also a way for state governments to raise funds to pay off their mounting deficits.