Public Policy and the Lottery

Lottery:

A competition based on chance in which numbered tickets are sold and prizes awarded to those whose numbers match the winning ones. Lotteries are typically run by governments to raise money for public purposes.

People in the United States spend an estimated $100 billion on lottery tickets each year, making it the country’s most popular form of gambling. But the lottery raises some important questions about state policy and public values. Does promoting a game that relies on chance have negative consequences for the poor, and is it worth the trade-offs with other forms of government spending?

State-run lotteries have a long history in America. The first American lotteries were organized in the 17th century, with Benjamin Franklin running a series to raise funds for cannons for defense of Philadelphia and George Washington sponsoring one to build a road across the Blue Ridge Mountains.

Today, most lotteries operate as public enterprises, governed by state law and managed by state agencies or private corporations. A typical state lottery legislates a monopoly for itself; starts operations with a small number of relatively simple games; and, as revenues expand, gradually adds new games in an attempt to maintain or increase revenue. These innovations, however, have produced their own set of problems. For example, many people quickly grow bored of lottery games that have the same odds of winning every time—even with the largest prize amounts—and the revenues from these types of games tend to plateau and even decline.