A lottery is a form of gambling in which tickets are sold for the chance to win a large sum of money. Some governments organize lotteries to raise money for public purposes, such as infrastructure, education, or charity. Others endorse private lotteries for entertainment or as a means of raising personal wealth, and still others ban them altogether.
The casting of lots has a long history in human culture, including several instances recorded in the Bible. Making decisions and determining fates by lottery has been a popular pastime for centuries, but it was only in the late eighteenth century that states began to use them to fund public goods.
State governments, which were themselves struggling with budget deficits, saw the lottery as a way to provide an array of social services without imposing a high tax burden on the middle and working classes. The lottery offered them a silver bullet that would allow them to expand their social safety nets and maybe even get rid of taxes altogether.
But the lottery was a bad idea from the start. As Cohen recounts, the early incarnations were “awful, corrupt, and expensive,” and they didn’t produce the revenue that proponents promised. State governments soon grew tired of running the lottery, and they moved on to other strategies for generating state money.
By the mid-twentieth century, state lotteries had developed a reputation as “taxes disguised as games.” As the author of this article explains, the rebranding worked. Lotteries became the “government answer to a national tax revolt.” In the late twentieth century, when voters turned against property taxes and income taxes, lottery revenues rose. But, as the author of this article points out, these new revenues did little to boost state economies and had no effect on reducing poverty, crime, or inequality.
In addition to their regressive nature, lottery proceeds are susceptible to the same incentives that drive other forms of gambling: euphoria and addiction. The ad campaigns, the math behind the prizes, and the psychology of addiction all work to keep players coming back for more. This is nothing new: tobacco companies and video game manufacturers use similar tactics to hook players on their products.
State lotteries are also run as businesses, with a focus on maximizing profits and revenue. To do so, they must advertise their games aggressively and lure in potential players. Super-sized jackpots are key, as they generate buzz and attract attention from the media. This is why we see a lottery’s jackpots grow to seemingly newsworthy amounts and then shrink again over time—and why the chances of winning increase with each drawing. Lottery sponsors and organizers also must decide how much of the prize pool should go to organizing and promoting the game, paying for prize distribution, and other costs. Of the remainder, a certain percentage must be allocated to winners. This is a difficult calculation, because the winners must be sufficiently large and attractive for people to want to play, while not so large that they discourage ticket sales.
