Public Policy and the Lottery

Lottery has become one of the most popular forms of gambling in the world. Since New Hampshire initiated the modern era of state lotteries in 1964, they have spread quickly and are now operated by 37 states. In a very short time, they have largely replaced traditional taxation as the primary source of state revenues.

While the popularity of lotteries is undeniable, it is important to remember that they are only a small part of the overall pattern of gambling and public policy. Many states, especially those that have had large social safety nets in the past, saw lotteries as a way to raise money without imposing heavy taxes on lower-income citizens.

The immediate post-World War II period was one of prosperity and rapid growth for the states, and it was seen as a good time to expand services while not overburdening those who had already paid heavily in taxes to support the war effort. Lotteries grew into a major component of that, with their promise of instant riches to the winners.

In the early days, lotteries were largely conducted through paper tickets. These were sold in convenience stores and by other outlets, and winners would be drawn in a future drawing at a specific date. By the 1970s, innovation in lottery games had introduced “instant” games. These were a form of scratch-off ticket, and the prize amounts were much smaller than those in traditional drawings. However, the chances of winning were still relatively high—on the order of 1 in 4. Instant games quickly became the dominant form of lottery play.

State lotteries have long been a favorite of politicians, and they enjoy broad and sustained public approval. The reasons for this popularity are complex. A key part of the argument is that lottery proceeds are earmarked for a public good, usually education. This appeal is particularly effective in times of economic stress, when fear of tax increases and cuts in public services can give rise to a sense of need for a painless revenue source.

But even when the lottery is defended on the basis of its educational benefits, it is not a perfect solution. For example, a study in the mid-1970s found that the majority of people who play daily numbers games are from middle-income neighborhoods, while far fewer come from low-income neighborhoods. Moreover, there is considerable evidence that the poor do not participate in the lottery as a proportion of their population, and that those who play are actually not much more likely to win than the non-poor.

As with most forms of government, when a lottery is established, debate and criticism shift away from the general desirability of the enterprise to particular aspects of its operations. Various criticisms have emerged, such as the potential for compulsive gamblers and its regressive impact on low-income populations. Nevertheless, critics should be aware that these problems are more the result of the continuing evolution of the lottery than they are of any specific feature of its establishment.