Public Policy and the Lottery


A lottery is a form of gambling in which numbers are drawn to determine a prize. The drawing of lots to determine ownership or other rights is recorded in a number of ancient documents, including the Bible, and became common in Europe in the sixteenth century, when it was used by private organizations and cities to raise money for towns, wars, college scholarships, and public works projects. In colonial America, the lottery was an important means of raising funds for the establishment of the first English colonies and other projects. It was also used to finance churches, paving streets, and constructing wharves. George Washington sponsored a lottery in 1768 to help pay for a road across the Blue Ridge Mountains.

Today, state lotteries operate in 37 states and the District of Columbia, with jackpots that can reach tens or even hundreds of millions of dollars. Lotteries are a popular source of recreation and entertainment, and the public is fascinated with stories about how big winners spend their winnings. However, despite this popularity, the lottery remains controversial in many quarters. Some critics claim that the lottery is a disguised tax on those least able to afford it, while others argue that its proceeds can be used for more worthwhile purposes.

State lotteries are a classic example of public policy being made piecemeal and incrementally, with little or no overall overview. Generally, the decisions about lottery structure and operation are made by state legislators and governors, and are further fragmented within the departments involved. This fragmentation, along with the lottery’s dependence on revenues that are tied to specific state programs, often leads to decisions being made at cross-purposes with the general interest.

Among the most prominent issues are the ways in which state lotteries promote gambling, with the emphasis on advertising. Since lotteries are run as businesses and must maximize revenue, advertising efforts focus on persuading people to spend their money. This necessarily includes promoting gambling to vulnerable groups such as poor people and problem gamblers.

Another issue is the distribution of lottery profits. State laws often distribute a percentage of lottery profits to different groups, such as schools and local governments. These allocations can lead to a situation in which lottery money is being spent at the expense of other state services.

In addition, the distribution of lottery money can have other unintended consequences. For example, a lottery may reward convenience stores that sell tickets by offering a discount on commissions or even paying for advertising. These incentives may encourage stores to stock more lottery products, which can increase the sales of these items and decrease the profitability of competing retailers. This can also affect the quality of service that consumers receive in these stores, which in turn can reduce customer loyalty. These issues have resulted in some states limiting the number of lottery products that can be sold at one time. Other states have banned the sale of certain games altogether.