Lottery History

Despite their widespread popularity and apparent legitimacy, lottery games pose serious problems. They undermine traditional forms of public finance and are a source of egregious corruption. And they can produce adverse effects on society, especially for the poorest people. Nevertheless, they remain popular because of an inextricable human impulse to gamble, and because lotteries promise large cash prizes that are enticing in a time when material goods are scarce.

Lottery history reveals a pattern of expansion into new forms, games, and marketing techniques. Initially, a state legislates a monopoly for itself; establishes a state agency or public corporation to run the lottery (as opposed to licensing private firms in return for a percentage of revenues); begins operations with a modest number of relatively simple games; and, due to constant pressure for additional revenue, progressively expands its game offerings, largely by adding new types of gambling.

The first step in a successful lottery campaign is to identify specific constituencies. These include convenience store owners who can profit from the sales of tickets; suppliers, whose hefty contributions to state political campaigns are often reported; teachers, in states that earmark lottery proceeds for education; and state legislators, who quickly become accustomed to lotteries as a source of tax-free revenue. These special interests can form a powerful lobby that is difficult to ignore, especially as the state government becomes dependent on the profits of the lottery.

Another factor that makes lotteries so successful is that their revenues are perceived to be “painless” – they don’t increase taxes or cut public programs, and players are voluntarily spending their own money. This dynamic is particularly potent during periods of economic stress, when the prospect of budget cuts and tax increases is most feared. It also has the advantage of obscuring the fact that lotteries are an expensive enterprise, as they must spend significant amounts to promote and administer their activities.

One of the most important lessons from the history of lotteries is that they cannot be assumed to be a neutral means of raising funds for public needs. While they may initially appeal to a broad range of social groups, they ultimately serve only as a tool for the wealthy to acquire even more wealth. For the rest of us, they can lead to an unsatisfactory lifestyle and, in the worst cases, lead to addiction. Consequently, the state must take steps to limit their availability and promote responsible use by consumers. In addition to regulating advertising and offering assistance to problem gamblers, the state should consider a variety of other reforms to limit lotteries’ impact on society.