Public Policy and the Lottery


A lottery is a game of chance in which people pay a small sum to participate for a chance to win a larger amount. The game has a wide appeal and is used as a method of raising money for a variety of purposes. Unlike other gambling games, the prizes of a lottery are not predetermined and the winnings depend on a random selection process. The process may be used to fill a vacancy in a sports team among equally competing players or to select a kindergarten placement, for example.

In the United States, lottery draws are conducted each week and contribute billions in revenue to state governments annually. Although the chances of winning are very low, many people still purchase tickets and hold out hope for a better life. However, it is important to understand how the lottery works and whether it is a wise financial decision.

Lottery is a classic case of public policy made piecemeal and incrementally, with little or no overall overview. It is not unusual for state officials to develop a heavy dependency on lottery revenues, which can become subject to constant pressure to increase the size of the prize pools. As a result, the public welfare is rarely taken into account in the establishment and evolution of state lotteries.

The modern era of state lotteries began in 1964 with New Hampshire’s adoption of a lottery, and subsequent lotteries have followed remarkably similar patterns. The state legislates a monopoly for itself, sets up a state agency or public corporation to run it (as opposed to licensing private firms in return for a share of the profits), begins operations with a relatively modest number of games, and then, as revenue streams are expanded, expands the lottery’s portfolio of offerings.

A key factor in gaining and retaining state approval for a lottery is the extent to which it is perceived to benefit a particular public good, such as education. This argument is particularly effective in times of economic stress, when state government budget deficits are pressing against popular expectations for more onerous tax increases or program cuts. However, studies have shown that the objective fiscal circumstances of a state do not appear to have much impact on whether or when it adopts a lottery.

For lottery players, the thrill of winning big is a major attraction, but they also realize that it is a very risky venture. Even the winnings are often far below what they could earn in a more prudent investment, such as purchasing stocks and bonds. The lottery may also distract people from saving for retirement or college tuition. Consequently, a large percentage of lottery participants are not acting as responsible citizens, but rather as irrational gamblers. Despite this, many people believe that the lottery is their last or best chance to change their lives. This is a dangerous proposition that can only be addressed through an extensive public education effort.